World stocks squeeze out gains, Italy bank trem­bles

Kuwait Times - - BUSINESS -

LON­DON:

Global stock mar­kets eked out fur­ther gains yes­ter­day af­ter a strong week, but Mi­lan eq­ui­ties were held back by more bad news for the world’s old­est bank, Monte dei Paschi. Key Euro­pean in­dices rose by up to around half a per­cent as positive sen­ti­ment in­spired by the Euro­pean Cen­tral Bank’s continued sup­port for the eu­ro­zone spilled over from Thurs­day. “Mar­kets across Europe are cling­ing stub­bornly onto the gains made through­out the week,” said Joshua Ma­hony, an­a­lyst at IG trad­ing group.

“Yes­ter­day’s ECB meet­ing marked the penul­ti­mate risk event of the year,” he said, ahead of next week’s Fed meet­ing which is now the main fo­cus for mar­kets. “The key to the meet­ing is likely to be how many rate hikes the Fed is fore­cast­ing for next year given that mar­kets are cur­rently only pric­ing in one by Novem­ber,” said an­a­lyst Craig Er­lam at Oanda.

Wall Street also opened on a slightly firmer note. But Mi­lan shares dropped by more than one per­cent, dragged down by Monte dei Paschi di Siena (BMPS), whose stock tum­bled over 13 per­cent af­ter re­ports the ECB had de­nied it more time to raise the cash it needs to avoid be­ing wound down.

ECB’s re­ported ‘No’

BMPS on Wed­nes­day asked the Euro­pean Cen­tral Bank for two more weeks to find the funds, say­ing po­lit­i­cal in­sta­bil­ity cre­ated by Prime Min­is­ter Mat­teo Renzi’s res­ig­na­tion had left in­vestors re­luc­tant to com­mit funds. But the ECB’s su­per­vi­sory board was re­ported to have said “no” Fri­day, up­ping pres­sure on the Ital­ian gov­ern­ment to bail out the ail­ing in­sti­tu­tion. Euro­pean eq­ui­ties had risen Thurs­day, with Paris hit­ting a 2016 high, and US stocks hit new records af­ter the Euro­pean Cen­tral Bank ex­tended its mas­sive stim­u­lus pro­gram be­yond March. Stocks have ral­lied all week, as mar­kets also brushed off po­lit­i­cal un­cer­tainty in eu­ro­zone mem­ber Italy trig­gered by Renzi’s res­ig­na­tion.

Oil pro­duc­ers

Fo­cus was also on the oil mar­ket as OPEC and non-OPEC crude pro­duc­ing na­tions meet in Vi­enna to­day to nail down de­tails on im­ple­ment­ing a deal to cut out­put. “Mar­ket sen­ti­ment to­day will be driven by ex­pec­ta­tions for tomorrow’s sum­mit be­tween OPEC and nonOPEC mem­bers, with the com­mit­ment of the lat­ter piv­otal for last week’s pro­duc­tion cut deal to suc­ceed,” Ac­cendo Mar­kets said in a note to clients.

Af­ter months of dis­agree­ment, OPEC mem­bers last month ham­mered out a deal to cut oil out­put for the first time in eight years. Moscow - which is not a mem­ber of the oil car­tel - has said it is ready to re­duce crude out­put by 300,000 bar­rels a day in the first half of 2017. In Asia yes­ter­day, Ja­panese stocks rose as a weaker yen pro­vided fur­ther sup­port to ex­porters. Hong Kong-listed casino op­er­a­tors plunged how­ever af­ter a re­port said of­fi­cials had halved the amount that cash gam­blers can with­draw from ATMs in the gam­ing city of Ma­cau, as China tries to choke off a flight of capital from the coun­try. — Reuters

KARACHI: Pak­istani stock­bro­kers sit un­der an in­dex board dur­ing a trad­ing ses­sion at the Pakistan Stock Ex­change (PSX) yes­ter­day. — AFP

TOKYO: A woman walks by an elec­tronic stock board of a se­cu­ri­ties firm yes­ter­day. — AFP

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