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European stocks waver as investors tread carefully
LONDON, April 27, 2019 (BSS/AFP) – European stock markets wavered on
Friday with investors treading carefully as global slowdown worries return to
the fore, with analysts pointing to an economic divergence between the US and
the rest of the world.
Oil prices fell sharply on profit-taking, one day after nearing six-month
highs on tight supply concerns.
Markets await responses from OPEC and Russia after the US said it would
not extend waivers that allow certain countries to buy crude from sanctions-
hit Iran.
Stock markets traders have meanwhile been cheered by a string of better-
than-expected earnings from corporate titans this reporting season, with
Facebook, Microsoft and Amazon adding to the positive mood on Wall Street,
but unable to fuel broad gains.
However, there have been a couple of misses from other top firms, while a
series of downbeat data and central bank caution have dampened spirits.
Central banks in Japan, Sweden, Turkey and Ukraine, with an eye on the
global outlook, on Thursday took a dovish turn and flagged softer policy in
the near future. That came after a growth forecast cut by the Bank of Canada.
Russia’s central bank opted to hold its key interest rate on Friday,
indicating that inflation passed its peak last month.
Meanwhile low inflation has led to speculation the Reserve Bank of
Australia could soon cut borrowing costs, while the European Central Bank is
battling weak eurozone growth.
On top of that, a drop in German business confidence fanned worries about
the bloc’s biggest economy, while South Korea saw its worst performance in 10
years during the first quarter.
US markets have been boosted after the Federal Reserve last month hinted
that it will not raise rates again this year, having signalled as recently as
September that it expected to raise rates three times.
The US economy meanwhile continues to outpace its peers and the jobs
market is flourishing, with Wall Street hitting new records this week. Eyes
are now on the release of US growth data later Friday.
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– ‘Ice water’ –
“While positive earning numbers have lent massive support to US equities,
it’s hard to ignore the inescapable fact that we are back to the divergent
economic narrative where the US economy is on fire while ice water continued
to pour over the rest of the globe,” said Stephen Innes of SPI Asset
Management.
In European deals on Friday, London stocks fell 0.2 percent approaching
midday, hit by news of falling first-quarter profits at British state-rescued
lender Royal Bank of Scotland.
In the eurozone, Frankfurt rose 0.1 percent and Paris flatlined in early
afternoon deals.
In Asia, Shanghai shed 1.2 percent, Tokyo ended down 0.2 percent and Seoul
shed 0.5 percent.
But Hong Kong added 0.2 percent after suffering five straight days of
decline, while Sydney, Mumbai and Singapore also edged up.
There was little reaction to soothing comments from Xi Jinping on trade, a
pledge to remove subsidies for Chinese firms and not keep the yuan
artificially low.
Top Chinese and US negotiators resume negotiations next week in Beijing
aimed at ending their long-running trade war.
BSS/AFP/HR/1035