London — Global shares edged up on Tuesday, helped by
bank gains after Italy’s largest lender unveiled a €13bn share issue and
the dollar held steady before the US Fed’s expected decision to raise
interest rates.
UniCredit launched Italy’s biggest share issue to clean up its balance sheet and boost profitability in the latest move to strengthen the Italian banking sector, a cloud over the outlook for European stocks.
UniCredit shares rose 6.8%, an index of Italian banks rose 2.7% as the pan-European STOXX 600 share index gained 0.6%. Markets were otherwise focused on the two-day Fed meeting, which is almost certain to conclude with only the second rise in US interest rates since the global financial crisis.
While a hike of 25 basis points in the Fed’s target range of 0.25%-0.50% is priced in, investors will be examining the Federal Reserve’s statement and economic forecasts for any signs of how the central bank thinks Donald Trump’s election has affected the outlook for growth and inflation.
"The big question is what sort of pace can we expect from the Fed for next year?" said Kaneo Ogino, director at foreign exchange research firm Global-info in Tokyo.
The dollar barely moved against a basket of leading currencies. The euro fell 0.1% to $1.0624 and the yen fell 0.2% to 115.24 a dollar.
But sterling rose 0.2% to $1.27, buoyed by comments from Chancellor of the Exchequer Philip Hammond that Britain should have a transition period to smooth its EU exit. Data showed UK consumer prices rose 1.2% year-on-year last month, their biggest rise since October 2014.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1% while Japan’s Nikkei stock index shrugged off losses as the yen pulled off its highs and ended 0.5% higher.
Global shares, as measured by MSCI’s all-country world index, rose 0.1%, but held below Monday’s 16-month high, touched as crude oil prices surged after Opec and other producers struck their first deal since 2001 to curb output.
Brent crude, the international benchmark, rose 0.1% on Tuesday to $55.74 a barrel, but traded well below Monday’s high of $57.89.
Italy’s efforts to clean up its banks — the treasury said on Monday it was ready to bail out Monte dei Paschi di Siena if necessary — pushed yields on its government debt lower and the premium Italy pays to borrow compared with Germany squeezed to its narrowest in more than a month.
Italian 10-year yields fell seven basis points to 1.94% while German equivalents fell 4bps to 0.37%. This followed new Prime Minister Paolo Gentiloni announcing an almost unchanged cabinet on Monday.
DZ Bank strategist Christian Lenk said: "The markets appear to be taking the developments in the banking sector quite positively. The cabinet chosen by Gentiloni has reassured investors."
Gold, which is highly sensitive to rising US interest rates as they lift the opportunity cost of holding nonyielding assets, fell 0.3% to just below $1,160 an ounce.
Reuters/
UniCredit launched Italy’s biggest share issue to clean up its balance sheet and boost profitability in the latest move to strengthen the Italian banking sector, a cloud over the outlook for European stocks.
UniCredit shares rose 6.8%, an index of Italian banks rose 2.7% as the pan-European STOXX 600 share index gained 0.6%. Markets were otherwise focused on the two-day Fed meeting, which is almost certain to conclude with only the second rise in US interest rates since the global financial crisis.
While a hike of 25 basis points in the Fed’s target range of 0.25%-0.50% is priced in, investors will be examining the Federal Reserve’s statement and economic forecasts for any signs of how the central bank thinks Donald Trump’s election has affected the outlook for growth and inflation.
"The big question is what sort of pace can we expect from the Fed for next year?" said Kaneo Ogino, director at foreign exchange research firm Global-info in Tokyo.
The dollar barely moved against a basket of leading currencies. The euro fell 0.1% to $1.0624 and the yen fell 0.2% to 115.24 a dollar.
But sterling rose 0.2% to $1.27, buoyed by comments from Chancellor of the Exchequer Philip Hammond that Britain should have a transition period to smooth its EU exit. Data showed UK consumer prices rose 1.2% year-on-year last month, their biggest rise since October 2014.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1% while Japan’s Nikkei stock index shrugged off losses as the yen pulled off its highs and ended 0.5% higher.
Global shares, as measured by MSCI’s all-country world index, rose 0.1%, but held below Monday’s 16-month high, touched as crude oil prices surged after Opec and other producers struck their first deal since 2001 to curb output.
Brent crude, the international benchmark, rose 0.1% on Tuesday to $55.74 a barrel, but traded well below Monday’s high of $57.89.
Italy’s efforts to clean up its banks — the treasury said on Monday it was ready to bail out Monte dei Paschi di Siena if necessary — pushed yields on its government debt lower and the premium Italy pays to borrow compared with Germany squeezed to its narrowest in more than a month.
Italian 10-year yields fell seven basis points to 1.94% while German equivalents fell 4bps to 0.37%. This followed new Prime Minister Paolo Gentiloni announcing an almost unchanged cabinet on Monday.
DZ Bank strategist Christian Lenk said: "The markets appear to be taking the developments in the banking sector quite positively. The cabinet chosen by Gentiloni has reassured investors."
Gold, which is highly sensitive to rising US interest rates as they lift the opportunity cost of holding nonyielding assets, fell 0.3% to just below $1,160 an ounce.
Reuters/
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