Euro, Stocks Climb as Traders Focus on Ukraine: Markets Wrap

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(Bloomberg) — The euro gained in early trading with Eastern European currencies as the region’s leaders scrambled to offer Ukraine their support amid concerns of a US pullback.

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The common currency rose 0.4% against the dollar, outperforming major peers and paring some of last week’s loss. The Polish zloty and Romanian leu also advanced. Asian stocks advanced, with gains in Hong Kong underpinned by a rally in technology shares.

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Markets are starting the week with geopolitics dominating as European leaders assemble what Britain called a “coalition of the willing” to secure Ukraine following an Oval Office clash between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy. China is also due to stage its biggest political huddle of the year just as US tariffs threaten to test Beijing’s ability to boost economic momentum.

“The US turnaround is certainly a historic opportunity for Europe to tackle the subject of an autonomous European defense with potentially very positive economic ramifications since we know that many innovations with military application can have significant civilian benefits – the internet for example,” said Christopher Dembik, senior investment manager at Pictet Asset Management. “But beware of excessive optimism.”

Bitcoin edged lower after a Sunday rally with Trump talking up his plan for a strategic crypto reserve.

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In Asia this week, traders’ hopes are running high that a ramp-up in fiscal spending will be announced at China’s National People’s Congress to bolster domestic demand, offsetting the risk of US tariffs and sustain this year’s blistering rally. 

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“We are reasonably confident the AI-driven optimism and momentum in Hang Seng is here to stay in the near-term, but a period of consolidation is warranted following the record year-to-date gains,” said Wee Khoon Chong, a senior strategist at BNY. 

Investors are waiting for news of any last minute negotiations to avoid a further increase in US trade tariffs on Chinese goods that are due to come into effect this week along with levies on Mexico and Canada. 

Meanwhile, the prospect of a surge in defense spending by European countries has led to a sharp rally in the shares of companies involved in the sector, such as Germany’s Rheinmetall AG, the UK’s BAE Systems Plc and Rolls-Royce Plc as well as Italy’s Leonardo SpA. Still, German and French bond futures dropped amid concern about rising debt issuance by the bloc. 

“Europe is getting ready to stand up for itself — this reflects a structural change within Europe,” which has driven some of the rotation away from the US this year, Kieran Calder, Union Bancaire Privee SA head of equity research for Asia. “For China overall, we’re still a bit negative.”

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Australian and Japanese shares rose on Monday along with the benchmark in Hong Kong. Mixue Group, China’s largest bubble-tea chain, surged in its trading debut in the city.

In other corporate news, Prada SpA is moving closer to a deal to buy Versace from Capri Holdings Ltd. after agreeing to a price of nearly €1.5 billion ($1.6 billion), according to people familiar with the matter. Prada’s shares rose as much as 3.9% in Hong Kong Monday.

Elsewhere, growth data in Australia as well as inflation readings in Latin America are due this week. The European Central Bank will give a policy decision after inflation readings in France and Italy last week supported the case for further cuts. Trump will also address a joint session of Congress just as two polls suggest he’s losing support from Americans concerned about the economy and inflation. 

In commodities, oil rose at the start of the week as the market prepared for Trump’s tariffs. Gold gained.

Key events this week: 

• China Caixin manufacturing PMI, Monday
• Eurozone CPI, HCOB manufacturing PMI, Monday
• UK S&P Global manufacturing PMI, Monday
• Japan unemployment, Tuesday
• Eurozone unemployment, Tuesday
• US President Donald Trump’s speech to a joint session of Congress, Tuesday
• Australia GDP, Wednesday
• China Caixin services PMI, Wednesday
• China’s National People’s Congress, Wednesday
• Eurozone HCOB services PMI, PPI, Wednesday
• BOE Governor Andrew Bailey and colleagues speak, Wednesday
• Eurozone retail sales, ECB rate decision, Thursday
• Eurozone GDP, Friday
• US nonfarm payrolls, consumer credit, Friday

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Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 11:41 a.m. Tokyo time
• Japan’s Topix rose 1.3%
• Australia’s S&P/ASX 200 rose 0.5%
• Hong Kong’s Hang Seng rose 1.7%
• The Shanghai Composite rose 0.7%
• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.4% to $1.0419
• The Japanese yen rose 0.1% to 150.43 per dollar
• The offshore yuan was little changed at 7.2878 per dollar

Cryptocurrencies

• Bitcoin fell 1.3% to $93,105.78
• Ether fell 3.4% to $2,439.16

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.24%
• Australia’s 10-year yield advanced three basis points to 4.32%

Commodities

• West Texas Intermediate crude rose 0.9% to $70.38 a barrel
• Spot gold rose 0.4% to $2,870.15 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Greg Ritchie, Matthew Burgess, Julien Ponthus, Allegra Catelli and John Cheng.

(An earlier version corrected Zelenskiy’s title.)

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