Stocks Rise Amid Global Tensions -- 2nd Update
November 25 2015 - 6:37AM
Dow Jones News
By Christopher Whittall and Riva Gold
Global stocks mostly rose Wednesday as investors shrugged off
concerns over geopolitical tensions and focused on the prospect of
further monetary stimulus from the European Central Bank.
The euro fell against the dollar and the Stoxx Europe 600 gained
1.3%, retracing losses on Tuesday that followed reports that the
Turkish military shot down a Russian fighter jet along the Syrian
border.
U.S. futures markets pointed to a 0.3% opening gain for the Dow
Jones Industrial Average. Changes in futures aren't necessarily
reflected in market moves after the opening bell.
Meanwhile, Asian markets slipped slightly as investors in the
region reacted to news of the downed jet.
Investors are looking past geopolitical tensions to focus on the
prospect of further monetary stimulus--also known as quantitative
easing, or QE--at the European Central Bank's meeting next week and
whether the Federal Reserve will raise interest rates in December,
said Mike Bell, global market strategist at J.P. Morgan Asset
Management.
"There is a strong likelihood the ECB is going to expand the QE
package" and cut interest rates further, said Mr. Bell, adding this
should boost European stocks heading into year-end.
Investors were also taking cheer from signs the Federal Reserve
believes the U.S. economy will be strong enough to withstand the
first rate rise in almost a decade, said Mr. Bell, whose firm
oversees $1.7 trillion in assets.
The euro fell to a seven-month low against the dollar Wednesday
on renewed expectations that QE could be more expansive. The euro
was last at $1.0586, down 0.6% on the day. Easy-money policies tend
to reduce the attractiveness of a currency to investors and boost
government bonds prices.
The yield on two-year German government bonds fell to a fresh
low of minus 0.41% in a sign that investors are ramping up bets the
ECB will cut the interest rate it pays on bank deposits from the
current level of minus 0.2%. Yields fall as prices rise.
Gains in Europe were led by shares in travel and leisure
companies, which rose 1.9%. These stocks remain down 1.3% this week
following a sharp fall on Tuesday.
The drop in European stocks on Tuesday "was probably driven by
short-term considerations," said Christoph Hilfiker, a fund manager
at LLB Asset Management, which holds 10 billion Swiss francs ($9.8
billion) in assets under management.
Mr. Hilfiker said he is focused on company valuations and
currently sees some opportunity in European stocks and sectors like
technology in the U.S.
"When there is fear, there is a good entry point," he said.
Elsewhere, shares in Spanish banks were hit after Spanish
engineering firm Abengoa SA said it is filing for preliminary
credit protection. Shares in Banco Popular EspaƱol SA fell 4.3%,
Banco Santander SA slipped 3.1%, Caixa Bank SA dropped 2.5% and
Banco de Sabadell SA fell 3.8%.
The losses dragged down Spain's IBEX 35 index 0.6%.
Shares in basic resources companies, which have been volatile of
late, were down 0.9%, taking losses to nearly 11% so far this
month. Shares in Anglo American PLC fell around 7% after HSBC
analysts published a note warning of persistent "cash burn" at the
mining giant.
In Portugal, the yield on 10-year government bonds yields fell
around 0.12 percentage points following the appointment of a new
prime minister on Tuesday that ended weeks of political
uncertainty.
In Asia, the Nikkei Stock Average fell 0.4%, while Australia's
S&P/ASX 200 fell 0.6%. Hong Kong's Hang Seng Index was 0.5%
lower, but the Shanghai Composite Index rose 0.9%.
Tuesday's gains in oil prices kept a lid on losses, supporting
energy companies in Asia and sending Wall Street to a slightly
higher close.
Brent crude oil was last down 1.3% at $45.49 a barrel, but
remains up almost 3% so far this week.
In commodities, gold was down 0.2% at $1,071.80 a troy
ounce.
Later Wednesday, investors will parse a raft of U.S. data
including readings on the housing sector, weekly jobless claims,
consumer sentiment, durable goods orders and inflation on the last
day of trading before the Thanksgiving holiday.
Write to Christopher Whittall at christopher.whittall@wsj.com
and Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
November 25, 2015 07:22 ET (12:22 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.