World stock markets mostly rose yesterday as investors priced in the near-certainty of a US rate rise this week following a forecast-busting US jobs report.
But enthusiasm was muted by uncertainty surrounding a Dutch election this week and the shape of Britain’s exit from the EU.
The pound advanced amid speculation that Britain could trigger as soon as today the formal process for exiting the European Union.
In London, the FTSE 100 edged up 0.3% to 7,367.08 points; Frankfurt — DAX 30 ended up 0.2% to 11,990.03 points and Paris — CAC 40 rose 0.1% to 4,999.60 points at the close yesterday.
“The anticipation of a busy week ahead including the possible triggering of Article 50, a potential populist revolt in the Dutch national election and a likely US interest rate hike meant there was a slow burn in markets,” said Jasper Lawler, Senior Market Analyst at London Capital Group.
Sterling held onto its gains despite the announcement by Scotland’s nationalist government of plans for another independence vote.
In the United States, Friday’s employment report reinforced a long-running belief the world’s top economy was on a strong growth track and focus is now on the conclusion of the central bank’s policy meeting tomorrow.
In a busy week for global monetary policy, the Japanese and British central banks also meet this week.
“Another rate hike could be just days away, indeed, given the way the Fed’s policymakers have been talking, it is practically a certainty at this point,” said Chris Beauchamp, chief market analyst at IG trading group.
The dollar wobbled Monday as some traders took out their profits before the Fed meeting.
“Markets are already fully priced for a Fed rate hike on Wednesday,” said Janu Chan, a senior economist at St George Bank in Sydney.
Most stock markets in Asia started the week on a high — tracking all three main Wall Street indices — after the Labor Department said the US economy created 235,000 new jobs in February, much more than estimated.
Wall Street was a touch easier, having opened unchanged.”US stocks are hovering around the flatline in early action...amid heightened Fed rate hike expectations for Wednesday and ramped up political uncertainty in Europe,” said analysts at US brokerage Charles Schwab.
Oil prices continued under pressure, with the main US futures contract lowing ground again, extending last week’s losses of about 9%. Investors are nervous because of a surprisingly big jump in US stockpiles, increased US shale production and concerns about implementation of a Opec-Russia led deal to cut output.
“For all the somewhat hopeful talk from industry experts about oil inventories running down later in the year, the fact remains that US shale has come back harder, faster and cheaper than anyone could have imagined,” said Jeffrey Halley, senior market analyst at Oanda trading group.
“Talk is cheap, and oil is getting cheaper as well.”
Traders monitor data at the Frankfurt Stock Exchange. The DAX 30 closed up 0.2% to 11,990.03 points yesterday.
