Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

GLOBAL MARKETS-Carmakers drive Europe higher, Johnson batters sterling

Published 2019/07/23, 11:28
Updated 2019/07/23, 11:30
© Reuters.  GLOBAL MARKETS-Carmakers drive Europe higher, Johnson batters sterling
EUR/USD
-
JP225
-
CONG
-
GOOGL
-
AAPL
-
AMZN
-
FRVIA
-
HAL
-
LCO
-
DE10YT=RR
-
META
-
STOXX
-
AMS
-
GOOG
-
HLE
-
SXAP
-

* Prospect of ECB, Fed easing supports global equities

* Europe climbs as car sector has best day since April 1

* MSCI Asia-Pacific index gains 0.15%, Nikkei adds 0.95%

* Pound sags as hard Brexit advocate Johnson set to become UK PM

* Oil nudges higher as Iran tensions grow

* World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, July 23 (Reuters) - A wave of central bank easing and positive soundings from the earnings season buoyed world stocks on Tuesday, while Britain's pound fell before the expected confirmation of hard-Brexit advocate Boris Johnson as the country's prime minister.

Corporate results from oil bellwether Halliburton (NYSE:HAL), Swiss bank UBS and Apple (NASDAQ:AAPL) supplier AMS AMS.S all helped Europe's STOXX 600 benchmark .STOXX add 0.5% to Monday's gains. .EU

The auto industry also gained .SXAP as German parts makers Hella HLE.DE and French peer Faurecia EPED.PA surged nearly 6% and tyre maker Continental CONG.DE rose 4% despite a profit warning, putting the sector on track for its best day since April 1. .EU

"The results are coming in and have helped the market today and we are still under the influence of interest rates," said Francois Savary, the chief investment officer of Prime Partners, referring to expectations of U.S. and ECB rate cuts.

He also said Wall Street earnings had provided no real worries so far and this week's results from Facebook FB.O , Amazon.com AMZN.O and Google parent Alphabet GOOGL.O would "drive the market up the road."

Among currencies, the dollar reached a two-week high after U.S. President Donald Trump and congressional leaders agreed on Monday to a two-year extension of the U.S. debt limit, ending the threat a government default later this year. /FRX New Zealand dollar led G10 losses after its central bank said it had "begun scoping a project to refresh our unconventional monetary policy strategy and implementation," although it added it was at a very early stage.

Britain's pound slid towards the mid $1.24 region GBP=D3 with eurosceptic Boris Johnson widely expected to replace Prime Minister Theresa May in a matter of hours.

Concern that Britain will crash out of the European Union without a deal have grown since Johnson said he would pull Britain out on Oct. 31 "do or die".

The pound GBP=D3 traded at $1.2459, near last week's 27-month low of $1.2382.

"Johnson is expected to become the new prime minister, so there is a real chance of a hard Brexit," said Takuya Kanda, general manager of research at Gaitame.Com Research Institute in Tokyo.

The euro fell 0.2% to $1.1189 EUR= , weighed down by the likelihood of even more negative ECB interest rates in the coming months. The central bank meets on Thursday.

"It is going to take a bold stroke by the ECB to both satisfy markets clamouring for incremental easing and make a difference to the economy, all the while remaining inside its institutional setting and not destabilising the financial system," wrote Carl Weinberg, chief international economist at High Frequency Economics.

HOT SPOTS

Europe's government bonds barely budged, with their yields slumping since the start of the year. Some yields did tick higher after the U.S. move on its debt ceiling.

Germany's 10-year bond yield, the benchmark for the euro zone, was up a basis point, but at minus 0.34% was near Monday's two-week low and not far from the record low posted at the start of the month. DE10YT=RR

Upcoming events to watch include the first of potentially two confidence votes in Spain. Caretaker prime minister Sanchez needs an absolute majority to form a formal coalition with far-left rivals Podemos.

There was also a rumoured meeting between the leaders of the two squabbling parties who make up Italy's coalition government, 5-Star Movement's Luigi Di Maio and League's Matteo Salvini.

"Investors are waiting to see whether this government will survive," said DZ Bank strategist Daniel Lenz. "One possibility is that the coalition continues but both agree to replace (Giuseppe) Conte as prime minister, which would be a very bad signal."

Conte is widely seen as a moderating influence on the anti-establishment Italian government, particularly in terms of its relationship with Brussels.

In commodities, Brent crude LCOc1 added 0.19% to reach $63.38 per barrel. It had risen 1.2% the day before on concern over possible supply disruptions after Iran seized a British tanker last week. O/R

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.