Overseas Headlines – July 11, 2017


Merkel: ECB policy not yet back to where we want it

The European Central Bank’s monetary policy is not yet where Germany would like it to be, German Chancellor Angela Merkel said, after years of ultra-loose measures designed to keep the euro zone afloat. In a rare comment on the ECB’s policy, which the German government frequently stresses is set independently, Merkel said it was important to make Europe fit again. “We’re not yet back where we want to be in terms of the ECB’s monetary policy,” she told Bavarian industry representatives. “The good news is that all euro zone member states are growing again. Millions of new jobs have been created, encouraging us that we’re on the right path.”




China blue-chips end at 18-month high, small-caps extend losses

China stocks diverged on Tuesday, with the blue-chip index hitting a fresh 18-month high as investors chased companies with solid fundamentals, while small-caps extended a fall on expectations more equity issuance would soften valuations. The blue-chip CSI300 index rose 0.5 percent to 3,670.81 points, while the Shanghai Composite Index lost 0.3 percent to 3,203.04 points. An index tracking 50 blue-chips in Shanghai, dubbed China’s “nifty 50” index, rose 0.8 percent to a 20-month high as investors continued to chase blue-chips with solid fundamentals. This follows MSCI’s decision to include China’s 222 big-caps in its key index. At the smaller end of town, however, the tech-heavy start-up board index ChiNext lost 1.1 percent following a 1.8 percent slump on Monday, with 12 small-cap stocks tumbling the 10 percent trading limit. Small-caps have weakened after the securities regulator approved more initial public offerings over the weekend. China’s central bank resumed open market operations to inject 40 billion yuan ($5.88 billion) into money market on Tuesday, after abstaining from open market operations during the previous 12 sessions.




U.S. Stocks Fluctuate, Dollar Climbs as Crude Dips: Markets Wrap

U.S. stocks edged lower, while the dollar strengthened versus the yen in listless trading before Federal Reserve Chair Janet Yellen testifies to Congress this week and companies begin to deliver second-quarter results. The S&P 500 Index was little changed in weak trading, while technology shares retreated before banks kick off earnings Friday. European equities declined as energy producers slid when crude briefly slumped below $44 a barrel on speculation production caps are being breached. Petro-currencies including Russia’s ruble and Norway’s krone led declines. Bonds extended losses triggered by last week’s hawkish rhetoric from central bankers. The reversal has exposed mounting doubt over a risk rally that has taken stocks to all-time highs. Analysts have started to cut their forecasts for company earnings amid concern valuations are elevated. Central banks are moving towards tighter policy after almost a decade of stimulus even though macro data show a mixed outlook, creating concern they could sap a global growth recovery.