Strong US factory output growth and the intervention of a senior American central bank official brought some relief to markets following three days of turmoil that have knocked billions of pounds off the value of the FTSE 100.
On another day of wild swings in stock prices, James Bullard, the hawkish president of the St Louis federal reserve, said the US central bank should consider maintaining its policy of pumping funds into the economy as inflation expectations eased.
Bullard, an influential member of the central bank’s decision-making committee, made his remarks as investors sought havens in German and US bonds, sending the Dow down more than 200 points in early trading and pushing leading shares in London at one point to a year low of 6072.
By the close the FTSE was 16 down at 6196, while the Dow ended down 24.5 points at 16,117. The intervention and US data showing a monthly 0.5% rise in industrial production triggered a rally that left most stock markets only slightly down on the day.
The FTSE 100, which has lost almost 10% of its value since the middle of last month, clawed back most of its early losses to close down 16 points, at 6196.
Global shares have been hard hit by mounting concerns about the prospects for economic growth, the spread of Ebola and geopolitical tensions, fears that have also hit the oil price, sending it to a four-year low. Overnight, Asian stock markets had tumbled in reaction to the losses in Europe and the US on Wednesday, with Japan’s Nikkei losing 2.2% and Hong Kong’s Hang Seng down 0.7%.
The Federal Reserve was expected to end its purchases of bonds under its programme of quantitative easing within a few months as a prelude to a first increase in interest rates.
While the economy remains robust, a lack of wage rises has undermined demand on the high street and pushed down prices. Bullard said that to keep consumers spending the Fed should consider maintaining the cheap credit.
Michael Hewson, chief market analyst at CMC Markets, said in a note to clients: “The reasons for this new jitteriness are not hard to find with the global economic outlook turning darker, and growth downgrades coming thick and fast from all angles, while concerns about the spread of Ebola are inducing fears about travel bans prompting changes in consumer behaviour across the US.”
A lack of job creation in France and Italy and diving business confidence in Germany added to investors’ fears.Inflation figures this week showed several countries, including Italy and Sweden, had fallen into deflation, reflecting weakening domestic demand and the impact of sanctions on Russia.
European leaders were forced to pledge their support for Greece amid growing concerns that the country’s spiralling debt interest bill endangered its recovery.
Greek bond yields, which determine the cost of financing Athens’s debt, soared past 9% as weak figures from the eurozone combined with a succession of downwards revisions to global growth to unsettle stock and bond markets.
European stock markets dived in early trading before rallying late in the afternoon after the strong industrial production numbers from the US. In Germany the Dax closed up 0.4% but France’s CAC was down 0.3%. Investors seeking a haven for their cash sent the yield on German 10-year bonds to a new low of 0.718%.
Last weekend leaders of Greece’s fragile coalition had been in Washington attempting to persuade the International Monetary Fund that they should be released from their draconian austerity programme.
They told IMF director Christine Lagarde they could prosper without the need for further rescue funds. Days later the suggestion appeared fanciful as reports of a weakening eurozone economy and fractious budget row between Berlin, Paris and Rome undermined investor confidence.
Jyrki Katainen, the Finnish vice-president of the European Union’s executive commission, said Greece had made “immense progress” since the €240bn (£190bn) rescue programmes started in 2010. “There should be no doubt that Europe will continue to assist Greece in whatever way is necessary so the government can keep financing itself,” he said.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The further dip in eurozone consumer price inflation in September will clearly be of serious concern to the European Central Bank as it keeps the deflation spectre very much in sight, especially given current stuttering eurozone economic activity and sharply falling oil prices.”
theguardian.com
On another day of wild swings in stock prices, James Bullard, the hawkish president of the St Louis federal reserve, said the US central bank should consider maintaining its policy of pumping funds into the economy as inflation expectations eased.
Bullard, an influential member of the central bank’s decision-making committee, made his remarks as investors sought havens in German and US bonds, sending the Dow down more than 200 points in early trading and pushing leading shares in London at one point to a year low of 6072.
By the close the FTSE was 16 down at 6196, while the Dow ended down 24.5 points at 16,117. The intervention and US data showing a monthly 0.5% rise in industrial production triggered a rally that left most stock markets only slightly down on the day.
The FTSE 100, which has lost almost 10% of its value since the middle of last month, clawed back most of its early losses to close down 16 points, at 6196.
Global shares have been hard hit by mounting concerns about the prospects for economic growth, the spread of Ebola and geopolitical tensions, fears that have also hit the oil price, sending it to a four-year low. Overnight, Asian stock markets had tumbled in reaction to the losses in Europe and the US on Wednesday, with Japan’s Nikkei losing 2.2% and Hong Kong’s Hang Seng down 0.7%.
The Federal Reserve was expected to end its purchases of bonds under its programme of quantitative easing within a few months as a prelude to a first increase in interest rates.
While the economy remains robust, a lack of wage rises has undermined demand on the high street and pushed down prices. Bullard said that to keep consumers spending the Fed should consider maintaining the cheap credit.
Michael Hewson, chief market analyst at CMC Markets, said in a note to clients: “The reasons for this new jitteriness are not hard to find with the global economic outlook turning darker, and growth downgrades coming thick and fast from all angles, while concerns about the spread of Ebola are inducing fears about travel bans prompting changes in consumer behaviour across the US.”
A lack of job creation in France and Italy and diving business confidence in Germany added to investors’ fears.Inflation figures this week showed several countries, including Italy and Sweden, had fallen into deflation, reflecting weakening domestic demand and the impact of sanctions on Russia.
European leaders were forced to pledge their support for Greece amid growing concerns that the country’s spiralling debt interest bill endangered its recovery.
Greek bond yields, which determine the cost of financing Athens’s debt, soared past 9% as weak figures from the eurozone combined with a succession of downwards revisions to global growth to unsettle stock and bond markets.
European stock markets dived in early trading before rallying late in the afternoon after the strong industrial production numbers from the US. In Germany the Dax closed up 0.4% but France’s CAC was down 0.3%. Investors seeking a haven for their cash sent the yield on German 10-year bonds to a new low of 0.718%.
Last weekend leaders of Greece’s fragile coalition had been in Washington attempting to persuade the International Monetary Fund that they should be released from their draconian austerity programme.
They told IMF director Christine Lagarde they could prosper without the need for further rescue funds. Days later the suggestion appeared fanciful as reports of a weakening eurozone economy and fractious budget row between Berlin, Paris and Rome undermined investor confidence.
Jyrki Katainen, the Finnish vice-president of the European Union’s executive commission, said Greece had made “immense progress” since the €240bn (£190bn) rescue programmes started in 2010. “There should be no doubt that Europe will continue to assist Greece in whatever way is necessary so the government can keep financing itself,” he said.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The further dip in eurozone consumer price inflation in September will clearly be of serious concern to the European Central Bank as it keeps the deflation spectre very much in sight, especially given current stuttering eurozone economic activity and sharply falling oil prices.”
theguardian.com
No comments:
Post a Comment