People walk in front of an electronic board showing the closing figure of the Nikkei 225 Stock Average in Tokyo yesterday. Tokyo stocks closed at 14,309.97, the highest closing index since May 29, ending the week up 291.04 points, or 2.08 percent, while the US dollar traded in the 100 yen range.
LONDON: European equities slumped yesterday, spooked by US jobs data and a day after surging on clear signs that the European Central Bank and the Bank of England would keep interest rates low for some time.
European markets, which began the day quietly, turned sharply lower after the release of better-than expected jobs data in the United States that dealers expect will encourage the US Federal Reserve to go ahead with scaling back its huge stimulus policy.
“It’s a reaction we are starting to get used to,” said Andrea Tueni, analyst at Saxo Bank. “The (US jobs) number is good but the markets are now anticipating” a slowdown of the easy money policy at the US Fed, which has said it would slow down stimulus if the recovery was confirmed.
At close, London’s benchmark FTSE 100 index of leading companies was down 0.72 percent to 6,375.52 points, while Frankfurt’s DAX 30 lost 2.36 percent to end trading at 7,806 points and in Paris the CAC 40 shed 1.17 percent to close at 3,753.85 points.
The US Labour Department reported that 195,000 jobs were added in June, above the 166,000 analyst estimate. The unemployment rate held steady at 7.6 percent.
Briefing.com analyst Patrick O’Hare called the jobs report “stronger than expected, but not undeniably strong.” He cited some less propitious details in the report, such as a rise in the number of discouraged workers compared with a year ago.
US stocks gained following the report. In midday trading, the Dow Jones Industrial Average rose 0.57 percent, the broad-based S&P 500 rose 0.61 percent, while the tech-rich Nasdaq Composite Index advanced 0.55 percent.
On the currency markets, the euro and British pound hit multi-month troughs as the prospect of low interest rates made them less attractive for investors to hold.
The euro sank to $1.2806 — which was the lowest level since late May. It recovered slightly to $1.2833 compared with $1.2914 late in New York on Thursday.
Sterling also slumped to $1.4909, tumbling underneath the key $1.5 barrier for the first time since mid March.
Major European indices had soared on Thursday after the ECB and BoE issued unprecedented advance notice of policy, so-called forward guidance, indicating that easy-money policies to stimulate growth would continue for some time. The news lifted share prices because low borrowing costs help boost lending to companies, dealers said.
In Asia, markets mostly climbed on the central bank news, while concerns over Portugal’s political crisis also abated.
Hong Kong added 1.89, Tokyo rose 2.08 percent and Sydney won 0.98 percent, while Seoul fell 0.32 percent after South Korean giant Samsung Electronics issued a weaker-than-expected earnings forecast.
Earlier in the week, global equities were hit by a political crisis in debt-plagued Portugal following the shock resignation of its foreign and finance ministers over austerity policies. However, worries about Portugal’s future have since receded after the nation’s centre-right coalition said it had found a “formula” to avert a break up of the government.
Gold slumped to $1,212.75 an ounce from $1,251.75 late Thursday on the London Bullion Market.
AFP
