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European stock markets diverge before ECB update

Concerns about a possible global trade war abated after the White House said there could be 'potential carve-outs for Mexico and Canada' and other countries
AFP

London (AFP) – Europe’s main stock markets diverged on Thursday awaiting a regular policy meeting of the European Central Bank and as traders tracked the latest twists and turns in US President Donald Trump’s plans over tariffs.

Around 1000 GMT, London’s benchmark FTSE 100 index was up 0.1 percent compared with Wednesday’s close.

In the eurozone, Frankfurt’s DAX 30 fell 0.3 percent and the Paris CAC 40 climbed 0.4 percent. Milan’s FTSE MIB shed 0.1 percent.

In foreign exchange, the dollar rose against the euro, pound and yen. 

“Stock markets in Europe are broadly unchanged as traders wait the European Central Bank meeting,” said David Madden, analyst at traders CMC Markets UK.

“Investors are also nervous about the protectionist policies the US are expected to announce.”

Fears of a transatlantic trade war and political deadlock in Italy will not cloud European Central Bank optimism Thursday but policymakers will remain tight-lipped about plans for winding down their massive support to the economy, analysts predict regarding the outcome of the ECB meeting.

– Softer tone on tariffs –

Markets have this week nervously eyed a populist surge in Italy, the eurozone’s third economy, and barbs flung between Washington and Brussels.

A softer tone on threatened tariffs from the White House helped Asian stock markets rise on Thursday, continuing a week of volatility sparked by fears of a global trade war.

Equities have swooned since Trump last week unveiled the levies as part of his “America First” agenda, which were met with anger across the world and from leaders in his own Republican Party.

European Union officials outlined planned retaliatory measures on targeted American exports to be rolled out if the US makes good on its threat, while China said it would make “an appropriate and necessary response”.

This week has seen sharp swings in stocks from positive to negative as predictions the measures will not be as bad as feared were offset by news Wednesday the president’s pro-trade top economics advisor Gary Cohn had resigned.

But for globalists, Thursday was positive after White House press secretary Sarah Sanders said there were “potential carve-outs for Mexico and Canada” and other countries based on national security. And Commerce Secretary Wilbur Ross insisted: “We’re not looking for a trade war.”

A final decision on the tariffs is expected soon.

“There is a feeling that President Trump may be toning down his protectionism push,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Centre.

“Things may not turn out as bad as we feared before,” he told AFP.

Elsewhere on Thursday, oil prices steadied after tumbling two percent Wednesday on a surge in US crude output. 

– Key figures around 1000 GMT –

London – FTSE 100: UP 0.1 percent at 7,166.57 points

Frankfurt – DAX 30: DOWN 0.3 percent at 12,212.8

Paris – CAC 40: UP 0.4 percent at 5,206.01

Milan – FTSE MIB: DOWN 0.1 percent at 22,452

EURO STOXX 50: UP 0.2 percent at 3,385.13.

Tokyo – Nikkei 225: UP 0.5 percent at 21,368.07 (close)

Hong Kong – Hang Seng: UP 1.5 percent at 30,654.52 (close)

Shanghai – Composite: UP 0.5 percent at 3,288.41 (close)

New York – Dow: DOWN 0.3 percent at 24,801.36 (close)

Euro/dollar: DOWN at $1.2383 from $1.2413 at 2130 GMT

Pound/dollar: DOWN at $1.3864 from $1.3901

Dollar/yen: UP at 106.09 yen from 106.05 yen

Oil – Brent North Sea: DOWN four cents at $64.30 per barrel

Oil – West Texas Intermediate: UP two cents at $61.17 

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