Euro, pound fall back against dollar
LONDON: The euro and pound fell against the dollar yesterday after rallying last week when central banks signaled tighter monetary policy in reaction to solid economic growth and high inflation. As the year’s second half got under way, European stock markets rebounded from heavy falls ahead of the weekend. The dollar last week tumbled after the ECB, Bank of England and Bank of Canada indicated that the age of cheap cash-in place since the financial crisis-was drawing to a close as the world economy gets back on track.
“I think the coordination of language reflects a coordination of the recognition that the global economy is pointing higher and the time for emergency policies in individual jurisdictions has ended,” Greg McKenna, chief market strategist at AxiTrader, said yesterday. During the first half, the euro jumped about ten percent against the dollar, while the pound gained almost as much from its January lows, despite. British political uncertainty caused by the country’s decision to leave the EU.
On equity markets yesterday, London’s benchmark FTSE 100 index was up 0.4 percent around midday, compared with Friday’s close. In the eurozone, Frankfurt’s DAX 30 gained 0.7 percent and the Paris CAC 40 jumped 1.0 percent, as traders reacted to regional manufacturing PMIs. The UK’s manufacturing reading came in at a three-year low of 54.3, which “doesn’t bode well for the country’s second quarter growth”, noted Spreadex analyst Connor Campbell. “While the UK economy suffered its latest setback, the eurozone continued to power ahead, with the region’s own manufacturing PMI arriving at a six-year peak of 57.4,” he added in a note to clients.
In company news yesterday, shares in EDF were down 0.6 percent at 9.43 euros after the French power supplier said a project to build a nuclear plant at Hinkley Point in Britain will overrun by £1.5 billion ($1.95 billion, 1.71 billion euros), as it warned also of delays of up to 15 months. EDF is part of a French-Chinese consortium that was awarded the two-reactor project last year despite criticism from green groups and cost warnings from experts. Elsewhere yesterday, Tokyo’s Nikkei stocks index ended 0.1-percent higher, boosted by a slightly weaker yen and a pick-up in confidence among Japanese businesses, traders said.
However, investors were spooked by a huge defeat for Prime Minister Shinzo Abe in Tokyo assembly elections, with his ruling party losing more than half its seats as he is rocked by a series of scandals and falling support. Shanghai meanwhile edged 0.1 percent up following a better-than-expected private survey showing Chinese manufacturing expanded last month. China yesterday widened access to its $10-trillion bond market, which analysts said will boost Beijing’s drive to internationalize the yuan and more deeply integrate its markets with the world financial system. —AFP
TOKYO: A man walks in front of a stock quotation board of the Tokyo Stock Exchange in front of a securities company in Tokyo.—AFP