Global stocks diverge on Fed, post-Brexit data

London (AFP) – European stocks rose Thursday as traders reacted to the outlook for US interest rates and some healthy post-Brexit data in Britain.

Tokyo’s main index however sank as the dollar fell against Japan’s haven yen currency, hurting share prices of the country’s exporters.

Wall Street meanwhile opened up with a slight boost from Wal-Mart Stores’ better-than-expected second-quarter earnings.

London’s benchmark FTSE 100 index was up around 0.1 percent in afternoon trading, while in the eurozone, Frankfurt’s DAX 30 won 0.4 percent and the Paris CAC 40 gained 0.2 percent.

The pound meanwhile rallied against the dollar as official data revealed that British retail sales surged by 1.4 percent last month — indicating no immediate fallout from Brexit, although analysts warn of a tough year ahead.

Sterling jumped to $1.3131 from $1.3038 late in New York on Wednesday.

The dollar was impacted also by minutes from the Federal Reserve’s July meeting that showed caution about raising US interest rates, dealers said.

“It’s been a bright start to trading in Europe, with UK retail sales brushing off any early side effects of Brexit to post strong July gains, while US futures look relatively flat ahead of the open,” said Craig Erlam, senior market analyst at Oanda trading group .

However Samuel Tombs, chief UK economist at Pantheon Macroeconomics, warned that looking ahead in Britain “with firms intending to stop hiring and inflation set to soar, the high street is set for a tough year”. 

In New York Wal-Mart shares climbed 2.4 percent after reporting an 8.6 percent rise in earnings to $3.8 billon in the second quarter. 

The Dow Jones Industrial Average five minutes into trading was at 18,580.31, up less than 0.1 percent with the broad-based S&P 500 and the tech-rich Nasdaq Composite also adding similar small gains.

– Japanese exporters hit –

Meanwhile minutes from the US central bank’s July gathering published Wednesday said policymakers were keeping their “options open” and remained divided on the threat of inflation.

Its cautious tone did little to raise hopes for a rise in US borrowing costs, which would tend to lift the greenback by stirring demand for dollar-denominated assets.

In reaction, Tokyo’s stock market tumbled 1.6 percent as the stronger yen — a negative for exporters as it tends to dent their profits — hit shares in companies such as car giants Toyota and Nissan. 

The Japanese market came under further pressure after local data showed exports slipped in July as shipments of vehicles, ships and steel products fell.

In other key Asian markets Shanghai also fell 0.2 percent, while Hong Kong rallied one percent.

– Key figures around 1345 GMT –

London – FTSE 100: UP 0.1 percent at 6,864.50 

Frankfurt – DAX 30: UP 0.4 percent at 10,579.50

Paris – CAC 40: UP 0.2 percent at 4,425.55

EURO STOXX 50: UP 0.25 percent at 2,988.11

Tokyo – Nikkei 225: DOWN 1.6 percent at 16,486.01 (close)

Shanghai – Composite: DOWN 0.2 percent at 3,104.11 (close)

Hong Kong – Hang Seng: UP 1 percent at 23,023.16 (close)

New York – DOW: UP 0.1 percent at 18,573.94 (close)

Euro/dollar: UP at $1.1314 from $1.1287 Wednesday

Pound/dollar: UP at $1.3131 from $1.3038

Dollar/yen: UNCHANGED at 100.28 yen