Stocks pushed by US equities record, pulled by oil slide – Financial Times

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Monday 12.30 BST

Overview

A sharp fall on Italy’s main equities index is standing out, as the prospect of early elections in the country unnerve investors.

The country’s former prime minister and leader of the Democratic Party, Matteo Renzi, said in a weekend newspaper interview that holding the poll in September, at the same time as German elections, made sense from a European perspective. Italy’s elections are not due until May 2018, and only the country’s president has the power to dissolve parliament.

But after the talk of an early vote, Milan’s FTSE MIB is the biggest faller in the region, down 1.7 per cent, while the region wide Euro Stoxx 600 is down only 0.3 per cent. Italy’s relatively steep fall is being led by financial, industrial and consumer stocks.

The other continental European stock markets open for business have picked up a lacklustre lead from their Asian peers, as softness in energy prices offset another record high close on Friday for Wall Street’s S&P 500.

Hot topic

Oil prices came off the boil on Monday following a week of big moves as Opec members agreed last Thursday to extend production cuts to March of next year to address a global supply glut.

Brent crude, the international benchmark, is down 0.2 per cent at $52.04 a barrel while WTI is down 0.3 per cent at $49.67. Trading on Friday was choppy before Brent closed 1.4 per cent higher, recovering from a 4.6 per cent drop in the previous session when traders “sold the fact” upon the signing of the Opec agreement.

Equities

Germany’s Xetra Dax 30 is down 0.1 per cent overall, with the energy stock Eon the biggest single faller, down 0.7 per cent. Major exporters are also weaker, with the euro trading within reach of its recent seven-month high. Daimler is down 0.6 per cent and Volkswagen is off by 0.5 per cent.

UK stock markets are closed for the late-May public holiday.

In Asia, the energy sectors of the Topix and Hang Seng were the second-worst performers in Japan and Hong Kong, while energy stocks in Australia were also softer.

Japan’s Topix is up 0.2 per cent. Toshiba was up 2.3 per cent on local media reports that Broadcom was preparing a ¥4tn bid for the company’s prized memory chip unit.

Hong Kong’s Hang Seng was up 0.2 per cent ahead of a public holiday on Tuesday. Lenovo slipped 0.8 per cent, the worst performer in the benchmark, continuing to suffer in the wake of disappointing quarterly earnings last week.

Mainland China’s markets were closed for a public holiday.

Commodities

Iron ore futures for September delivery on China’s Dalian Commodity Exchange ended last week 4.8 per cent lower at Rmb451.5 ($65.81) per tonne in their third-biggest weekly drop of 2017. It was the lowest level for the contract since November 8.

Prices are down 11.3 per cent so far this year and down 32.9 per cent since this year’s high of Rmb673 in late February. Mainland commodities markets were closed on Monday for holiday.

Gold was down 0.1 per cent at $1,265.91 an ounce, retreating from a four-week high.

Forex

The euro is flat at $1.1187, but trading in sight of the seven-month high above $1.12 it reached last week.

The dollar index, a measure of the US currency against a basket of global peers, is up 0.1 per cent to 97.486, on track for its first three-day win streak in a fortnight. The greenback gained on Friday after US first-quarter GDP growth was revised higher by more than expected.

Other currencies are mixed. The Japanese yen was a touch lower at ¥111.35 per dollar, while the Australian dollar was down 0.2 per cent at $0.7437.

The pound is 0.3 per cent firmer at $1.2841, after stumbling 1.1 per cent on Friday as polls in the lead-up to next month’s general election showed the Conservatives had lost ground to Labour.

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