LONDON: Eurozone equity markets rebounded on Thursday, and London extended gains, on positivity surrounding US-China trade talks, while the pound steadied after a Brexit-fuelled slump.
“European stock markets are higher… as there are positive noises coming out of China in relation to the trade situation,” said David Madden, analyst at traders CMC Markets UK.
“US-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market.”
Asian stock markets were narrowly mixed after Wall Street closed higher.
“The higher close on Wall Street didn’t spill over into Asian trade overnight,” noted Jasper Lawler, head of research at London Capital Group.
“US stocks rose on Wednesday as the energy sector was lifted by higher oil prices, however sentiment was kept in check with the US yield curve inverting further, fuelling fears of a recession.”
Investors appear to be readying for a downturn. The yield on two-year Treasury notes has recently fallen below that for 10-year bonds — which is seen a pointer to recession — and on Wednesday it was at its widest point since 2007.
Also, the yields on 30-year government paper touched a fresh all-time low as investors bet on longer-term economic weakness.
It comes against a backdrop of slowing global growth and uncertainty about the Federal Reserve’s plans for cutting interest rates to support the US economy.
In Europe, Germany’s labour market remains robust, but is starting to feel the impact of a slowing economy, official data showed Thursday.
In foreign exchange, the pound was stable a day after slumping more than one percent on UK Prime Minister Boris Johnson’s shock decision to bring an end to the parliamentary year and not restart it until mid-October.
While he said the extended recess was to draw up a full legislative programme, anti-Brexiters are fuming that it will cut short any time they could have to debate a plan to avert a no-deal divorce from the EU on October 31, with some calling it a “coup”.
Arch-leaver Johnson could now face a vote of no confidence, which could lead to a British general election and continued uncertainty for the already struggling economy.
Elsewhere Thursday, shares in British software maker Micro Focus slumped after it issued a profit-warning and launched a strategic review of operations, blaming weak demand in a “deteriorating macro environment”.
Micro Focus slumped 25 percent to stand at £11.68 in midday trading on London’s benchmark FTSE 100 index.
– Key figures around 1130 GMT –
London – FTSE 100: UP 1.0 percent at 7,188.40 points
Frankfurt – DAX 30: UP 1.1 percent at 11,830.71
Paris – CAC 40: UP 1.4 percent at 5,441.76
EURO STOXX 50: UP 1.3 percent at 3,409.65
Tokyo – Nikkei 225: DOWN 0.1 percent at 20,460.93 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 25,703.50 (close)
Shanghai – Composite: DOWN 0.1 percent at 2,890.92 (close)
New York – Dow: UP 1.0 percent at 26,036.10 (close)
Pound/dollar: DOWN at $1.2203 from $1.2213 at 2100 GMT
Euro/pound: UP at 90.73 pence from 90.67 pence
Euro/dollar: DOWN at $1.1074 from $1.1076
Dollar/yen: UP at 106.29 yen from 106.14 yen
Brent North Sea crude: DOWN six cents at $60.43 per barrel
West Texas Intermediate: UP 35 cents at $56.13 per barrel