Europe markets end lower awaiting US rate rise sign
August 06 2015 10:17 PM

People walk through the lobby of the Athens Stock Exchange in Athens. The market closed 3.56% higher at 660.68 points yesterday, after dropping nearly 20% in value since the start of the week.


Europe’s main stock markets closed lower yesterday, on the eve of US jobs data that could cement expectations of a Fed rate rise next month.
London’s benchmark FTSE 100 index ended the day 0.08% down to 6,747.09 points, after the Bank of England (BoE) decided to keep its main interest rate at 0.50% earlier in the day.
In the eurozone, Frankfurt’s DAX 30 closed 0.44% lower to 11,585.10 points, while the CAC 40 in Paris slipped 0.09% to finish at 5,192.11.
“As the camp expecting a rates rise in the coming months from both US and UK central bankers gains support, investors will be paying close attention to macroeconomic data releases,” said Kash Kamal, senior analyst at Sucden Financial Research.
In speaking of the BoE’s decision to keep rates unchanged, governor Mark Carney said that “interest rate increases would proceed slowly and rise to a level in the medium term” as outlook becomes clearer towards the end of the year, but warned that the timing and size of a hike “will be data dependent.”
The euro rallied to $1.0914 from $1.0904 late in New York on Wednesday.
The pound slipped to $1.5513 compared with $1.5603 on Wednesday, with investors reacting to news that British industrial production fell in June by 0.4%.
“June’s industrial production figures highlight that the strong pound and weak overseas demand held back the manufacturing sector’s recovery in the second quarter,” said Paul Hollingsworth, UK Economist at Capital Economics research group.
Positive US data has meanwhile strengthened the case for an interest rate hike from the Federal Reserve as early as September. The Institute for Supply Management (ISM) said Wednesday the US service sector expanded 4.3% in July to a record high.
Yesterday, Wall Street was posting mixed results, as big declines in 21st Century Fox, Tesla Motors and some other companies following earnings reports halted the market’s advance.
During mid-day trade in New York, the Dow Jones Industrial Average was 0.68% lower at 17,430.75 points.
The tech-rich Nasdaq Composite Index shed 1.58% at 5,058.74, while the broad-based S&P 500 rose 0.31% at 2,099.84.
Traders are now focusing on today’s official US employment figures, after payroll firm ADP estimated that the private sector in the world’s biggest economy added 185,000 jobs in July, much below the analysts’ estimates.
“Wednesday afternoon’s data was particularly mixed, with a big miss in ADP non-farm joined by an 11-year high ISM non-manufacturing PMI. Comments, be them from hawk or dove, about the likelihood of September (rate) lift-off versus a December start are premature since the big daddy of the jobs data world doesn’t arrive until tomorrow,” said Spreadex analyst Connor Campbell.
In Greece, Prime Minister Alexis Tsipras on Wednesday said his government was nearing a deal with international creditors on a mammoth bailout, as his spokeswoman raised the prospect of early elections in the fall.
The Athens stock market closed 3.56% higher at 660.68 points yesterday, after dropping nearly 20% in value since the start of the week.
The Greek stock exchange reopened on Monday, five weeks after the government imposed capital controls to prevent a bank run and stave off financial collapse at the height of its standoff with EU-IMF creditors over a new bailout.
The ATHEX gain, if it holds, would be the first since the record 16% plunge at the start of the volatile trading week.

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