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EUROPE-MARKETS
Stocks rally wanes before Fed rate call
LONDON, Nov 9, 2018 (BSS/AFP) – A stock market rally waned Thursday, with
eurozone shares treading water as the European Union warned of slowing growth
across the single currency bloc.
London outperformed on hopes that a Brexit deal would soon be announced,
dealers said.
Wall Street was steady in the late New York morning as the excitement of
the US mid-term elections faded.
“The post-election bounce was strong (for stocks) but short-lived,” said
Craig Erlam, senior market analyst at Oanda trading group.
The dollar managed a modest recovery after Wednesday’s selloff in the wake
of the US elections.
The vote outcome clouds the outlook for the pace of rate rises by the US
Federal Reserve, dealers said, adding that there was little chance of any
change at Thursday’s Fed monetary policy meeting.
– EU growth ‘disappointment’-
The midterm results — which saw the Democrats regain control of the House
of Representatives and President Donald Trump’s Republican party widening its
majority in the Senate — could mean less pressure on the Federal Reserve to
raise US interest rates more aggressively, taking some heat out of the
dollar, according to analysts.
Trump now faces a tough two years before his 2020 re-election bid, with
Democrats appearing ready to fight against his tax-cutting, deregulation
agenda while boosting oversight of the president’s administration.
In Europe meanwhile, the EU on Thursday said growth in the eurozone would
slow in 2019 and beyond, citing global uncertainty and heightened trade
tensions.
The European Commission warned also that Italy’s deficit would balloon in
2019 owing to a spending boost planned by Rome’s populist government that
blatantly defies the EU over bloc rules on expenditure.
Analysts at Capital Economics called the eurozone’s growth slowdown “a
major disappointment”, although they said growth could pick up again over
coming quarters.
Elsewhere, oil prices were subdued after data showing a surge in US energy
stockpiles, although there was some support from reports OPEC may reduce
output next year.
The cartel had started opening the taps again this year after a long-
running cap agreement with Russia, which boosted prices, ended.
But with production now rising globally again — and Iran sanctions
seemingly having little impact owing to US waivers — Bloomberg News said
ministers meeting in Abu Dhabi this weekend were considering a reduction.
“Saudi Arabia and Russia have increased production, and prices have come
down $15 a barrel,” Hossein Kazempour Ardebili, Iran’s representative to the
OPEC, said. “They have over-balanced the market” and have no choice but to
cut about one million barrels a day.
BSS/AFP/HR/0950