Europe markets in lull, growth aids Wall Street
LONDON:
European markets marked time yesterday following a dour Asian session as better than expected third-quarter US economic growth brought a measure of cheer to Wall Street Frankfurt, London and Paris wobbled slightly with investors waiting on next week’s vital central bank interest rate decisions. London had risen Thursday on news that the British economy grew 0.5 percent in the three months after the nation’s shock June referendum in favor of exiting the European Union.
But it was just into negative territory early afternoon yesterday as investors bedded down before next week’s hectic schedule of monetary policy decisions from many of the world’s top central banks - and headline-grabbing data releases. In the eurozone, meanwhile, Frankfurt and Paris were just down. “It has been a relatively quiet week on the data front with little by the way of fundamental developments to drive the markets,” noted XTB analyst David Cheetham.
“UK growth in the third quarter exceeded expectations and we have the US equivalent out this afternoon in arguably the biggest data point of the week.” Kicking off next week will be the eurozone’s third-quarter GDP on Monday. Both the Bank of Japan and the Reserve Bank of Australia will deliver their latest interest rate calls Tuesday, followed by the US Federal Reserve on Wednesday and the Bank of England on Thursday. The dollar extended gains heading into the weekend after breaking 105 yen Thursday on increasing expectations the Fed will lift interest rates by year’s end.
At the opening bell on Wall Street, the Dow Jones index had added just 0.1 percent helped by news that US third-quarter economic growth accelerated to a 2.9 percent annual rate, topping analyst forecasts of 2.5 percent on an exports jump and strong consumer spending. However, the S&P 500 and the tech-heavy Nasdaq both dipped slightly amid disappointing earnings from Amazon, which took its share price down 5.1 percent. “The lull in action this week may very well prove to be a calm before the storm with next week’s economic calendar jam packed with major events,” added Cheetham. “There are four major central bank decisions next week from Australia, Japan, the US and UK, the latest manufacturing numbers from China, US and the UK as well as employment figures out of the US, eurozone, New Zealand and Canada. “Political risk could also be set to rise ahead with next week representing the last full trading week ahead of the US election and the ongoing Brexit saga remaining at the forefront of many traders’ minds,” he said. Yesterday, the biggest share price faller in London was Royal Bank of Scotland, which dropped 1.6 percent after revealing it sank into the red in the third quarter on litigation and restructuring costs. British Airways owner IAG was the top gainer, soaring six percent after third-quarter operating profit beat expectations. In Paris, oil and gas group Total saw its stock drop 0.9 percent, despite better-than-expected quarterly earnings. —