Euro­pean stocks re­bound be­fore ECB rate call

The China Post - - BUSINESS INDEX & -

Euro­pean eq­ui­ties re­bounded Wed­nes­day as weak Chi­nese eco­nomic growth data stoked Bei­jing stim­u­lus hopes, while traders geared up for the lat­est eu­ro­zone in­ter­est rate call and eyed ris­ing oil prices.

Sen­ti­ment was also boosted af­ter Finnish tele­coms gi­ant Nokia agreed a 15.6-bil­lion-euro (US$16.5 bil­lion) takeover of Franco-Amer­i­can ri­val Al­ca­tel-Lu­cent.

The deal, cre­at­ing the world’s big­gest sup­plier of mo­bile phone net­work equip­ment, sent Al­ca­tel shares slump­ing more than 12 per­cent in Paris — but Nokia won 1.8 per­cent in Helsinki.

The merger of two com­pa­nies — once high-fly­ing new tech­nol­ogy stars — is aimed at pro­duc­ing a Euro­pean cham­pion able to take on Nokia’s Swedish ri­val Eric­s­son and fierce Chi­nese com­pe­ti­tion.

In late Paris morn­ing deals, the bench­mark CAC-40 in­dex ral­lied 0.64 per­cent to 5,251.26 points and Frank­furt’s DAX 30 won 0.47 per­cent to 12,285.26 com­pared with Tues­day’s close.

Lon­don’s FTSE 100 in­dex ad­vanced 0.32 per­cent to 7,099.11 points, aided partly by news of sparkling sales from luxury goods com­pany Burberry.

Deal­ers re­mained on ten­ter­hooks be­fore the out­come of the lat­est mon­e­tary pol­icy meet­ing of the Euro­pean Cen­tral Bank (ECB) at 1145 GMT.

“Wed­nes­day has brought with it a wave of pos­i­tive trad­ing in Europe,” said Spreadex an­a­lyst Con­nor Camp­bell.

“It is likely that the lat­est push by Brent crude, the in­creas­ing chances of more stim­u­lus in China, the lat­est M&A news from Nokia and Al­catelLu­cent, and the hope that Mario Draghi will be bullish on ECB QE’s con­tin­ued im­ple­men­ta­tion this af­ter­noon, has over­rid­den the neg­a­tive UK elec­tion/Greek debt sagain­spired trad­ing en­vi­ron­ment that de­fined the start of the week.”

Asia Mar­kets Mostly Down af­ter

China Data

Hong Kong’s stock mar­ket ticked higher Wed­nes­day but Shang­hai sank af­ter a fur­ther slow­down in Chi­nese eco­nomic growth, while Tokyo edged down on a stronger yen.

Dis­ap­point­ing U.S. re­tail sales data damp­ened hopes of an early in­ter­est rate cut by the Fed­eral Re­serve, caus­ing a drag on the dollar.

Shang­hai tum­bled 1.24 per­cent, or 51.40 points, to 4,084.16 but Hong Kong closed up 0.21 per­cent, or 57.33 points, at 27,618.82.

Tokyo ended down 0.20 per­cent, or 38.92 points, at 19,869.76 and Syd­ney fell 0.64 per­cent, or 38.15 points, to 5,908.4. Seoul rose 0.39 per­cent, or 8.24 points, to 2,119.96.

China said its econ­omy ex­panded 7.0 per­cent in the first three months of 2015, slightly bet­ter than fore­cast in an AFP sur­vey but much slower than Oc­to­ber-De­cem­ber. It was also the worst for a sin­gle quar­ter since the first three months of 2009, in the depths of the global fi­nan­cial cri­sis.

The fig­ures are the lat­est to high­light a slow­down in the econ­omy and will likely in­crease ex­pec­ta­tions Bei­jing will an­nounce more stim­u­lus on top of two in­ter­est rate rises since Novem­ber.

The econ­omy grew last year at its slow­est pace in al­most a quar­ter of a cen­tury, buf­feted by weak man­u­fac­tur­ing, slow do­mes­tic de­mand and low gov­ern­ment in­vest­ment, among other fac­tors.

Hopes for more loos­en­ing have fanned a rally in Hong Kong and Shang­hai stocks. In the past nine ses­sions Hong Kong has soared al­most 15 per­cent as main­lan­ders pick up what they con­sider cheap eq­ui­ties fol­low­ing a year-long runup in Shang­hai that has al­most dou­bled its value.

Stim­u­lus Ur­gency

“It is ur­gent for pol­i­cy­mak­ers to do more now to stim­u­late the econ­omy,” said Dar­iusz Kowal­czyk, se­nior econ­o­mist at Credit Agri­cole SA in Hong Kong.

“We ex­pect ac­cel­er­a­tion in fis­cal spend­ing and in gov­ern­men­torches­trated in­fra­struc­ture projects, as well as more mon­e­tary eas­ing,” he told Bloomberg News.

On Wall Street Tues­day the Dow gained 0.33 per­cent and the S&P 500 added 0.16 per­cent but the Nas­daq slipped 0.22 per­cent.

Gold fetched US$1,191.19 against US$1,187.95 late Tues­day. In other mar­kets: — Sin­ga­pore gained 0.54 per­cent, or 18.87 points, to 3,539.95.

— Jakarta ended down 0.08 per­cent, or 4.56 points, at 5,414.55.

— Malaysia’s main in­dex gained 0.03 per­cent, or 0.52 points, to close at 1,840.13.

— Mumbai fell 0.84 per­cent, or 244.75 points, to end at 28,799.69.

— Welling­ton slipped 0.44 per­cent, or 26.03 points, to 5,856.08.

— Manila closed down 1.86 per­cent, or 150.03 points, at 7,906.46.

— Bangkok was closed for a public hol­i­day.

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