European and Asian stocks rose after the early scare from the latest Fukushima quake dissipated when all Tsunami warnings were cancelled. The global risk on mood was spurred by another jump in crude, which was up 1% in early trading, with the commodity complex now enjoying its biggest three-day rally since May, after Nigeria signaled optimism that OPEC will agree a supply-cut deal next week in Vienna. S&P futures are up 0.3%, with the cash index set to open at new record highs.

With OPEC jawboning having become a daily fixture ahead of the cartel's now almost monthly summits, today was no exception, and earlier in the session, a Nigerian OPEC delegate said he expects details of the Vienna accord to be finalized Tuesday (and if they are not, this will just serve as a basis for a similar headline tomorrow, and then day after, and so on).

“Everyone is on board,” delegate Ibrahim Waya said in Vienna, where OPEC members are meeting to discuss output quotas ahead of the November 30 summit. Brent and WTI both extended gains following the headlines, pushing index futures higher with them.

The commodity story - on hopes of a global fiscal stimulus push - dominated as miners led the MSCI All-Country World Index higher while S&P500 futures on the S&P 500 Index advanced 0.3 percent. On Monday, the American gauge reached a record for the first time since Aug. 15, just as the Dow Jones Industrial Average, Russell 2000 Index and Nasdaq Composite Index hit fresh all-time highs.

Oil reached the strongest level in more than three weeks. Copper headed for its highest close since July 2015. Euro-area bonds rose on optimism the region’s central bank will extend stimulus.

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American shares have been buoyed as companies ended a five-quarter profit slump and Donald Trump’s election to the U.S. presidency fueled speculation of a boost to manufacturing and infrastructure spending. Goldman Sachs Group Inc. said Monday that a renewed acceleration of global factory activity suggests commodity markets are entering a cyclically stronger environment. JPM echoed as much saying in a note that “our regional (U.S., Europe, EM) business cycle indicators are all showing either recovery or expansion phases of the intra-cycle. Across regions, our strongest style conviction for both these phases is overweight Value.”

“The market is a lot more sure of itself now,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. He predicts the S&P 500 will rise another 9.2 percent by the end of 2017. “Stocks are no longer stuck in that frustrating range and we’ve finally broken through to new records. We can move on to pricing in the improving outlook: there are strong signs that the U.S. economy is in good shape and that bodes well for corporate earnings.”

The Stoxx Europe 600 Index added 0.5 percent. A gauge of miners extended its highest level since June 2015, while energy producers advanced with oil on optimism OPEC will agree to reduce output. Enel SpA led an advance in utilities after announcing a plan to cut costs and dispose assets of about 3 billion euros ($3.2 billion). Swiss stocks were lower after Swatch Group lost 2.6% and Richemont fell 2.6% as Swiss watch exports plunged the most in seven years. Banco de Sabadell SA dropped 4.3 percent as its largest shareholder reduced its stake in Spain’s fifth-largest lender. French ophthalmology company Essilor International SA sank 6.8 percent after cutting its 2016 revenue target. The MSCI Emerging Markets Index rose 1.2 percent, trimming this month’s slide to 5.3 percent. The Hang Seng China Enterprises Index gained 2.2 percent to a two-week high, while the Philippine benchmark gauge sank 2.5 percent to the lowest since March 1.

According to Bloomberg, global funds sold about $11 billion of equities and bonds in Asia’s emerging markets after Trump’s victory as Treasury yields climbed, spurring the dollar’s strongest rally in eight years. India suffered the biggest outflows between Nov. 9 and Nov. 18, followed by Thailand, according to calculations by Bloomberg using official data.

Meanwhile Trumpflation took a breather, with both bond yields and the dollar declining for the second consecutive day. Sovereign debt securities advanced across the euro area, with the yield on Italian 10-year bonds sliding eight basis points to 1.99 percent. Yields on similar-maturity Spanish bonds fell six basis points to 1.55 percent, set for the biggest decline since Nov. 2. The region’s highest-rated bonds also advanced as European Central Bank officials have sought in recent speeches to reassure investors that policy divergence with the Fed will be maintained as U.S. interest rates begin to rise. Benchmark German 10-year bonds fell three basis points to 0.24 percent.

Demand for collateral also boosted demand for shorter-dated securities, with the German two-year note yield down three basis points to minus 0.71 percent. The securities do not qualify for purchase under QE because they yield less than the ECB’s deposit rate, which is currently at minus 0.4 percent.

Treasuries advanced for a second day, pushing the 10-year yield down two basis points to 2.29 percent, after sliding four basis points on Monday. Two-year notes declined before a sale of $13 billion of floating notes with that maturity, and $28 billion in five-year securities. That will be followed Wednesday by an offering of $34 billion in seven-year debt securities. the Bloomberg Dollar Spot Index dropped 0.1%, adding to Monday’s 0.4 percent slide, paring an advance that has still left it about 4 percent stronger since the Nov. 8 election. The dollar was little changed at 110.78 yen, after falling earlier by as much as 0.5 percent as a magnitude 7.4 earthquake struck Japan, boosting demand for the nation’s currency as a haven.

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Bulletin Headline Summary from RanSquawk

• European equities buoyed by the all-time highs posted in US indices, alongside the upside in oil prices.
• FX markets dictated by the corrective moves observed in the USD-index which has been testing yesterday's low.
• Looking ahead, highlights include Canadian Retail Sales and the latest API Crude Oil Inventory Report

Market Snapshot

• S&P 500 futures up 0.3% to 2200
• Stoxx 600 up 0.3% to 341
• FTSE 100 up 0.9% to 6838
• DAX up 0.4% to 10723
• German 10Yr yield down 3bps to 0.24%
• Italian 10Yr yield down 10bps to 1.97%
• Spanish 10Yr yield down 8bps to 1.54%
• S&P GSCI Index up 1.3% to 375.3
• MSCI Asia Pacific up 0.9% to 136
• Nikkei 225 up 0.3% to 18163
• Hang Seng up 1.4% to 22678
• Shanghai Composite up 0.9% to 3248
• S&P/ASX 200 up 1.2% to 5413
• US 10-yr yield down 2bps to 2.29%
• Dollar Index down 0.3% to 100.75
• WTI Crude futures up 1.8% to $49.11
• Brent Futures up 2% to $49.90
• Gold spot up 0.3% to $1,218
• Silver spot up 1.6% to $16.86

Global Top News

• KKR to Purchase Nissan-Backed Calsonic Kansei for $4.5 Billion: 1,860 yen/share a 28% premium to last closing price
• Oil Extends Gains as OPEC Shows Signs of Progress on Output Deal: Goldman Sachs ‘tactically bullish’ on oil in short- term
• Fed Hike Is Certainty for Bond Traders as Market Odds Reach 100%: Easy for Fed to raise rates as stocks are gaining: Kuriki
• Bank of America, Bain Said to Consider Bids for Popular Assets: Popular said to eye EU1b, non-performing asset sale
• Disney Adding ’Frozen’ in $1.4 Billion Hong Kong Expansion: Construction will begin 2018 and will be six-year project
• Credit Suisse Said to Face Tax Probe Over Undeclared Accounts: U.S. asks why bank didn’t reveal ‘toxic’ assets
• South Africa Slows Nuclear Plans as Rating Assessments Loom: Energy plan ‘base case’ sees first new nuclear power in 2037

Looking at regional markets, Asia stocks traded higher across the board again following momentum from Wall Street where all 3 major US indices printed fresh-record highs. ASX 200 (+1.2%) was led by gains in the energy and materials sectors after WTI surged 4% amid increased optimism regarding the finalization of OPEC freeze deal, while Nikkei 225 (+0.3%) lagged as JPY strength was seen in early Asia trade following an initial 7.3 magnitude earthquake in Japan that resulted in a tsunami warning. Elsewhere, Shanghai Comp (+1%) and Hang Seng both (+1.6%) conformed to the heightened risk appetite after a firm PBoC liquidity injection and gains in commodities which saw Dalian iron ore futures hit limit up. Finally, 10yr JGBs traded marginally higher with support seen following an enhanced liquidity auction which showed a significant increase of allotted bids at the highest spread, while the BoJ also commented that they will continue with fixed-rate operations when needed. A magnitude 7.3 quake rattled Fukushima in Japan and resulted to a Tsunami warning issued. However, the tsunami warning and alerts were later lifted and Japanese finance minister Aso stated that no major damage was observed from the earthquake.

Top Asian News

• All Tsunami Alerts Lifted After Earthquake Rocks Northern Japan: Cooling system briefly knocked offline at Fukushima plant
• China Tells Trump That Ties With U.S. Are ‘Too Big to Fail’: Communist Party’s top newspaper emphasizes mutual benefits
• Taiwan Airline TransAsia to Shut Down After Suffering Losses: Unable to repay convertible bonds due Nov. 29, carrier says
• Chinese-Made $100B City Near Singapore ’Scares Everybody’: Planeloads of buyers fly in as condos rise from the sea
• Anbang Said Near $2.3 Billion Property Deal With Blackstone: Chinese insurer bids on Japan residential property assets
• China Formally Arrests Crown Staff Amid Gambling Crackdown: Employees to be held for initial two months for investigations
• Chow Tai Fook Profit Falls 22% as Chinese Jewelry Slump Eases: Net income dropped to HK$1.22b for six months ended Sept.
• China Selfie App Said in Talks for $5 Billion Valuation in IPO: International, Chinese investors split over proper value
• Singapore Says Private Banks Should Reveal Rebates on Bond Sales: Firms defaulted on S$1.1b of bonds in past 12 months

In Europe, rhe FTSE 100 (+0.9%) is Europe's top performing stock index as mining stocks continue to climb, with the top performer in the index Anglo American, up 5%. Elsewhere equities are broadly in the green, but the SMI is the lone loser in the wake of the biggest fall in Swiss watch export data for 7 years and with Swatch (-3.7%) the worst performer. In fixed income markets, Bunds trade higher this morning amid light volumes and as participants react to the comments seen from ECB's Draghi yesterday afternoon. Analysts at Informa note that some are interpreting the comments as a firm hint that there could be an extension to QE at the Dec 8th meeting.

Top European News

• Banco Sabadell Drops as Largest Shareholder Gilinski Cuts Stake: Gilinski sold 168.4m shares at 1.20 euros each
• U.K. Government Sells Shares in Lloyds; Stake Below 8 Percent: Latest sale raised the total amount recovered to GBP17b
• Air Berlin Said to Seek Funding Via Etihad Stake in Niki Arm: Transaction would precede merger of Austrian unit with TUIfly
• Swiss Watch Exports Have Biggest Monthly Drop in Seven Years: Thirteen of top 15 markets for timepieces were negative
• VW to Make E-Cars in North America in Post-Crisis Recovery Push: Production in that region will start in 2021
• Enel Jumps Most Since June on Share Buyback, Strategic Plan: Enel increases 2017 dividend to 65 percent of net income
• Daimler Removes China Truck Executive After Parking Lot Argument: Says dispute was unbecoming and prejudicial to name
• Julius Baer Said to Hire Singapore Private Bankers From BSI: Singapore withdrew BSI’s local licence in May for 1MDB links

In currencies, the Bloomberg Dollar Spot Index dropped 0.1%, adding to Monday’s 0.4 percent slide, paring an advance that has still left it about 4 percent stronger since the Nov. 8 election. The dollar was little changed at 110.78 yen, after falling earlier by as much as 0.5 percent as a magnitude 7.4 earthquake struck Japan, boosting demand for the nation’s currency as a haven. South Africa’s rand led currencies higher in the developing world on Tuesday, climbing 1.2 percent. The government delayed plans to build nuclear power plants for a nuclear program estimated to cost $37 billion to $100 billion. South Korea’s won advanced 0.9 percent, the second-biggest gain, followed by the Mexican peso and Russian rubble.

In commodities copper added another 1.6% to $5,650 a ton on the London Metal Exchange. All non-ferrous metals rose, while iron ore and steel in China surged limit up. Anglo American Plc and Vedanta Resources Plc led mining shares higher. Oil advanced for a third day on signs OPEC members have made progress toward finalizing a deal to cut output. January futures rose as much as 1.5 percent in New York after the December contract expired 3.9 percent higher Monday. Silver led precious metals higher, climbing 1.5 percent to $16.83 an ounce. Investors have continued paring holdings in bullion-backed funds in anticipation of a rate increase by the Federal Reserve next month. West Texas Intermediate crude for January delivery rose 1.5 percent to $48.95 a barrel on the New York Mercantile Exchange. Gold added 0.3 percent.

Looking at the day ahead, the focus in the US will be on the October existing home sales data, while the Richmond Fed’s manufacturing survey is also due out for this month. Away from the data the latest central banker to speak will be the BoE’s Forbes who is scheduled to address an audience this morning in London.

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US Event Calendar

• 8:55am: Redbook weekly sales
• 10am: Richmond Fed Manufacturing Index, Nov., est. 0 (prior -4)
• 10am: Existing Home Sales, Oct., est. 5.44m (prior 5.47m)
• 4:30pm: API weekly oil inventories

DB's Jim Reid concludes the overnight wrap

As you mull over that with your morning coffee, markets have certainly started the week on a brighter note. Risk assets can thank the moves in Oil for that after WTI surged +3.94% yesterday to close at $47.49/bbl and to the highest price this month. It’s up another +0.89% this morning too. As the clock ticks down to the OPEC meeting on November 30th the latest fresh round of jawboning appears to have gotten the market excited again that the finer production freeze details will be agreed upon. Indeed comments from two of OPEC’s more reluctant members, namely Iran and Iraq, were seen as fuelling yesterday’s rally with Iran’s oil minister in particular saying that ‘it’s highly probably’ that OPEC will reach a consensus.

It was unsurprisingly then that the energy sector led the way with the end result being a fairly remarkable statistic for US equity markets in that we saw the S&P 500 (+0.75%), Dow (+0.47%), Nasdaq (+0.89%) and Russell 2000 (+0.50%) indices all simultaneously reach fresh all time highs for the first time since 1999. CDX HY spreads were also some 8bps tighter by the close while the relentless selloff for US Treasuries also finally abated with the 10y yield finishing nearly 4bps lower at 2.316%. That is only the second time in two and a bit weeks that yields have fallen during the course of a day. Meanwhile in Europe the Stoxx 600 edged up +0.25% with gains for the energy complex also a feature. In France the CAC returned +0.56% following the surprising weekend primary results. A bit more on that shortly.

Onto the latest this morning where the positive momentum has continued into the Asia session. The Hang Seng (+1.35%), Shanghai Comp (+0.73%), Kospi (+0.81%) and ASX (+1.18%) are all trading with decent gains in the early going. The Nikkei (+0.19%) is back in positive territory and has wiped out earlier losses following the news that a 7.4 magnitude earthquake had struck just off the coast of Fukushima. That sparked a typhoon warning for the region but all tsunami alerts have since been lifted. The Yen was fairly choppy in and around the headlines but it’s currently little changed. Elsewhere credit indices in Asia-Pacific are also generally trading with a better tone with indices around 2bps tighter. There’s also some focus on a video message released by President-elect Trump last night in which he outlined that he intends for the US to quit the TPP trade deal on his first day in the White House, and so following through on one of his campaign promises.

Moving on. Back to France and following the surprise margin of victory in the first-round centre-right primary for ex-PM Filllon, our European economists now note (in their report titled France:Centre-right primaries, published yesterday) that Fillon is the favourite to win the centre-right primary. In terms of the implications for the Presidential race they go on to highlight that the latest polls (from September) showed that Fillon had a c.20% lead over Le Pen. That puts him in the middle of the implied lead for Juppe (c.30%) and Sarkozy (c.10%) over Le Pen. Significantly however, with Sarkozy now out of the race, Le Pen’s chances have probably declined somewhat. Still, we’d be hesitant to fully rely on polls given the events of this year, but it does seem that the risk of a Le Pen victory is pretty low.

Staying with politics, there was an interesting article which caught our eye in the WSJ yesterday. It was a report centred on the Dutch general election due in March next year which is shaping up to be another intriguing event. The report suggests that in an increasingly fragmented Dutch political landscape, the most likely election outcome is a coalition of four-to-five centre right and left parties. However, the article goes on the suggest that the real risk to the EU comes ‘from a new generation of Dutch euroskeptics who are less divisive and concerned about immigration but more focused on questions of sovereignty and utterly committed to the destruction of the EU’. In particular the article talks about two leading figures, Thierry Baudet and Jan Roos, who in 2015 persuaded the Dutch parliament to adopt a law requiring the government to hold a referendum on any law should 300k citizens request one. This was put into practice when they secured a vote rejecting the EU’s proposed trade and economic pact with the Ukraine. This potentially throws open questions marks about any legalisation which is aimed at deepening European integration or stabilizing the eurozone in the future, particularly in the event of a fragmented government. Another to keep on the radar.

Meanwhile, yesterday we also got the latest ECB CSPP holdings data. It showed that the ECB had total holdings as at November 18th of €44.322bn. This implied net purchases settled last week of €2.166bn or an average daily run rate of €433m which compares to the €385m since the program started. Interestingly then there was no slowdown post the volatility created by the US election and instead suggests a possible ramping-up ahead of the quieter holiday season ahead next month.

Staying with the ECB, President Draghi spoke again yesterday although his comments weren’t hugely different to those made last week. Draghi reiterated that ‘the return of inflation toward our objective still relies on the continuation of the current, unprecedented level of monetary support, in spite of the gradual closing of the output gap’. He also said that fiscal policies ‘should also support the economic recovery, while remaining in compliance with the fiscal rules of the EU’.

Away from this it was super quiet on the data front yesterday. The sole release came from across the pond where the Chicago Fed national activity index improved to -0.08 last month from -0.20. We also got comments from Fed Vice-Chair Fischer who said that the US economy ‘has moved back to the vicinity of employment and inflation targets’ and so ‘suggesting that the cyclical drag on the economy has been greatly reduced, if not largely eliminated’. Fischer also echoed comments similar to those of Yellen last week in saying that ‘some combination of improved public infrastructure, better education, more encouragement for private investment, and more effective regulation are all likely to have a role to play in promoting faster growth of productivity and living standards’. He also warned however that ‘we don’t have a lot of room to increase the deficit without adverse consequences down the road’.

Looking at the day ahead, we’ve got another fairly light calendar on the cards for today. This morning in Europe the sole release comes from the UK where the October public finances data gets released and then shortly after the CBI distributive trends data for November is out. Later this afternoon we also get the flash consumer confidence reading for the Euro area. Meanwhile the focus in the US will likely be on the October existing home sales data, while the Richmond Fed’s manufacturing survey is also due out for this month. Away from the data the latest central banker to speak will be the BoE’s Forbes who is scheduled to address an audience this morning in London.