European stock markets were lower yesterday, mirroring falls across Asia. In London, the FTSE 100 closed down 0.6% at 7,387.80 points; Paris — CAC 40 fell 0.1% at 5,252.90 points and Frankfurt — DAX 30 ended down 0.2% at 12,647.27 points yesterday.
The euro extended its run higher versus the dollar yesterday, hitting a year-high, following an upbeat outlook on the eurozone economy this week from ECB chief Mario Draghi.
Meanwhile, the US Republicans’ struggle to push through controversial healthcare legislation was fuelling concerns about the chances of President Donald Trump passing his much-vaunted economic agenda, traders said.
The euro went over $1.14 at one point, its highest level since a year earlier.
“Wednesday’s trading continued to be driven by Tuesday’s news, with little to challenge either Draghi’s...comments or the latest US healthcare reform stumble for market dominance,” said Connor Campbell, analyst at Spreadex trading group.
“The euro had already managed a strong Tuesday performance after Draghi subtly hinted at a slight shift in the ECB’s approach to stimulus.
Yet the currency soon received a second wind, hitting a 12-month high against the dollar following news that the Republicans had pushed back the Senate healthcare vote due to intra-party opposition,” he added.
Draghi on Tuesday said the EU was enjoying a newfound confidence that could unlock demand and investment.
While he cautioned against winding down the bank’s easy money policy, analysts said the Italian was more hawkish than expected.
“We think that the euro’s latest rise against the US dollar was a justified reaction to Mario Draghi’s hints,” analysts at Capital Economics said.
The European single currency was also up against the yen at levels not seen since April 2016, while the dollar was lower also on concerns about Trump’s agenda.
Global stock markets soared in the months after the tycoon’s November election victory as traders bet his plans to slash taxes and red tape while ramping up infrastructure spending would fire the world’s top economy.
But his failure to pass an overhaul of Obamacare — a key campaign promise — despite his party controlling Congress has led many to question his ability to deliver his major promises.
Notable gainers among individual stocks in Europe included Nestle, up 1.1%, after the company said it will buy back 20bn Swiss francs worth of stock, only days after an activist fund took a stake in the food conglomerate, demanding more returns for shareholders.
“This is an additional step towards speeding up the creation of value for shareholders,” said Andreas von Arx, an analyst at Baader Helvea.
Wall Street was firmer, lifted by a strong performance of financials ahead of the result of Federal Reserve stress tests for banks.
The oil price rose meanwhile on its fifth consecutive day of recovery, shrugging off the US government’s announcement of rising oil inventories, concentrating instead on a drawdown of gasoline stocks.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
New reforms, streamlined policies to make doing business in Qatar easier
LuLu’s Twenty14 Holdings completes £300mn UK investment
Ramaphosa pledges tough love for ailing South African firms
Optimized Industries for Chemicals Factory to produce Unilever’s soaps in Qatar
QBIC concludes 13th wave of LeanStartup Programme at ‘Selection Day’
Meinhardt’s first global board meeting in the Middle East to be held in Doha
Vodafone Qatar launches Ready Network SDN to power digital innovation for business
Legislations helped boost competition, prevent monopoly, says Qatar Chamber chairman
Asian markets end mixed as US rally fails to inspire