Jittery trade stalks European exchanges
European stock markets diverged in jittery trade yesterday as investors mulled mixed earnings and weak oil prices on the eve of a US interest rate decision. London rose 0.3 percent as dealers also awaited today’s British economic growth data and next week’s Bank of England interest rate call. Frankfurt stocks added 0.2 percent after solid gains the previous day on bright German business confidence.
On the downside, Paris fell 0.4 percent with sentiment partly hit by news of a church hostage taking in France, dealers said. A priest was killed yesterday when men armed with knives seized hostages at a church near the northern French city of Rouen, a police source said. Police said they killed two hostage-takers in the attack in the Normandy town of Saint-Etienne-du-Rouvray, 125 kilometers (77 miles) north of Paris.
“European shares were choppy yesterday as mixed corporate results were overrun by jitters ahead of central bank meetings, a slide in oil prices and ongoing geopolitical tensions after hostages were taken at a church in Normandy,” said CMC Markets analyst Jasper Lawler. In foreign exchange, the European single currency clambered above the dollar as participants awaited the Fed. The US central bank, which concludes its latest meeting today, is not expected to make any big announcement.
However, its accompanying statement will be pored over for clues about policy following a run of strong data that have fanned talk of a rate hike. Traders also eyed today’s first estimate of British second-quarter gross domestic product (GDP), before the BoE decision due on August 4. The BoEwhich this month decided to keep its rates fixed at 0.50 percent where they have stood since March 2009 — has already signaled a possible cut in response to Brexit.
‘Jittery kind of dullness’
“The markets have settled into a jittery kind of dullness,” noted Spreadex analyst Connor Campbell, in reference to yesterday’s trade. “I think it’s just pre-Fed jitters, pre-UK GDP jitters, pre-BoE next week jitters,” he said. The pound dipped after BoE policymaker Martin Weale told the Financial Times newspaper that recent poor data has persuaded him to vote in favor of stimulus. Meanwhile, Europe’s energy sector faced fresh selling pressure yesterday as oil prices struck new three-month lows on supply glut concerns.
BP’s share price sank 2.2 percent to 430.60 pence, hit also by disappointing secondquarter results. In Asia yesterday, most markets rose but Tokyo sank on a strong yen as traders also awaited this Friday’s Bank of Japan gathering. The BoJ is thought to be preparing to widen its broad monetary easing program, a prospect which sent the yen tumbling and the Nikkei index soaring this month. However, the two reversed course yesterday with a drop in oil prices also hitting confidence. —AFP