A man passes a desk at the London Stock Exchange. The FTSE 100 index climbed 1.35% at 6,229.01 points yesterday.
AFP/London
Europe’s main stock markets extended their rally yesterday, finishing higher for a third straight day with the FTSE 100 index climbing 1.35% to close at 6,229.01 points.
In the eurozone, Frankfurt’s DAX 30 gained 0.31% to finish at 10,303.12 points and the Paris CAC 40 rose 1.44% to 4,664.59.
Confidence swept through world markets, with Tokyo surging almost 8% on hopes of a fresh stimulus and an end to recent China-fuelled losses.
“European markets are taking their lead from a buoyant Asian session, with stocks soaring higher and appearing to have put recent concerns behind them,” said Rebecca O’Keeffe, head of investment at online stockbroker Interactive Investor.
“After weeks of subdued performance in Asia, with fears of lower Chinese growth fuelling negative sentiment, speculation that Chinese policymakers will do more and a seeming shift in investor confidence has seen the strongest rally in Asian stocks since October 2008.”
Japanese stocks spearheaded an Asian equities rally as investors scooped up shares on the cheap, with buying also boosted by a weak yen and hopes that China’s wild market volatility was ending.
Tokyo’s Nikkei-225 index leapt 7.71% or 1,343.43 points to 18,770.51 by the close.
That was the biggest one-day jump since late 2008 during the global financial crisis and Lehman Brothers bankruptcy when markets faced heavy volatility.
Yesterday’s recovery came after the Nikkei tumbled 2.43% a day earlier, wiping out all of its gains since the start of the year, as weak China trade data aggravated worries about the world’s number two economy.
The Nikkei had been up almost 20% on the year in late June, before tumbling as China devalued its yuan currency last month, setting off a wave of global volatility.
Big gains on stock markets come after weeks of stocks being hammered by concerns about slowing growth in China, whose economy is worth more than 13% of global GDP.
Suggestions that Beijing had stepped in to shore up mainland shares on Tuesday sent Shanghai and Hong Kong stocks flying higher yesterday.
An announcement by the country’s finance ministry that it would accelerate major construction projects and cut taxes for small and medium-sized enterprises to support growth also appeared to be adding to the positive mood, some analysts said.
Hong Kong ended more than 4% higher while Shanghai and Sydney closed up more than 2%.
“The European markets got another growth injection from the Asian session ... with news from Japan and China helping to convince investors the worst may indeed be over,” said Spreadex analyst Connor Campbell yesterday.
“From China came a statement by the Ministry of Finance, affirming its commitment to accelerating ‘the implementation and improvement of pro-active fiscal policy and related measures... to support stable growth and promote continued healthy economic development.’
“This seemed to confirm the hopes of some kind of further Chinese stimulus, hopes that were ostensibly behind the large gains made by the Western markets on Tuesday,” Campbell added.
In London foreign exchange deals yesterday, the euro fell to $1.1195 from $1.1202 late in New York on Tuesday.
On the London Bullion Market, gold crept upwards to $1,121.89 per ounce from $1,121.15.
