Euro and eurozone bond markets point to a stimulus fund, stocks cautious


LONDON (Reuters) – Euro and eurozone bond markets have raised hopes that European Union leaders will strike a deal on a stimulus fund for the economy ravaged by the bloc pandemic on Monday, but The region’s stock markets took a cautious turn to the downside as trading halted.

FILE PHOTO: The offices of the London Stock Exchange Group are seen in the city of London, in Great Britain, on December 29, 2017. REUTERS / Toby Melville

The single currency hit its highest level against the dollar since March 9, at $ 1.1467 after progress reports after three days of negotiations over the proposed € 750 billion fund. [FRX/]

Bond markets also welcomed the advance, with risk premiums investors pay to hold Italian government debt on Germany – the bloc’s benchmark – falling to 162 basis points, the lowest level since March 27. [GVD/EUR]

However, the stock markets kept optimism in check. The pan-European STOXX 600 index fell 0.6% in the first trades. [.EU]

Discussions on the fund were adjourned until 4:00 p.m. CET (2:00 p.m. GMT) on Monday. After the adjournment was announced, Austrian Chancellor Sebestian Kurz and Dutch Prime Minister Mark Rutte said progress was being made.

A group of wealthy northern European states lobbied during the summit for a smaller clawback fund and sought to limit the split of payments between grants and repayable loans.

An attempt at compromise failed on Sunday. An agreement providing 400 billion euros in subsidies – against 500 billion euros proposed – was rejected by the north, which declared that it considered 350 billion euros as the maximum.

Discussions on subsidies have since tightened, EU summit chairman Charles Michel said they would be based on 390 billion euros combined with smaller discounts.

“The euro won on the likelihood that they would find a solution at this meeting,” said Marshall Gittler, head of investment research at BDSwiss Group.

“I expected them to fail, or at best to only reach a partial agreement, but the fact that they have been going on for so long shows that they are genuinely determined to succeed,” said Gittler said. A successful deal would likely give the euro a boost, he said.

Earlier in Asia, the largest MSCI index of Asia-Pacific stocks outside of Japan gained 0.14%, reversing losses earlier today.

Chinese markets rose more than 2% after regulators raised the cap on insurers’ equity investments and encouraged mergers and acquisitions between brokerage firms and mutual fund companies.

Australia’s S & P / ASX 200 index fell 0.5% after authorities warned that an outbreak of COVID-19 in the country’s second most populous state could take weeks to tame.

More than 14 million people have been infected with the novel coronavirus worldwide and nearly 602,000 have died, according to a Reuters tally.

South Korea’s KOSPI slashed its gains to 0.1%. Japan’s Nikkei also fell 0.1% after data showed the country’s exports suffered a double-digit decline for the fourth consecutive month in June.

In the United States, Congress is expected to start discussing a new aid program this week, as several states in the south and west of the country have imposed new locks to curb the virus.

The virus has killed more than 140,000 in the United States since the start of the pandemic, and Florida, California, Texas and other southern and western states are breaking records of new cases every day.

Wall Street futures fell 0.6%. [.N]

In foreign currencies, the dollar climbed 0.2% against the Japanese yen to 107.22. The British pound was stable at $ 1.2570. The risk-sensitive Australian dollar lost 0.1% to $ 0.6989.

In commodities, spot gold fell to $ 1,807.6 an ounce, still near a nine-year high.

Oil prices have fallen, baffled by the prospect of an increase in coronavirus cases interrupting a pickup in fuel demand. US crude and brent both fell 1% each to $ 40.14 per barrel and $ 42.71 per barrel, respectively. [O/R]

Copper prices, a barometer of economic growth, fell on Monday after data showed an increase in stocks in Chinese warehouses and, fears that the increase in coronavirus cases threatened a lasting global recovery.

Reporting by Ritvik Carvalho; additional reporting by Swati Pandey and Sumeet Chatterjee in Sydney; edited by Larry King

Our standards:Thomson Reuters Trust Principles.


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