Global Market Reviews

European stocks climbed higher Monday, with optimism regarding the global economic outlook continuing to prompt investors into pushing more cash into the equity asset class.

By 0805 GMT, the Dow Jones pan-European Stoxx 600 index was up 0.6% at 220.9. London’s FTSE 100 index was 0.2% higher at 4587.65, Frankfurt’s DAX index pushed up 0.8% to 5269.14 and the CAC-40 index in Paris up 0.7% at 3388.33.

This session’s rally follows several days of straight gains, with London’s
FTSE heading for its eleventh day of consecutive gains, its longest winning
streak for four years.

ING described the current optimism as “infectious” with analysts moving
recommendations in a positive direction and upgrading earnings forecasts. “This should underpin recent gains and is likely to add further fuel to the rally,” the brokerage said.

It noted that in March, earnings momentum was negative in all sectors, except health. Now half of all sectors are seeing upgrades, led by resources,
financials and technology.

A “quite chunky” supply of government bonds in Italy this week is being offset by coupon and redemption proceeds out of Spain, and “we think the recent outperformance of the latter in the broader country spread compression may have further to run,” says Nomura International. That said, it says, (yield) differentials have covered some distance already and are especially susceptible to a reversal of the “re-risking” them, it adds.

Bunds remain in negative territory Monday, but are showing little immediate reaction to the latest euro zone money supply data which show the M3 measure growing by 3.5% in the year to June, in line with market expectations. The September bund futures contract is currently down 0.17
on the day at 120.16, unchanged from prior to the numbers. The 10-year bund is down 0.26 at 100.00, yielding 3.50%, unchanged from prior to the money supply data.