Fi­nan­cial mar­kets look beyond at­tacks to eye hint of UK cen­tral bank rate rise

Pound rises af­ter BoE says it may raise rates soon

The National - News - Business - - Front Page - Mah­moud Kassem

Global mar­kets shrugged off a ma­jor cy­ber at­tack that spread across the globe yes­ter­day and were in­stead lifted by com­ments from the Bank of Eng­land that it may soon start rais­ing in­ter­est rates. The ransomware at­tacks which be­gan in Rus­sia and Ukraine on Tues­day spread to western Europe and across the At­lantic, and wrought havoc on gov­ern­ment and cor­po­rate com­puter sys­tems. The at­tack­ers de­manded ran­som from af­fected users.

Sev­eral multi­na­tional com­pa­nies were tar­geted, in­clud­ing US phar­ma­ceu­ti­cal maker Merck, Rus­sian state oil producer Ros­neft and the French in­dus­trial com­pany Saint-Gobain. The French bank BNP Paribas was also caught up in the at­tacks.

In­vestors in those com­pa­nies mostly brushed off those con­cerns. Shares in BNP Paribas was up 2.5 per cent to €64.22 (Dh268) in early evening UAE time. Merck shares had gained 0.1 per cent to US$65.61. Ros­neft shares climbed 1.7 per cent to 332.8 rou­bles.

The cy­ber­at­tack re­called an out­break last month which hit more than 150 coun­tries and more than 200,000 vic­tims with the Wan­naCry ransomware.

The fight against cy­ber crim­i­nals has sparked ex­po­nen­tial growth in global pro­tec­tion spend­ing, with the cy­ber­se­cu­rity mar­ket es­ti­mated at $120 bil­lion this year, more than 30 times its size a decade ago.

The at­tacks, how­ever, were not enough to spook mar­kets. The Bri­tish pound and US stocks rose af­ter Mark Car­ney, the gover­nor of the Bank of Eng­land, said rates may need to start ris­ing soon.

The euro also rose af­ter Euro­pean Cen­tral Bank of­fi­cials walked back com­ments from the ECB pres­i­dent Mario Draghi that the mar­ket was per­ceived to be dovish. Mr Car­ney’s com­ments sparked a risk-on mood in fi­nan­cial mar­kets less than a day af­ter a host of events from an IMF cut to its US growth fore­cast, a new blow to the Repub­li­can agenda in Wash­ing­ton and a global cy­ber at­tack had ush­ered in a cau­tious tone. In­vestors took the lat­est cen­tral bank com­ments as ev­i­dence the global econ­omy re­mains on a firm enough foot­ing to with­stand a slow with­drawal of stim­u­lus that un­der­pinned growth for years.

The euro also rose to $1.1380 as of 10.53am in New York, the high­est level since June last year, ac­cord­ing to Bloomberg. It briefly dipped be­fore re­sum­ing gains on Mr Car­ney’s com­ments. The cur­rency had climbed 1.4 per cent on Tues­day. The pound jumped 1.1 per cent to $1.2954. The S&P 500 In­dex added 0.8 per cent in morn­ing trade. The un­der­ly­ing gauge lost 0.8 per cent on Tues­day, the most since May 17, as tech­nol­ogy and health­care shares de­clined.

Erdem Sahin / EPA

An ex­pert checks cy­ber threats at his of­fice in Is­tan­bul, Turkey, yes­ter­day. Ransomware Petya has spread round the world.

EPA

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