European stocks rebound before ECB rate call
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
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.
“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.