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BCN-17
EUROPE-MARKETS
Trade and tepid inflation help world stocks rise
LONDON, Sept 14, 2018 (BSS/AFP) – Moves by the United States and China
towards dialogue rather than slapping new trade tariffs on each other helped
stocks advance Thursday along with a tepid US inflation reading.
“In the end, it wasn’t the fairly uninteresting updates from the Bank of
England or the ECB, nor a much-needed, and huge, rise in interest rates from
the Central Bank of Turkey, that got the markets moving this Thursday, but
rather a disappointing inflation reading from the US,” said Spreadex analyst
Connor Campbell.
US consumer price inflation slid to 2.7 percent on an annual basis in
August, from 2.9 percent in July, removing one source of pressure that could
push the Federal Reserve to raise interest rates faster than the gradual pace
it has indicated.
As low interest rates are good for businesses, US stocks pushed higher,
while the dollar fell. The Dow was up 0.3 percent in late morning trading.
Markets in Asia started off a rally after the US reached out to China for
fresh talks in a bid to avert a trade war, providing some much-needed respite
to weary investors.
News that Treasury Secretary Steven Mnuchin had invited top Chinese
officials for talks came just under a week after Donald Trump threatened to
impose tariffs on all $500 billion worth of imports from China.
China’s commerce ministry on Thursday welcomed the offer and said the two
sides were discussing details.
Hong Kong’s Hang Seng Index jumped 2.5 percent, having fallen for six
straight days and into a bear market, which is a 20 percent drop from its
January record high.
Most other markets in the region followed it higher.
In Europe, London ended the day down 0.4 percent, penalised by a stronger
pound which hurts companies which do most of their business globally and
convert profits back into sterling.
The European Central Bank indicated it planned to continue reducing its
asset purchases, which helped the euro rise against the dollar.
Frankfurt’s DAX 30 managed to remain in the green, but the CAC 40 in Paris
slid into the red just before the closing bell.
MORE/HR/0956
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BCN-18
EUROPE-MARKETS 2 LAST LONDON
– Turkish delight –
The biggest surprise on Thursday came from Turkey’s central bank, which
announced a massive rate hike to battle soaring inflation and boost the lira,
prompting the embattled currency to surge in value.
The central bank hiked the one week repo auction rate 625 basis points
from 17.75 percent to 24 percent, significantly higher than the Bloomberg
consensus of 21 percent.
The lira reacted strongly to the decision, rising by five percent in value
to 6.0 lira to the US dollar. It later shed some of those gains but was still
up over 3.3 percent in value at 6.14 to the dollar.
Turkey has in recent weeks been battling through one of the most troubled
periods for its economy under the rule of President Recep Tayyip Erdogan,
with the lira battered on currency markets in August.
It made the announcement only hours after President Recep Tayyip Erdogan
called on the bank to lower interest rates.
Crude oil prices tumbled as Hurricane Florence weakened on its approach
towards the US east coast, reducing the risk of damage and disruption to oil
installations.
Traders also focused on the International Energy Agency announcing that
global oil output hit a record of 100 million barrels per day in August,
providing some relief from concerns about supplies as exports from Iran and
Venezuela decline.
BSS/AFP/HR/0958