AFP/London
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Europe’s main stock markets fell back yesterday from gains posted in early trading to close with mixed results as London’s FTSE 100 index of leading companies slipped by a slight 0.07% to 6,427.64 points.
The Dax 30 gained 0.62% in Frankfurt to a more than five-year high of 7,919.33 points however, while in Paris the Cac 40 lost 0.35% to 3,773.76 points as markets awaited a monthly rate-setting meeting by the European Central Bank (ECB) today.
Earlier in the day, dealers had taken their cue from Wall Street, where the Dow Jones Industrial Average posted another record intra-day level in midday trades on confidence underpinned by ongoing monetary easing measures in Japan, Europe and the US.
The Dow had extended a record-breaking run after setting an all-time high on Tuesday by adding another 0.16% to 14,277.13 points.
The broader S&P 500 slipped by a very modest 0.02%, while the tech-heavy Nasdaq Composite was down by 0.13%.
“It had been feared that European markets would have lost confidence in early trading without the guiding hand of US markets,” noted Alastair McCaig, an IG analyst. “These fears were quickly erased as the FTSE opened almost 20 points up and has remained in positive territory all day, confirming the current ‘risk on’ mentality,” he added.
In foreign exchange activity, the euro dropped to $1.2991 from $1.3047 late on Tuesday in New York. Gold prices eased to $1,574 an ounce on the London Bullion Market from $1,579.75.
Elsewhere, Madrid’s Ibex 35 shares index gave up 0.76% and Milan’s FTSE MIB was off by 0.47% amid ongoing Italian political uncertainty in the wake of last week’s deadlocked elections.
Eurozone traders tidied up their positions ahead of a European Central Bank meeting today in Frankfurt, at which ECB policymakers were expected to keep the bank’s key lending rate at a record low of 0.75%.
“We are betting that the ECB will maintain its main rate” at that level, said Natixis analyst Johannes Gareis, though some hoped that ECB chief Mario Draghi would leave the door open for a rate cut in the coming months, at a press conference later today.
European investors were also mindful of official data which showed that the 17-nation eurozone sank further into recession in the last three months of 2012 as the debt crisis continued to exact a heavy price.
The eurozone economy shrank by 0.6% in the fourth quarter of 2012 compared with the third quarter, when it had contracted by 0.1%, the Eurostat data agency said, confirming initial estimates given in February.
The Dow Jones Industrial Average had closed at an all-time peak Tuesday, exactly four years after hitting bottom in the worst economic crisis since the Great Depression. The Dow’s surge, which has seen the index more than double since its trough in March 2009, came despite uncertainty in the US economy and as lawmakers battled over how to trim the government’s huge deficit.
“Monetary easing measures by Japan, the US and Europe are providing excess liquidity in the market. The Dow’s gains are just part of it,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
Asian markets rise on Dow surge
Asian markets rallied yesterday following a record-breaking performance by shares on Wall Street, with Tokyo and Sydney both hitting multi-year highs.
The stand-out player was Japanese electronics giant Sharp, which surged more than 17% in the morning on reports that it was ready for a tie-up with South Korea’s Samsung worth more than $100mn.
Tokyo added 2.13%, or 248.82 points, to end at 11,932.27 while Sydney was 0.82% higher, adding 41.4 points to 5,116.8 - both indexes sitting around highs not seen since September 2008.
Seoul was up 0.2%, or 4.13 points, at 2,020.74, while Hong Kong rose 0.96%, or 217.34 points, to 22,777.84 and Shanghai added 0.9%, or 20.87 points, to 2,347.18.
“Monetary easing measures by Japan, the US and Europe are providing excess liquidity in the market. The Dow’s gains are just part of it,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
In Tokyo trade Sharp soared 17.06% at one point after the Nikkei business daily and other media reported that Samsung was set to make a capital injection. The firm ended 14.05% higher, while Samsung closed up 0.65%.
On currency markets the dollar bought ¥93.27 in the afternoon, from ¥93.31 in New York Tuesday. The euro fetched ¥121.73 and $1.3049, compared with ¥121.74 and $1.3044.
Sydney stocks were given a lift after data showed the economy grew 0.6% in the three months to December from the previous quarter and 3.1% year-on-year, as the resources sector and consumer spending rallied.
The Australian dollar rose slightly to US$1.0283 from US$1.0266 prior to the release of the figures.
Oil prices edged up after the death of Venezuelan President Hugo Chavez, which has stoked uncertainty about the direction of the major Latin American oil-producing nation.
New York’s main contract, light sweet crude for delivery in April, added five cents to $90.87 a barrel and Brent North Sea crude for April delivery rose 10¢ to $111.71 in afternoon trade.
Gold was at $1,574.50 at 1100 GMT compared with $1,583.02 late Tuesday.
In other markets, Taipei rose 0.22%, or 17.59 points, to 7,950.30; Manila rose 1.84%, or 123.49 points, to a record high 6,835.21; Wellington rose 0.67%, or 28.81 points, to 4,297.97; Singapore rose 1.34%, or 43.55 points, to 3,291.81; Jakarta added 1.54%, or 72.98 points, to 4,824.68; Bangkok rose 0.65%, or 10.04 points, to 1,559.35; and Kuala Lumpur shares gained 0.59%, or 9.76 points, to 1,651.84.
