Investors Bet on Recovery Ahead of Data
Enviado: 28/7/2003 11:30Reuters
Investors Bet on Recovery Ahead of Data
Monday July 28, 6:11 am ET
By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - Investors bet on a rebounding world economy on Monday, piling into stocks and deserting government bonds ahead of a raft of key economic reports that should show whether a rosier future is in the offing.
The dollar was firm across the board against major currencies, boosted by prospects for growth in the world growth engine the United States.
Key data to be released later in the week were expected to give investors a clearer view of whether financial markets have got ahead of themselves or if a sustained global rebound is really marking the end of a more than three-year slump.
"U.S. data continues to point to economic recovery," American Express Bank wrote in its weekly outlook. "The expectation is that the data will continue to improve."
Among the releases are U.S. consumer confidence on Tuesday, U.S. second-quarter growth and jobless claims on Thursday; and U.S. and euro zone manufacturing surveys on Friday along with U.S. employment.
A first taste came on Monday when Germany's key Ifo business climate index improved for the third straight month in July to its highest level in a year.
"It's an important figure because it shows that the expectations for recovery in Germany aren't just something the financial markets have dreamt up," said Volker Nitsch, an economist at Bankgesellschaft Berlin.
The report was the latest in a series of indications that the global economy is on the mend. A surprisingly strong U.S. durable goods report on Friday helped send the Dow Jones industrial average to a five-week high.
Strategists have also noted a turnaround in corporate earnings expectations and numerous better-than-expected reported results.
STOCKS, BONDS, DOLLAR
U.S. gains and the more positive economic outlook drove European and Asian shares higher.
The FTSE Eurotop 300 index was up 1.42 percent while the DJ Euro Stoxx 50 index gained 1.91 percent.
On individual bourses, Britain's FTSE 100 index was up 0.78 percent, Germany's DAX gained 1.87 percent up, and France's CAC 40 was 2.13 percent stronger.
The Swiss SMI was 1.36 percent firmer at 5,012, marginally below its 2003 peak of 5,032 struck earlier.
"Sectoral shifts now underway offer some clues about how investors are repositioning themselves for a post-summer upturn. In Europe and the U.S. we see growing evidence of a call on cyclical recovery," said Anais Faraj, a strategist at Nomura.
Earlier, Japan's key Nikkei average finished up 1.99 percent at 9,839.91, closing above 9,800 for the first time since July 10. The benchmark has risen for three of the past four sessions after hitting a three-week low of 9,485.97 last Tuesday.
The broader TOPIX index closed Monday up 1.52 percent at 959.69, also a three-week high.
The bourse gains hit government bond prices, sending their yields higher and adding to the debt sell off that began in mid-June.
Ten-year U.S. Treasury note yields were at nearly eight-month highs in London at 4.22 percent.
Europe's interest rate-sensitive two-year Schatz yield was up 4.3 basis points at 2.319 percent but off a two-and-a-half-month high of 2.37 percent struck last Tuesday.
The 10-year Bund yield was up 5.8 basis points at 4.077 percent, but off the two-and-a-half-month high at 4.14 percent struck last Tuesday.
On foreign exchange markets, the dollar was boosted by the upbeat tone in equity markets and Wall Street's strong close on Friday.
The euro was a third of a percent lower on the day at $1.1476, almost a cent off Friday's three-week peak and 4.5 cents below its record peak set in May and June.
The dollar was two-thirds of a percent up at 119.43 yen and had gained nearly half a percent on the Swiss franc to 1.3483 francs.
Investors Bet on Recovery Ahead of Data
Monday July 28, 6:11 am ET
By Jeremy Gaunt, European Investment Correspondent
LONDON (Reuters) - Investors bet on a rebounding world economy on Monday, piling into stocks and deserting government bonds ahead of a raft of key economic reports that should show whether a rosier future is in the offing.
The dollar was firm across the board against major currencies, boosted by prospects for growth in the world growth engine the United States.
Key data to be released later in the week were expected to give investors a clearer view of whether financial markets have got ahead of themselves or if a sustained global rebound is really marking the end of a more than three-year slump.
"U.S. data continues to point to economic recovery," American Express Bank wrote in its weekly outlook. "The expectation is that the data will continue to improve."
Among the releases are U.S. consumer confidence on Tuesday, U.S. second-quarter growth and jobless claims on Thursday; and U.S. and euro zone manufacturing surveys on Friday along with U.S. employment.
A first taste came on Monday when Germany's key Ifo business climate index improved for the third straight month in July to its highest level in a year.
"It's an important figure because it shows that the expectations for recovery in Germany aren't just something the financial markets have dreamt up," said Volker Nitsch, an economist at Bankgesellschaft Berlin.
The report was the latest in a series of indications that the global economy is on the mend. A surprisingly strong U.S. durable goods report on Friday helped send the Dow Jones industrial average to a five-week high.
Strategists have also noted a turnaround in corporate earnings expectations and numerous better-than-expected reported results.
STOCKS, BONDS, DOLLAR
U.S. gains and the more positive economic outlook drove European and Asian shares higher.
The FTSE Eurotop 300 index was up 1.42 percent while the DJ Euro Stoxx 50 index gained 1.91 percent.
On individual bourses, Britain's FTSE 100 index was up 0.78 percent, Germany's DAX gained 1.87 percent up, and France's CAC 40 was 2.13 percent stronger.
The Swiss SMI was 1.36 percent firmer at 5,012, marginally below its 2003 peak of 5,032 struck earlier.
"Sectoral shifts now underway offer some clues about how investors are repositioning themselves for a post-summer upturn. In Europe and the U.S. we see growing evidence of a call on cyclical recovery," said Anais Faraj, a strategist at Nomura.
Earlier, Japan's key Nikkei average finished up 1.99 percent at 9,839.91, closing above 9,800 for the first time since July 10. The benchmark has risen for three of the past four sessions after hitting a three-week low of 9,485.97 last Tuesday.
The broader TOPIX index closed Monday up 1.52 percent at 959.69, also a three-week high.
The bourse gains hit government bond prices, sending their yields higher and adding to the debt sell off that began in mid-June.
Ten-year U.S. Treasury note yields were at nearly eight-month highs in London at 4.22 percent.
Europe's interest rate-sensitive two-year Schatz yield was up 4.3 basis points at 2.319 percent but off a two-and-a-half-month high of 2.37 percent struck last Tuesday.
The 10-year Bund yield was up 5.8 basis points at 4.077 percent, but off the two-and-a-half-month high at 4.14 percent struck last Tuesday.
On foreign exchange markets, the dollar was boosted by the upbeat tone in equity markets and Wall Street's strong close on Friday.
The euro was a third of a percent lower on the day at $1.1476, almost a cent off Friday's three-week peak and 4.5 cents below its record peak set in May and June.
The dollar was two-thirds of a percent up at 119.43 yen and had gained nearly half a percent on the Swiss franc to 1.3483 francs.