Stock markets hit pause button after big gains

The Bank of England is widely expected to keep its key lending rate at a record low 0.50 percent
AFP

London (AFP) – Investors hit the pause button on Europe’s main stock markets and on Wall Street on Thursday despite gains elsewhere as they paused for breath following bumper gains earlier in the week.

A day after hitting a 2016 high on strong Chinese trade data London’s benchmark FTSE 100 index dipped 0.1 percent in cautious trade after the Bank of England said it was keeping its key lending rate at a record low 0.50 percent, where it has stood since March 2009.

In addition to posting its unanimous decision the bank also again warned a British exit from the European Union would have a negative impact.

In the eurozone, Frankfurt’s DAX 30 index added 0.6 percent while the Paris CAC 40 crawled 0.2 percent ahead.

Asian and European stocks had churned higher Wednesday on strong Chinese trade data, building on the previous day’s solid gains driven by soaring oil prices.

US stocks opened barely changed as banking shares cooled off following lower earnings from Bank of America and Wells Fargo, both boosting their reserves to cover bad energy loans.

Five minutes into trading, the Dow Jones Industrial Average stood up 0.06 percent at 17,919.44 while the broad-based S&P 500 and tech-rich Nasdaq Composite Index were both flat.

“After touching the highest level of the year in yesterday’s trade, this morning the FTSE 100 has pared back some of the gains ahead of the Bank of England rate decision,” said analyst David Cheetham at London-based brokerage XTB.

– Money off table –

“The slight move lower we are seeing could be attributed to investors acting cautiously and deciding to take some money off the table following the recent rally,” Cheetham told AFP.

Asian stocks rallied for a second straight session Thursday, tracking gains in New York where traders cheered surprisingly upbeat earnings from Wall Street titan JPMorgan Chase.

The renewed confidence saw investors shift out of the safe investment yen, which in turn helped Japan’s Nikkei soar more than three percent.

A shock decision by Singapore to loosen monetary policy sent the island-state’s dollar tumbling, dragging other emerging market currencies.

After Wednesday’s rally, regional investors returned to trading floors to news that JP Morgan had posted forecast-beating first-quarter earnings.

The banking giant also said the US economy, the world’s biggest, was on a solid footing and dismissed the prospect it would go into recession this year. The news provided strong support for the financial sector, with all three main New York indexes ending more than one percent higher.

“The fact that investor appetite for the heavily weighted banking sector looks to be returning could help see an even stronger day,” Angus Nicholson, a IG markets analyst in Melbourne, told clients.

Hong Kong was up 0.9 percent while Shanghai ended 0.5 percent higher. Sydney climbed 1.3 percent and Seoul shot up 1.8 percent.

Tokyo led the gains, with the Nikkei flying 3.2 percent. Japanese exporters were the big beneficiaries of another drop in the yen against the dollar.

– Key figures around 1400 GMT –

London – FTSE 100: DOWN 0.1 percent at 6,358.61 points

Frankfurt – DAX 30: UP 0.6 percent at 10,095.32

Paris – CAC 40: UP 0.2 percent at 4,497.91

EURO STOXX 50: UP 0.6 percent at 3,057

Tokyo – Nikkei 225: UP 3.2 percent at 16,011.05 (close)

Shanghai – Composite: UP 0.5 percent at 3,082.36 (close)

Hong Kong – Hang Seng: UP 0.9 percent at 21,337.81 (close)

New York – Dow: UP 1.1 percent at 17,908.28 (close)

Euro/dollar: DOWN at $1.1274 from $1.1276 on Wednesday

Dollar/yen: DOWN at 109.14 yen from 109.33 yen

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