LONDON: World stock markets mostly fell Thursday on disappointing Chinese economic data, but the pound shot higher after the Bank of England hinted an interest rate hike could soon be on the way.
Asian equities also declined on profit-taking, having rebounded earlier this week on easing North Korea tensions and relief that Hurricane Irma had not been as devastating to Florida as feared.
Hong Kong and Shanghai stocks each slid 0.4 percent in value after a disappointing print on Chinese factory production, retail sales and state investment.
The negative sentiment spilled over into Europe, with Frankfurt stocks down 0.2 percent in afternoon trading, but Paris bucked the trend with a 0.1 percent gain.
The Bank of England (BoE), as expected, maintained its key interest rate at a record-low 0.25 percent despite surging inflation. But analysts remarked that despite no change to the rate at September's meeting, the tone of the minutes indicated that the BoE was readying for a rate rise.
"The accompanying statement contained some hawkish rhetoric with perhaps the most telling line revealing that all MPC members think that rate hikes will be faster than the current market pricing and this has provided the catalyst for a strong move higher in the pound," said David Cheetham, chief market analyst XTB online currency trading platform.
Sterling shot up from around $1.32 when the decision was announced to over $1.33.
But that sent London's FTSE-100 tumbling as many companies listed on the blue-chip index make most of their earnings abroad, and a strong pound dampens profits when they are converted into sterling.
Wall Street dipped at the open.
"US stocks are lower in early action, coming off another record high run, following a hotter-than-expected read on consumer price inflation that may be bringing the Fed back in focus, while the Bank of England's expected unchanged monetary policy decision hinted at a potential rate hike in the coming months," said analysts at Charles Schwab brokerage.
- China cause for concern -
Analyst David Madden at CMC Markets UK said "the bullish momentum we witnessed at the start of the week has waned, and softer than expected economic data from China overnight has added to the negative move."
He added: "The cooling in the growth rate of Chinese industrial production, retail sales and fixed asset investment has given traders cause for concern."
The metals and mining sector was snagged by the data because China is a top consumer of many raw materials.
In Amsterdam, steelmaker Arcelor Mittal sank 1.2 percent to 22.65 euros. Germany's Thyysenkrupp dipped 0.1 percent to 26.26 euros in Frankfurt.
London-listed miners Anglo American, BHP Billiton, Glencore and Rio Tinto all saw their share prices slide more than 2.0 percent lower.
Meanwhile, shares in Sky fell 0.5 percent to 927.5 pence on news of a formal regulatory probe into 21st Century Fox's planned takeover of the British pay-television broadcaster.
Comments
Comments are closed for this article.