Global stocks inch higher in hol­i­day lull

Kuwait Times - - BUSINESS -

Share prices inched higher yesterday as trad­ing in some of the world’s ma­jor fi­nan­cial mar­kets re­sumed af­ter a Christ­mas break, with oil and the dol­lar also ris­ing marginally. Con­cerns about Ital­ian banks, Chi­nese growth and US Pres­i­dent-elect Don­ald Trump’s pro­tec­tion­ist bent look set to keep in­vestors on edge into the start of 2017.

But ex­pec­ta­tions the new ad­min­is­tra­tion will splash out on a fis­cal boost for the US econ­omy also has mar­kets ex­pect­ing in­fla­tion and more growth over­all that should ben­e­fit com­pa­nies glob­ally. Data on Tues­day showed Chi­nese in­dus­try racked up its strong­est profit growth in three months in Novem­ber, sug­gest­ing the world’s sec­ond-largest econ­omy was im­prov­ing.

In Ja­pan, how­ever, core con­sumer prices fell in an­nual terms for the ninth month as house­hold spend­ing slumped. “Mar­kets have calmed down a lot since the US elec­tion and the de­ci­sions by the ECB and Fed (ear­lier in De­cem­ber),” said Daniel Lenz, a bond mar­ket strate­gist with DZ Bank in Frank­furt.

“There is a feel­ing that some of the ex­pec­ta­tions af­ter the Trump elec­tion may have been ex­ag­ger­ated and now it is a ques­tion of wait­ing to see what the US gov­ern­ment will look like when it fi­nally takes shape.” Ger­many’s DAX and France’s CAC 40 both gained just over 0.1 per­cent and US mar­kets were seen open­ing sim­i­lar- ly. Bri­tish mar­kets were closed for a hol­i­day, along with those in Aus­tralia, New Zealand and Hong Kong.

Ear­lier, MSCI’s broad­est in­dex of Asia-Pa­cific shares out­side Ja­pan had risen 0.2 per­cent while Ja­pan’s Nikkei closed lit­tle changed. “It is the time of the year when mar­kets trade with hushed tones,” Jingyi Pan, mar­ket strate­gist at IG, wrote in a note. “The mag­ni­tude of moves could re­main capped with thin mar­ket trades ex­pected to re­main the case.”

China’s CSI 300 in­dex was down 0.1 per­cent and the Shang­hai Com­pos­ite slipped al­most 0.2 per­cent, de­spite the up­beat in­dus­trial data.

The yen fell fol­low­ing the in­fla­tion num­bers but was still around 1 yen stronger than lows hit af­ter the US Fed­eral Re­serve raised dol­lar in­ter­est rates two weeks ago. In a cur­rency mar­ket ex­pected to trade con­ser­va­tively into the end of the year, strate­gists say they will be watch­ing chiefly for any sign of a squeeze in the cost for banks of bor­row­ing dol­lars rel­a­tive to other cur­ren­cies.

Such costs - called the cross cur­rency ba­sis - have been ris­ing and could sup­port the dol­lar over the next few days. “The rise in the euro dol­lar ba­sis is an ar­gu­ment for dol­lar strength. Plus you have the fun­da­men­tal fac­tors go­ing into the be­gin­ning of next year that point (that way),” said Lutz Kar­powitz, a strate­gist with Com­merzbank in Lon­don. The dol­lar inched higher against the yen and a hand­ful of other ma­jor cur­ren­cies in hol­i­day-thinned trade yesterday, with ster­ling by far the big­gest faller as con­cerns over next year’s Brexit ne­go­ti­a­tions con­tin­ued to weigh heav­ily. Go­ing into the fi­nal week of 2017, the trend re­mains to­wards a stronger US cur­rency, al­though a 1 per­cent re­treat for the green­back be­fore Christ­mas sug­gested any at­tack on 120 yen and par­ity with the euro may have to wait un­til Jan­uary.

Those bankers at their desks in con­ti­nen­tal Europe, with Lon­don on hol­i­day, said they would be watch­ing chiefly for any sign of a year-end squeeze in the cost for banks of bor­row­ing dol­lars rel­a­tive to other cur­ren­cies. —Agen­cies

TOKYO: Men walk past an elec­tronic stock in­di­ca­tor of a se­cu­ri­ties firm in Tokyo yesterday. Shares are mixed in Asia as the last week of trad­ing for the year be­gan yesterday af­ter most mar­kets were closed for Christ­mas. — AP

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