Stock markets are off to a positive start this week led by a 1.5% gain by Italy’s FTSE MIB, which is rallying on the back of news that two troubled Italian banks are being rescued / taken over by a combination of the government and Intesa Sanpaolo (MI:ISP).
The government has agreed to provide up to €17B of financial support while Intesa has agreed to acquire certain assets. Meanwhile, former PM Berlusconi’s party apparently did well, outperforming current PM Gentiloni’s party and the Euroskeptic Five Star movement. Gold and JPY are trading lower today, indicating that the street sees these developments as easing political and banking sector risks in the country.
Positive sentiment from Italy, or positive Germany IFO survey results have not carried through to the euro, which is underperforming sterling and the US dollar today. GBP has picked up on the news that the Conservatives have reached a formal deal with the Democratic Unionist Party for support in key votes to keep its minority government afloat.
Crude oil continues to rebound today. CAD is climbing again in tandem but also could attract interest rate speculation trading today. Bank of Canada Deputy Governor Schembri is holding a closed meeting with the Albany Club today around midday. Recall that speculation on a rate hike started from a speech by Deputy Governor Wilkins not Governor Poloz, so there’s potential that whatever leaks out to the markets from whatever transpires at this meeting could move the loonie.
US indices are up so far today ahead of durable goods orders. The headline number is expected to be negative again while the ex-transport number is expected to be positive. Next month the headline could do better as Boeing (NYSE:BA) did well at last week’s Paris Air Show.