Banks push European stocks higher
A positive start in Europe nudged the main world share indexes and bond yields higher on Thursday, after the U.S. Federal Reserve’s second interest rate cut of the year while Japan and others kept their limited remaining powder dry.
The effects of the trade war has seen central banks around the world swing back into support mode this year, but the Fed’s central message on Wednesday was that it wasn’t expecting a major capitulation of the economy.
The Bank of Japan and Switzerland’s central bank then both kept their deeply negative interest rates on hold. Brexit-bound Britain was expected to do the same later, while an outlier hike in Norway also came with a hint it would be the last.
It was enough to push London’s FTSE, Frankfurt’s Dax and Paris, Milan and Madrid up between 0.2% and 0.8% in early moves after a broadly subdued Asian session. MSCI’s broadest index of Asia-Pacific shares had ended down 0.5% as a 1% fall in Hong Kong and 1.1% drop in India offset 0.4% gains on Japan’s Nikkei and from China’s bluechip stocks.
The BOJ had maintained its pledge to guide short-term interest rates at minus 0.1% and the 10-year government bond yield around 0%. It also signalled it could add stimulus as early as next month but some traders had expected a move on Thursday after the Fed’s rate cut.
The Fed had cut interest rates to 1.75%-2.00% in a 7-3 vote but made a point of saying U.S. labour market remains strong.
Among commodities, U.S. crude futures rose 0.31% to $58.29 per barrel having largely stabilised after attacks in Saudi Arabia over the weekend sent prices soaring on Monday. Washington has blamed Iran for the attacks, a charge which Tehran denies. U.S. Secretary of State Mike Pompeo has said the strike was “an act of war.”
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.