Daily Agenda: European Equities Stage Modest Rally

In a signal that anticipated intervention by the European Central Bank may offset any fallout from a departure of the U.K. from the European Union, stocks throughout the euro zone to a rebound today in early trading. This renewed confidence on the Continent sat in stark contrast to the latest data from within the U.K. as the latest housing data from the Royal Institution of Chartered Surveyors indicated the most rapid contraction of home-buying activity since the height of the late 2000s credit crisis. For investors, understanding where the pain of the breakaway will impact markets is now less a matter of how large the fallout will be than the timing of when it will be felt, with expectations that the U.K. will have a much more immediate pullback in activity while ECB policymakers do their best to cushion the blow for the rest of the EU.

IEA predicts oil oversupply to tamp down. The International Energy Agency released a report today predicting that the current overhang in crude oil inventories globally will be offset by refinery demand in the second half of 2016. The Paris–based think tank expects record demand from refiners during the third quarter as gasoline producers exhaust stockpiles built at lower prices. In the same report, the agency indicated that it expects production levels to remain high in both OPEC and non–OPEC oil-producing nations. Separately, today it was revealed that Saudi Arabia increased total crude production by 123,000 barrels per day to a new record high as the OPEC leader continues to jockey for market dominance over North American producers.

Alibaba beats estimates. Financial results for the second quarter released by Chinese online retailer Alibaba Group Holding exceeded consensus analyst estimates, with a 59 percent year-over-year revenue increase. Critically, the company’s move to diversify into other market segments such as cloud computing and entertainment are making headway based on the filing. This release marks the first time that the operations Lazada Group, of which Alibaba gained control for more than $1 billion earlier this year, was integrated into the Chinese firm’s financials.

Valeant faces possible charges. Only days after announcing a place to sell assets that saw the price of its shares rise, Laval, Quebec–based Valeant Pharmaceuticals International suffered another setback as media outlets reported that the company now faces a criminal probe by the U.S. Attorney General’s office. The probe reportedly centers on the controversial relationship between the firm and its specialty pharmacy subsidiary. According to the reports, which were initially published by The Wall Street Journal, federal prosecutors allege that the nature of the relationship between Valeant and the pharmacy was not revealed to insurers paying for the company’s drugs.

IMF agrees to loan for Egypt. The International Monetary Fund today acknowledged that a $12 billion credit facility for the nation of Egypt has been initially agreed upon, subject to final approval by the fund’s senior leadership. The loan, which is conditional on certain reforms by the Egyptian government, is intended to alleviate the flight of hard capital exacerbated by the nation’s budget deficits that resulted in the wake of the restructure following the nation’s 2011 uprising.