London (AFP) – European stock markets slumped on Friday following falls in Asia and on Wall Street, as traders expressed unease over central bank policy and Britain’s looming referendum on EU membership.
After a healthy run of gains for stocks helped in part by a recovering oil market, European indices were down between 1.5 and 2.0 percent, a day after European Central Bank chief Mario Draghi called for political action to help kickstart eurozone growth.
His comments were taken as a sign that the ECB’s arsenal is running low following its unprecedented stimulus programme launched this week.
Federal Reserve boss Janet Yellen has meanwhile indicated that the US central bank is unlikely to lift interest rates until the final quarter of 2016 following weak jobs data from the world’s biggest economy.
Adding to markets’ unrest are fears that a Brexit vote on June 23 could unleash a wave of turmoil across world indices.
“The economic impact of the EU vote is riding high in investors’ minds as they try to assess how it will affect the UK, European and global market outlook over the coming months,” said Dave Jeal, head of investment products at stockbroker Interactive Investor.
“The direction of the next US interest rate decision looks clear, but the uncertainty over it’s timing and continuing concerns over global market growth, added to the Brexit decision, make this a time for more cautious investors to take a back seat,” he added.
Around 0945 GMT, London’s benchmark FTSE 100 index was down 1.5 percent compared with Thursday’s close.
In the eurozone, Frankfurt’s DAX 30 tumbled 2.0 percent and the Paris CAC 40 shed 1.6 percent.
Europe’s main markets had already retreated by more than 1.0 percent on Thursday as Draghi again urged politicians to step up in efforts to breathe new life into the tepid eurozone economy.
The losses carried over into US trading on Thursday and Asian deals Friday, with Hong Kong’s main index giving up 1.2 percent.
In foreign exchange Friday, the euro dropped against the dollar, which in turn was lower versus the yen.
The British pound was steady against the euro but down versus the dollar.
Market focus was starting to turn toward next week’s monetary policy meetings of the US and Japanese central banks.
The Bank of Japan earlier this year adopted a negative interest rate policy, following a similar move in 2015 by the ECB, in a bid to nurture investment. But the move has been criticised as being ineffective.
– Key figures around 0945 GMT –
London – FTSE 100: DOWN 1.5 percent at 6,136.45 points
Frankfurt – DAX 30: DOWN 2.0 percent at 9,886.74
Paris – CAC 40: DOWN 1.6 percent at 4,333.61
EURO STOXX 50: DOWN 1.9 percent at 2,933.61
Tokyo – Nikkei 225: DOWN 0.4 percent at 16,601.35 (close)
Hong Kong – Hang Seng: DOWN 1.2 percent at 21,042.64 (close)
Shanghai – Composite: Closed for a public holiday
New York – Dow: DOWN 0.1 percent at 17,985.19 (close)
Euro/dollar: DOWN at $1.1298 from $1.1315 late Thursday
Dollar/yen: DOWN at 106.82 yen from 107.10 yen
Euro/pound: DOWN at 78.27 pence from 78.29 pence
Pound/dollar: DOWN at $1.4435 from $1.4453
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