European equities rise as US Fed meets

LONDON: Global stock markets were higher yesterday, as investors girded themselves for this week’s key interest rate decisions, with the energy sector boosted by firm oil prices.

Wall Street opened tentatively higher as the US Federal Reserve sat down for its last policysetting meeting of the year. On this side of the Atlantic, however, Germany’s DAX was underperforming

Europe’s other main indices, “losing ground amid a slightly stronger euro,” said Accendo Markets analyst, Mike van Dulken.

Meanwhile, the Dow rose from record peaks early yesterday, lifted by a Boeing dividend boost and as investors prepared for a likely Federal Reserve interest rate increase. Aerospace giant Boeing surged 3.2 percent after announcing it would increase its dividend by 20 percent and undertake a new $18 billion share repurchase program.

Analysts expect shareholders to benefit from similar moves once the tax bill moving through Congress becomes law, even as President Donald Trump has touted the corporate tax cuts as a way to boost economic growth and job creation.

“If the tax cuts are approved and signed into law, those reductions should help boost earnings and cash flow, which are the fuel for dividend payments and share repurchases,” Briefing.com analyst Patrick O’Hare said.

About 15 minutes into trading, the Dow Jones Industrial Average stood 24,492.20, up 0.4 percent. The broad-based S&P 500 added 0.1 percent to 2,661.50, while the techrich Nasdaq Composite Index lost 0.1 percent to 6,870.49.

In London, however, the FTSE was outperforming “thanks to a weaker pound versus the dollar and higher Brent Crude oil prices after a North Sea supply shutdown,” the expert said.

London’s FTSE 100 index advanced 0.3 percent in mid-afternoon deals and the Paris CAC 40 index won 0.4 percent, while Frankfurt’s DAX 30 was only fractionally higher. “The shutdown of the Forties pipeline can have a durable impact on the price because it adds to the tighter supply picture brought about by OPEC’s output cuts,” said London Capital Group analyst, Jasper Lawler. “We suspect... that Brent is on its way to challenge the 2015 high near $68 per barrel.” Some degree of profit-taking had set in by midafternoon, with crude prices coming off recent highs, the overall rise has energized the oil sector because higher prices tend to translate into bumper profits and revenues.

In London, Anglo-Dutch energy giant Royal Dutch Shell’s ‘A’ shares jumped 1.4 percent to 2,445 pence and British rival BP gained 1.5 percent to 506.40 pence. French oil and gas titan Total saw its share price rally 1.6 percent to 47.84 euros in Paris.

Central banks in focus Focus this week, meanwhile, is also on monetary policy meetings of central banks in the United States, Britain and the eurozone. Today, the US Federal Reserve unveils its latest decision, followed on Thursday by both the Bank of England (BoE) and the European Central Bank.

“European markets are trading in positive territory, with oil stocks particularly buoyant after the shutdown of the Forties Pipeline sent Brent crude oil to a 30-month high,” said Rebecca O’Keeffe, head of investment at online stockbroker Interactive Investor. “With all eyes on central banks this week, investors will be hoping that (ECB chief) Mario Draghi will remain the benevolent Santa Claus for markets and not turn into Scrooge,” she told AFP. — AFP