Real Estate Leads European Stock Gains; Oil Rises: Markets Wrap

(Bloomberg) — European real estate shares headed for their biggest three-day advance since March, while oil rose as traders weighed supply cuts.

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Global stock market trading was light on Tuesday, with US exchanges closed for the Independence Day holiday. Europe’s Stoxx 600 was higher on trading volume that was a third lower than the 30-day average. US futures were little changed, while Canada’s benchmark equity gauge rose.

Real estate led gains among European industrial groups as Swedish property manager Castellum AB jumped while DNB Bank ASA recommended buying the stock due to its attractive valuation. Belgium’s Warehouses de Pauw CVA rose after raising its earnings outlook.

The deal activity also sparked investor interest on Tuesday. Vienna-based OMV AG surged after Bloomberg News reported that the company and Abu Dhabi had agreed to create a chemical and plastics company worth more than $30 billion.

Meanwhile, shares of Casino Guichard-Perrachon SA were suspended after rising 16%, as the French retailer received offers from Czech billionaire Daniel Kretinsky and a group led by telecom billionaire Xavier Neil.

After stocks rallied in the first half of the year, investors are concerned that higher rates and a worsening economic backdrop will limit gains from here. Friday’s nonfarm payrolls report will be closely watched for signs of the trajectory of monetary policy, before the focus turns to next week’s earnings season.

Meanwhile, strategists are increasingly warning about risks to US stocks after a steep rally in the first half. Chris Montagu of Citigroup Inc. said the positioning looks “very extended” and cited data showing that investors flocked to bullish bets on US stock futures at the end of June.

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Among other notes of caution, strategists at Goldman Sachs Group Inc. wrote that it is too early to dismiss the risk of higher interest rates weighing on stocks. On Monday, a significant portion of the Treasury yield curve approached its most inverted level in decades, with the two-year note yield surpassing the 10-year rate by as much as 110.8 basis points. .

“We remain cautious on equities amid a broadly muted economic backdrop,” said Luca Paolini, chief strategist at Pictet Asset Management. “A gap has opened between earnings expectations and leading economic indicators. At some point, the gap must close. Either the economy will recover – which we think is unlikely – or equities will reverse.

Elsewhere, Brent crude traded near $76 a barrel as oil traders weighed the effects of output cuts. On Monday, Saudi Arabia said it would extend a unilateral 1 million barrel-a-day supply cut until August, a move traders had expected. Russia has announced a reduction in exports, while Algeria plans to make more modest curbs.

In Asia, Sri Lankan stocks jumped the most in more than a year as a domestic debt restructuring plan eased concerns over the stability of the financial sector. Japan’s Nikkei 225 fell from its highest level since 1990.

Pakistan’s rupee has rallied against the dollar on hopes that the International Monetary Fund’s bailout will boost demand for the country’s assets.

Shares of Chinese non-ferrous metal companies rose after the government imposed export restrictions on gallium and germanium in an escalation of the technology trade war with the US and Europe. Metals are important for the semiconductor sector, telecommunications and electric vehicles.

Main events this week:

• China Caixin services and composite PMI, Wednesday

• Eurozone S&P Global Eurozone service PMI, PPI, Wednesday

• The International Seminar of OPEC, speakers including the oil ministers of OPEC +, began in Vienna, Wednesday

• The FOMC issued the minutes of the June policy meeting on Wednesday

• New York Fed President John Williams in a “fireside chat” at the meeting of the Central Bank Research Association at the New York Fed, Wednesday

• First US jobless claims, trade, ISM services, job openings, Thursday

• Dallas Fed President Lorie Logan addresses a panel on policy challenges for central banks at the CEBRA meeting, Thursday

• US unemployment rate, nonfarm payrolls, Friday

• Christine Lagarde of the ECB spoke at an event in France, Friday

Some of the main movements in the markets today:

Stocks

• S&P 500 futures were little changed at 2:17 p.m. New York time

• Dow Jones Industrial Average futures fell 0.1%, more than any closing loss since June 28

• Nasdaq 100 futures fell 0.1%

• The MSCI Asia Pacific Index was little changed

• The MSCI Emerging Markets Index rose 0.3%, rising for the third day in a row, its longest streak since June 16.

Money

• The Bloomberg Dollar Spot Index fell 0.1%, falling for the third day in a row, its longest losing streak since June 15

• The euro fell 0.2% to $1.0895

• The British pound rose 0.2% to $1.2723

• The Japanese yen rose 0.1% to 144.51 per dollar

• The offshore yuan rose 0.3%, more than any closing gain since June 15

• The Mexican peso rose 0.1% to the highest in more than seven years

Cryptocurrencies

• Bitcoin fell 0.7% to $30,915.08

• Ether fell 0.4% to $1,951.76

Bonds

• The yield on 10-year Treasuries was little changed at 3.85%

• Germany’s 10-year yield rose two basis points to 2.45%

• Britain’s 10-year yield fell two basis points to 4.42%

Commodities

• West Texas Intermediate crude rose 2% to $71.16 a barrel

• Gold futures rose 0.2% to $1,933.20 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Jason Scott, April Ma, Ruth Carson, John Viljoen, Tassia Sipahutar, Sagarika Jaisinghani and Sebastian Boyd.

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