Stock markets are off to a positive start this week, led by a 1.5% gain from Italy’s FTSE MIB, which is rallying on the back of news that two troubled Italian banks are being rescued, by a combination of the government and Intesa Sanpaolo.
The government has agreed to provide up to €17bn of financial support, while Intesa has agreed to acquire certain assets. Meanwhile, former Italy prime minister Silvio Berlusconi's party apparently did well, outperforming current PM Paolo Gentiloni's party and the Euroskeptic Five Star movement.
Gold and JPY are trading lower today, indicating that markets sees these developments as easing political and banking sector risks in the country.
Positive sentiment from Italy and 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 Lawrence Schembri is holding a closed meeting with the Albany Club today at 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 after Boeing did well at last week's Paris Air Show.
Significant economic announcements released overnight:
Germany IFO business climate 115.1 vs street 114.5
Germany IFO expectations 106.8 vs street 106.4
Germany IFO current 124.1 vs street 123.2
Upcoming significant economic announcements:
8:30 am EDT US durable goods orders street (0.6%)
8:30 am EDT US durables ex transport street 0.4%
TBA Bank of Canada Deputy Governor Schembri speaks to the Albany Club
10:30 am EDT US Dallas Fed street 16.0 vs previous 17.2
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