Frankfurt stocks approach record peak, India soars
The German stock market rose close to a record pinnacle yesterday, buoyed by bright eurozone economic data, dealers said. On the first trading day of April-which is the first trading day of the second quarter Frankfurt’s benchmark DAX 30 index climbed as high as 12,375.58 points. That was a whisker away from its all-time peak of 12,391 that was set on April 10, 2015. The DAX later stood just above 12,360.
Indian stock markets closed at record highs yesterday, buoyed by increased investor confidence in the domestic economy and in line with rises across Asia. Analysts said traders were betting on economic reforms following the Indian government’s recent massive victory in a key state election, while the indices were also being lifted by recent rallies in some international equities.
“The Uttar Pradesh election is a factor and demonetization is behind us. Most importantly GST (goods and services tax) will get approved in July and that’s positive,” Rahul Shah, an equities analyst at Motiwal Oswal Securities, told AFP.
“But it’s not just India. There’s a global effect. All these things together is why the markets are touching new highs. Economically I don’t see any major challenges which might spoil the party right now,” he added.
The Eurostat statistics agency said the jobless rate in the 19-nation single currency area fell to 9.5 percent, with sustained drops in Spain and Portugal also a factor. By country in February, Europe’s top economy Germany had one of the lowest eurozone jobless rate at 3.9 percent. Data firm Markit meanwhile reported that factory orders in the eurozone were fueling the recovery in jobs. In its closely watched survey, Markit said the eurozone manufacturing PMI hit 56.2 points in March, up from 55.4 in February, the fastest growth in six years. A reading above 50 points line indicates economic expansion.
‘April hits ground running’
“April hits the ground running this Monday,” noted Spreadex analyst Connor Campbell. He added: “The eurozone-wide manufacturing PMI came in at an effective sixyear high, largely thanks to the huge improvements seen in Germany and Italy, while the region’s unemployment now sits at an eightyear low. “All of this only worked in the DAX’s favour; rising by half a percent, the German index just needs to scrounge together another 40 points and it will be at a fresh all-time high,” Campbell said.
The Bombay Stock Exchange’s (BSE) benchmark Sensex index rose 0.98 percent, or 289.72 points, to end the day at 29,910.22. That surpassed its previous closing high of 29,681.88 set in January 2015. Meanwhile, the Nifty on India’s National Stock Exchange (NSE) closed above the 9,200-point mark for the first time ever. —
World stock markets and the US dollar started the second quarter on a positive note yesterday, although caution also set in as the first meeting between US President Donald Trump and China’s Xi Jinping loomed.
European shares touched a 16-month high, tracking Asian shares up after generally upbeat economic data. German manufacturing growth reached an reached an almost six-year high in March, Markit’s Purchasing Managers’ Index (PMI) for manufacturing showed yesterday. Manufacturing activity in France and Italy also rose, adding to signs of a pickup in momentum in the global economy. A private survey on China’s manufacturing on Saturday came in below market expectations but still showed a healthy expansion after a similar survey by the government on Friday pointed to strong growth in the sector. The Bank of Japan’s “tankan” survey showed that business sentiment improved, albeit slightly less than expected.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 percent, while Japan’s Nikkei gained 0.8 percent after hitting a seven-week low on Friday. US stock futures were flat, indicating a note of caution as focus turned to earnings and a meeting on Thursday and Friday between the US and Chinese presidents. “Despite the solid gains seen so far this year, there is some evidence that the rally in US markets is looking a little tired given President Trump’s trials and tribulations in Congress,” said Michael Hewson, chief market analyst at CMC Markets. “The reflation trade is likely to face a new test this week when President Trump entertains the Chinese leader Xi-Jinping at his Mar-a-Lago golf course in Florida, which in the words of President Trump himself could be a little ‘difficult’.”
A failure to push through healthcare reforms last month has added to concerns that Trump may struggle to pass highly anticipated tax cuts and infrastructure spending bills. Trump held out the possibility on Sunday of using trade as a lever to secure Chinese cooperation against North Korea and suggested Washington might deal with Pyongyang’s nuclear and missile programs on its own if need be. On Friday, the US president sought to push his crusade for fair trade and more manufacturing jobs back to the top of his agenda by ordering a study into the causes of US trade deficits and a clampdown on import duty evasion.
Manipulator?
Any hints that Washington may name some of its trade partners such as China, Japan and Germany as currency manipulators could dent the dollar. The US Treasury will release its next currency report on April 15. “The meeting between Trump and Xi is very important because if they can form some sort of mutual interest, it will be in their mutual benefit, however, if the differences grows even further, then it spells more problems for the dollar,” said Naeem Aslam, chief market analyst at Think Markets UK.
The dollar index, which measures the dollar’s value against a basket of other major currencies, was up 0.28 percent at 100.63 - above four-month lows hit last week. US monetary policy also remained in focus with US jobs data due out on Friday, while in Europe April marked the start of a fall in the European Central Bank’s monthly asset purchases to 60 billion euros from 80 billion euros. Governments and other economic actors need to get ready for higher borrowing costs after years of record lows, ECB Executive Board member Benoit Coeure said yesterday.
The euro was little changed at around $1.06, but 0.4 percent firmer against sterling, which fell after data showed British manufacturing lost momentum last month. —Reuters