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Stock markets in Europe are starting the week on the front foot after a generally positive Asia session following Wall Street’s climb to another record.
Trading is a tad subdued, however, with mild action in forex delivering a slightly softer dollar, and a lack of leadership in the sovereign debt sector as US markets are shut for the Presidents’ Day holiday.
What to watch
The UK pound may come into focus later in the day as the House of Lords starts debating — and is likely to attach conditions to — the legislation giving Prime Minister Theresa May the power to trigger the country’s exit from the EU.
Sterling is up 0.2 per cent to $1.2430 and is 0.2 per cent firmer against the euro at £0.8533.
Stripping out October’s flash crash, the UK currency hit a 31-year low of $1.1979 just over a month ago as investors expressed concern about the potential damage to the UK economy from a “hard Brexit”.
US investors are taking a rest on Monday after pushing the S&P 500 to another record at the end of last week.
Wall Street’s benchmark index continues to be lifted by recent better global economic data and investor hopes that the mooted policies of president Donald Trump — tax cuts, infrastructure spending, and deregulation — will boost corporate earnings.
“While the media remains obsessed with the new US administration, financial markets remain squarely focused on what looks like a broadly-based acceleration in global growth and inflation momentum, which continues to provide a supportive backdrop for equity markets,” said Ian Williams, strategist at Peel Hunt.
Not even the prospect of tighter US monetary policy by the Federal Open Market Committee is halting the advance, notes Mr Williams.
“FOMC Chair Yellen’s comments last week underlined how central bankers remain cautious, but risks to the path of US interest rates in particular are shifting to the upside. That puts the onus on corporate earnings growth to drive indices and the trend in forward estimates across most regions remains supportive.”
Such company earnings optimism helped the FTSE All-World equity index hit a record intraday high of 294.15 last week.
And a firm start in Europe on Monday sees the All-World again flirting with virgin territory. The pan-European Stoxx 600 is up 0.3 per cent, as miners and banks find form.
London’s FTSE 100 is up 0.2 per cent, held back by a chunky retreat for
Unilever as much of Friday’s bid-induced gains made by the consumer goods group dissolve after Kraft-Heinz withdrew its $143bn offer.
Japan’s Topix benchmark rose 0.2 per cent, helped by SoftBank gaining ground in the wake of reports on Friday that the Japanese telco, which is the majority owner of US wireless carrier Sprint, might approach T-Mobile US about a possible merger.
Hong Kong’s Hang Seng Index added 0.5 per cent to hover at its best level since August 2015, while in mainland China the Shanghai Composite gained 1.2 per cent following reports that large pension insurance funds were moving into the market, according to Reuters.
Together, the moves leave the All-World up 0.1 per cent to 293.92.