Fears of tighter monetary policies weigh on global stocks
LONDON: Expectations of tighter monetary policies on both sides of the Atlantic weighed on global stock markets yesterday amid talk that the European Central Bank (ECB) plans to cut back its vast stimulus drive.
Mounting evidence that the US Federal Reserve is gearing up for an early rise in key interest rates also dampened sentiment, but Wall Street stocks held up, lifted by rising oil prices.
Both Frankfurt and Paris equities fell by 0.7% in value around midday, while London dropped 0.5%.
Eurozone bond prices also fell, reflecting expectations of fewer ECB bond purchases.
The ECB rebutted a report of an “informal consensus” among its policymakers that its quantitative easing bond-buying stimulus programme should be gradually scaled back in steps of 10 billion (RM46.5 billion).
On the currency front, Britain’s pound steadied after hitting a 31year low of US$1.2686 early yesterday before recovering to US$1.2758, 0.2% higher on the day. It fell as much as 0.5% to 88.43 pence per euro before also clawing its way back into positive territory.
Earlier in Asia, Tokyo stocks rose as the weaker yen boosted exporters. Hong Kong was buoyed by recent upbeat China data and the impending opening of a link-up with the Shenzhen stock exchange that could see fresh funds flood in.
However, most other Asian markets struggled.
Oil prices meanwhile continued rebounding and received a extra boost from US data showing a surprise decline in stockpiles.
Brent crude was up US$1.13, or 2.2%, at US$52 (RM215) a barrel by 1458 GMT, peaking at US$52.09, its highest since June 10.
US West Texas Intermediate crude was up US$1.20, or 2.4%, at US$49.89. It earlier hit US$49.95, a high since June 29.
The US Energy Information Administration said crude stockpiles fell nearly 3 million barrels for the week to Sept 30. – Agencies