Financial Times - France and Italy’s bonds rally
the media pirate
June 12, 2017. Michael Hunter, Peter Wells.
Improved political outlook lifts mood after elections; tech stocks hit by sell-off.
Key Quote
“Political risk premium is certainly coming out of the bond market following political events over the weekend,” says David Stubbs, global market strategist at JPMorgan Asset Management.
“Yields on French and Italian debt have fallen as the potential for a centrist reforming government rose in the former, and the chances of the radical anti-euro Five Star movement coming to power dropped in the latter. At this stage, everyone is waiting for reflation to take off.”
Hot topic
On sovereign debt markets, yields on French and Italian 10-year debt are falling, as a more benign political outlook in both countries draws investors in to buy bonds.
France’s 10-year yield is down 4 basis points at 0.60 per cent and Italy’s is down 7.5bp at 2.002 per cent. Yields fall when prices rise.
The rally comes after President Macron’s party is on course for a clear majority in parliament after national elections at the weekend. Meanwhile, Italy’s Eurosceptic Five Star Movement failed to make the run-off in a series of municipal elections on Sunday.
Equities
Technology stocks are taking a toll on global stock indices.
On the Euro Stoxx 600, chipmakers set the pace of the selling. STMicroelectronics fell 5.6 per cent and ASM International fell 4.3 per cent. Micro Focus was among the biggest fallers in London, down 2.5 per cent and the biggest single faller on the FTSE 100.
The selling comes after the sector led a Wall Street sell-off on Friday, where the Nasdaq Composite lost 1.8 per cent. It is expected to fall by almost 1 per cent at the open according to Futures trade. Wall Street’s other indices are also expected to fall further, with futures trade pointing to losses of 0.2 per cent for the S&P 500 and the Dow Jones Industrial Average.
The region-wide Euro Stoxx 600 is down 0.9 per cent, as is Frankfurt’s Xetra Dax. The Paris CAC 40 is down 1 per cent.
The UK’s FTSE 100 is down 0.2 per cent, in part helped by further weakness for sterling and its paucity of tech stocks.
Hong Kong’s Hang Seng fell 1.2 per cent, with the Shanghai Composite 0.6 per cent weaker. Japan’s Topix is flat.
Currencies
The weak pound has lifted the UK’s blue-chip index since last year’s Brexit vote, making exports more competitive and helping earnings made in foreign currency. The pressure on sterling held off during Asian trade and for much of the European morning before returning. It is down
The dollar is weaker as investors look towards this week’s rate-setting meeting at the Federal Reserve, at which a quarter-point rate rise is likely, although investors are not expecting the US central bank to overhaul its dovish rhetoric on the pace of future tightening. The index tracking the world’s reserve currency is down 0.2 per cent at 97.152.
The euro is up 0.2 per cent at $1.1210, while the yen is 0.3 per cent firmer at ¥110.01.
Commodities
Oil prices are continuing to rise. Brent crude, the international benchmark, is up 0.4 per cent at $48.36 a barrel while West Texas Intermediate is also 0.4 per cent higher, at $46.01.
Gold is up 0.3 per cent at $1,269.10 an ounce.
Read more paid articles free: https://t.me/media_pirate