European financial markets were mildly positive Monday, with the euro up against the dollar, oil and gold firm and stocks a touch higher overall as market participants focus firmly on stimulus plans from the world's most powerful central banks.
Later Monday, Federal Reserve Chairman Ben Bernanke will give a speech on monetary policy, the recovery from the financial crisis and the long-term challenges facing the U.S. economy. Investors will be waiting eagerly for any hints as to when the Fed will put the brakes on monthly bond purchases and for any changes to monetary policy.
The dollar was firmer against the yen after Japan's Prime Minister Shinzo Abe said Sunday that the Bank of Japan needs to state a clear 2% inflation target. The prospect for even looser monetary policy by the Bank of Japan will continue to weigh on the yen. Earlier the dollar traded at Y89.67, its highest since June 25, 2010. Japan's benchmark stock market was closed for a public holiday.
There was further support for markets out of Asia on reports that the head of China's securities regulator said it could substantially increase the quota for foreign investors to invest in domestic stocks as a means to develop the market. "Demand for riskier assets has been unrelenting," said Rabobank in a note to clients.
In addition, investors are looking ahead to a busy week of earnings, particularly from the U.S. bank sector. Goldman Sachs, JPMorgan Chase & Co. and Citigroup are among those reporting earnings.
"A host of earnings this week, especially from financials will help dictate the equity market and in turn risk tone over coming days," said Credit Agricole Corporate & Investment Bank. The Stoxx 600 index for banks was among the biggest gainers early on Monday, while Societe Generale was one of the top gainers in the euro zone following a rating upgrade by Credit Suisse.
Also in corporate news, building materials company Compagnie de Saint-Gobain surged after receiving an offer for Verallia North America from Irish group Ardagh.
TNT Express NV's shares fell by as much as 50% Monday after the European Commission looked set to block United Parcel Service Inc.'s $6.8 billion bid for the company.
Write to Andrea Tryphonides at [email protected] or on Twitter @ATryphonides
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