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Stock markets pause for breath after sell-off

An upward revision of US growth provided markets with a bright spot in an otherwise patchy trading day
AFP

London (AFP) – Stock markets got a reprieve from heavy selling pressure Wednesday in a patchy session marked by lots of volatility, traders said.

After steep recent falls there was relief that stock valuations seemed to have found a floor, helped by an upward revision in US growth for the fourth quarter and confirmation of a visit by North Korea’s leader to China.

“The tide of selling in shares settled down,” said Jasper Lawler, head of research at LCG.

“A higher revision to earlier estimates of fourth quarter US economic growth and more signs of easing geopolitical tensions on the Korean Peninsula have helped to ease some nerves,” he said.

But rapid price changes indicated that high volatility that has raked trading floors since the start of February shows no sign of abating, they said.

– ‘Wildly unpredictable’ –

“Stock markets are likely to remain explosively volatile and wildly unpredictable amid the ongoing trade drama between the US and China,” said Lukman Otunuga, an analyst at FXTM.

Bond prices rose as investors, scared by the uncertainties dogging stock markets, fled for the safety of fixed-income securities, dealers said.

Most European markets were slightly up at the close, having spent much of the session in the red except for London which outperformed thanks to strength in the healthcare sector.

Some of the biggest names in the tech sector, meanwhile, suffered sharp falls for the second day running, with Amazon and Netflix stock plunging on Wall Street.

Earlier in Asia, South Korea’s Samsung lost 2.6 percent.

“Markets remain under pressure as the sell-off in tech spreads once more to the wider equities space,” said Chris Beauchamp, chief market analyst at IG trading group.

In foreign exchange, the dollar rose against the euro despite talk that the European Central Bank is heading towards winding down its crisis-era stimulus.

Markets were sent into spasms this month when Trump imposed tariffs on steel and aluminium imports, then followed up last Thursday with levies on $60 billion of other goods from China over intellectual property issues — sparking talk of a trade war. 

Those fears were soothed somewhat — and markets bounced back — as it emerged high-level talks had been taking place between the world’s top two economies to find an agreement on tariffs.

In commodities trading Wednesday, oil prices slipped on indications of weak US demand after data from an industry body pointed to a pick-up in stockpiles.

The commodity had been rising on expectations of tighter supplies from the Middle East after US President Donald Trump appointed hawk John Bolton as his national security adviser, fuelling fears he would push for an end to the Iran nuclear deal.

– Key figures around 1540 GMT –

London – FTSE 100: UP 0.6 percent at 7,044.74 points (close)

Frankfurt – DAX 30: DOWN 0.3 percent at 11,940.71 (close) 

Paris – CAC 40: UP 0.3 percent at 5,130.44 (close) 

EURO STOXX 50: UP 0.1 percent at 3,313.54

New York – Dow: UP 0.1 percent at 23,869,24

Tokyo – Nikkei 225: DOWN 1.3 percent at 21,031.31 (close)

Hong Kong – Hang Seng: DOWN 2.5 percent at 30,022.53 (close)

Shanghai – Composite: DOWN 1.4 percent at 3,122.29 (close)

Dollar/yen: UP at 106.09 yen from 105.36 yen at 2100 GMT 

Euro/dollar: DOWN at $1.2345 from $1.2402 

Pound/dollar: DOWN at $1.4124 from $1.4159

Oil – Brent North Sea: DOWN 53 cents at $68.93 per barrel

Oil – West Texas Intermediate: DOWN 72 cents at $64.53 

burs-jh/spm

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