HONG KONG: Stocks mostly inched higher in Europe and Asia Monday in a busy week set to include policy decisions from three major central banks and fresh readings on inflation.
The Stoxx Europe 600 edged up 0.1% in early trading after its best week since July, following upbeat sessions on Wall Street and in Asia. Europe’s banking sector rose 0.6%, helping lead the index higher, while shares of Steinhoff International Holdings jumped 14% after the retail giant’s shares tumbled 86% last week following the disclosure of possible accounting irregularities.
The multinational-heavy FTSE 100 outperformed other European indexes, rising 0.6% as the British pound edged down 0.1% to $1.3370, deepening Friday’s losses in the currency.
Futures pointed to a 0.2% opening gain for the S&P 500 after a rebound in technology shares and a stronger-than-expected pickup in hiring helped lift U.S. indexes to weekly gains on Friday.
Analysts largely expect trading to be quiet early this week ahead of policy statements from the Federal Reserve, Bank of England and European Central Bank. While market participants broadly expect the Fed to raise interest rates at its December meeting, the U.S. central bank’s economic and rates projections will be closely watched for hints at their path in 2018.
“On balance, we believe that the Fed will stick to their current plans to raise rates gradually by a further three times in 2018, although building concerns over persistently low inflation and the flattening of the U.S. yield curve are sending more cautionary signals to the Fed,” strategists at MUFG wrote in a note.
Hong Kong’s Hang Seng Index was recently up 1.2%, helped by gains in HSBC, Tencent and oil company Cnooc. Investors in Hong Kong expect higher interest rates to benefit big banks like HSBC, said Ivan Ip, a stock strategist at UOB Kay Hian. The Hong Kong dollar is loosely pegged to its U.S. counterpart and local banks typically track U.S. interest rates.
In China, the Shenzhen Composite Index climbed 1.5% and Shanghai stocks rose 1%. The Chinese central bank injected a net 20 billion yuan ($3.02 billion) into money markets Monday after draining liquidity for two weeks, providing a lift to equities traders’ moods in China. BJapanese stocks perked up after the lunch break, with the Nikkei Stock Average rising 0.6%.
In currencies, the WSJ Dollar Index, which tracks the dollar against a basket of 16 others, was flat Monday after its best week of the year.The New Zealand dollar rose 1.3% against the greenback after the government announced that the current head of New Zealand’s sovereign-wealth fund, Adrian Orr, has been selected to lead the country’s central bank.
Elsewhere in markets, the first bitcoin futures started trading Sunday, triggering a sharp jump in the price of the digital currency as the exchange provider’s website experienced outages from heavy traffic. The bitcoin contract expiring in January opened at $15,000 and spiked to $16,660 within the first six minutes of trading before dropping and rebounding again.
Market participants have been intrigued by bitcoin’s rise and might look at reinvesting profits there following recent profit-taking in Asian stocks in the wake of big gains across the market this year, said Alex Wijaya, head of Southeast Asia at AxiCorp Financial Services.
