MARKET WRAPS
Stocks:
European stocks rose Monday, building on last week's higher close, as investors prepare for further corporate earnings and look ahead to U.S. economic data for a view on the Federal Reserve's future policy.
European equities followed Asian peers higher at the opening bell with the region's top indexes in positive territory. The FTSE 100, the CAC 40 and the DAX posted gains, supported by industrial and tech names, while banks lifted the FTSE MIB and the IBEX 35.
Also boosting stocks in London were miners supported by precious-metal prices .
European oil stocks traded down, however, as oil prices slipped with BP, TotalEnergies, Eni and Repsol falling.
All of this as investors have a meager week ahead as it pertains to European economic data.
The highlight will be the second estimate eurozone gross domestic product as well as unemployment data for the fourth quarter on Friday. Other data are France's fourth-quarter unemployment figures on Tuesday and Spanish CPI on Friday.
In the U.K.. fourth-quarter GDP data are due Thursday, so too will the country's industrial production data for December. Thursday's figures will be closely watched after investors brought forward their expectations for when rates will be cut again following the Bank of England's interest-rate decision.
Economic Insight
The Recruitment and Employment Federation's report on jobs in the U.K. showed improving sentimen t in January, Pantheon Economics said.
"Hiring is recovering as policy uncertainty eases and economic activity picks up in the wake of the budget. We take encouragement from the latest improvement and think that hiring sentiment has further to improve in Q1 as growth quickens."
U.S. Markets:
Stock futures pointed to a mixed open Monday as investors look forward to key economic insights in the week ahead including Wednesday's U.S. monthly nonfarm payrolls data.
Forex:
The euro rose against the dollar, which weakened after Japan's Lower House election resulted in a landslide victory for Prime Minister Sanae Takaichi's ruling coalition.
The dollar fell against a basket of currencies after Japan's Sunday's election.
"The landslide victory will reinforce her responsible but expansionary fiscal spending and a more Japan-focused foreign policy. Risk-on sentiment will dominate the market for now," ING said.
With political uncertainty resolved in Japan after the country's lower house election, rate differentials should emerge as the dominant driver of the U.S. dollar/Japanese yen , SEB said, adding that demand for yen will likely pick up.
"Moreover, foreign investor appetite for FX-hedged Japanese government bonds will likely remain as U.S. bonds yields are capped by Federal Reserve easing."
The yen's downward trend was likely to continue amid fiscal concerns , unless the Japanese government carries out actual currency intervention, Mitsubishi UFJ Morgan Stanley Securities said. The brokerage expects the yen to reach 160 against the dollar by the end of the year.
Now that Japan's election is over, the market's focus is shifting to the U.S. economy, the strategists say.
"We could see a scenario where selling pressure on the dollar intensifies if policy uncertainty surrounding the Trump administration or concerns over a U.S. economic slowdown mount."
Bitcoin declined from intraday highs but remained above $70,000 amid risk-on sentiment following the election victory of Japanese Prime Minister Sanae Takaichi's ruling coalition.
Bonds:
Eurozone government bond yields rose in line with global bond yields following the Japanese Lower House election and ahead of this week's bond supply.
"A supermajority in the lower house will make it easier for her coalition to pass legislation and put the contentious issue of constitutional amendment back on the table," Saxo said of Prime Minister Sanae Takaichi's coalition win.
Low volatility in eurozone rates markets encourages risk taking, according to LBBW. Expectations of stable key interest rates for the eurozone is an important driver, as they contribute to low volatility on the euro interest-rate market.
"In our opinion, this encourages risk-taking on the part of many investors," it said.
Treasury yields rose in Asian trade where markets were focused on the election victory of Japan's Prime Minister Sanae Takaichi's ruling coalition. The next potential driver for Treasurys is the delayed January job report due on Wednesday.
Long-dated JGB yields could face upward pressure on Japanese PM Sanae Takaichi's landslide election win, according to Invesco.
"More proactive fiscal spending aimed at reflating the economy could increase both fiscal and inflationary risk," it said.
Energy:
Oil prices fell 1% in early trading as investors closely monitored developments in U.S.-Iran negotiations.
Metals:
Gold prices rose back above the $5,000 mark on a softer dollar and as traders waited for the release of key U.S. data later this week.
"Investors reasserted their long-term bullish views on the precious metal," ANZ said. Silver, meanwhile, climbed 6% to $81.55 an ounce.
Gold was likely to trade within a range, Pepperstone said.
Geopolitical uncertainty, sustained central-bank buying and a temporarily weaker dollar are likely to collectively provide support, but a lack of fresh catalysts is likely to constrain the yellow metal's upside, it said.
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GLOBAL NEWS
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02-09-26 0509ET
