Dollar and equities back in fashion

LONDON: The dollar held onto its gains and stocks climbed on Thursday (Aug 31) as strong concern over North Korea’s missile test faded, while oil prices shot higher.

Photo source: AFP

“Equities remain in rebound mode, extending their bounces as relative geopolitical calm and positive macro data” in China, the United States and the eurozone “fuels fresh risk taking by investors,” said Mike van Dulken, head of research at Accendo Markets.

London closed 0.9 per cent higher, followed by a 0.6 per cent gain in Paris and 0.4 per cent in Frankfurt.

The gains were more modest on Wall Street, with the Dow up 0.2 per cent nearing midday.

“In light of the devastation wrought this week in Texas by Hurricane Harvey, and the provocative missile launch by North Korea, it’s a testament to the underlying bullish bias that the stock market has fared as well as it has,” said Patrick O’Hare of Briefing.com

But one notable heavy loss among individual companies was French supermarket giant Carrefour.

Its share price dived 13 per cent in Paris after the group published disappointing results for the first half and warned of a drop in earnings for the whole year.

The dollar was mostly holding onto gains made on Wednesday, when the US Commerce Department reported the world’s largest economy expanded a forecast-beating three percent in the second quarter.

“The greenback still seems to be benefiting from yesterday’s better than forecast second-quarter GDP reading,” said Spreadex analyst Connor Campbell.

The data revived speculation that the Federal Reserve could consider lifting US interest rates for a third time this year, and the attention of investors is now shifting to the release of US jobs figures on Friday.

“So, it is now all down to Friday’s official nonfarm payrolls report,” said market analyst Fawad Razaqzada at Forex.com.

“If this shows further strength in the labour market and another rise in wages then calls for a December rate rise may increase, triggering further dollar buying interest.

“Conversely, a very weak jobs report may have the opposite effect,” he said.

In Asian trade, the weak yen supported Japanese exporters, with Tokyo’s Nikkei ending 0.7 per cent higher, while Sydney added 0.8 per cent and Singapore gained 0.5 per cent. Wellington and Taipei were also higher.

However, Shanghai dipped 0.1 per cent as official figures showed a rise in Chinese factory activity in August but not strong enough to ease concerns about the world’s number two economy, which is growing at its slowest pace in more than a quarter of a century.

Hong Kong eased 0.4 per cent, with profit-takers also moving in after enjoying six days of gains in the previous seven trading days.

On oil markets, both main crude contracts shot higher after having slid this week on the impact of Hurricane Harvey, which has forced the temporary closure of dozens of refineries in the crude-rich Gulf of Mexico, thus depressing the demand for crude.

“WTI and Brent Crude oil prices jumped on the news that OPEC members had a 96 per cent compliance rate with the coordinated production cut in August,” said David Madden, a market analyst at CMC Markets UK.

“We are now finally seeing proper adherence to the production cut among oil producers.”

Key figures around 1530 GMT:

London – FTSE 100: UP 0.9 per cent at 7,430.62 points (close)

Tokyo – Nikkei 225: UP 0.7 per cent at 19,646.24 (close)

Euro/dollar: DOWN at US$1.1876 from US$1.1882 at 2100 GMT on Wednesday

Oil – Brent North Sea: UP US$1.56 at US$52.29 per barrel

Source AFP



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