European stock markets mixed on Chinese stimulus, stronger pound

European stock markets mixed on Chinese stimulus, stronger pound

LSE London Stock Exchange
Logo of the London Stock Exchange.

LONDON: European stock markets were mixed on Monday (Sep 9) after China unveiled fresh stimulus measures and below-par US jobs data reinforced expectations the Federal Reserve would cut interest rates this month.

London equities fell sharply as the pound rose on official data that showed the British economy grew by 0.3 per cent in July, reducing the likelihood of a UK recession this year as Brexit looms large.

Sterling's gains were curbed later in the day when House of Commons speaker John Bercow said he would step down within weeks.

Widely known for bellowing "Order! Order!" during unruly Brexit debates, Bercow has been a colourful, if controversial figure amid the chaos.

Commenting on bitter rows between the government and MPs, Bercow said: "We degrade this parliament at our peril."

Over in New York meanwhile, the Dow had gained 0.3 per cent in midday trading.

Elsewhere, the euro wavered as dealers mulled speculation that the European Central Bank could decide this week to loosen monetary policy.

"One broad theme is the prospect of monetary stimulus, which may be propping up some markets today," said City Index analyst Fiona Cincotta.

But "there are significant fears that the global economy is running out of puff," she added.

Britain's parliament is to shut for business later Monday in a suspension ordered by Prime Minister Boris Johnson that is widely seen as a bid to stop MPs blocking a no-deal Brexit on Oct 31.

"While parliament seems to be falling apart, the economy is holding up reasonably well," noted Paul Dales, chief UK economist at research consultancy Capital Economics.

"July's surprisingly strong rise in GDP suggests that it has not fallen into a recession."

CHINA STIMULUS BOOST

Most Asian markets ended on Monday on a positive note, building on last week's gains after China unveiled fresh stimulus measures and below-par US jobs data reinforced expectations the Federal Reserve will cut interest rates this month.

The Fed's Open Market Committee (FOMC) is due to meet on Sep 17-18.

The People's Bank of China said on Friday that it would slash the amount of cash lenders must keep in reserve to its lowest level in 12 years, freeing up more than US$100 billion for the stuttering economy.

US business activity appears to also have been affected by the trade row with China and central bank boss Jerome Powell said on Friday that the Fed will "continue to act as appropriate" to sustain growth, which he said now faced "significant risks".

Key figures around 1540 GMT:

London - FTSE 100: DOWN 0.8 per cent at 7,225.24 points (close)

Frankfurt - DAX 30: UP 0.3 per cent at 12,226.10 (close)

Paris - CAC 40: DOWN 0.3 per cent at 5,588.97 (close)

EURO STOXX 50: FLAT at 3,495.02

Tokyo - Nikkei 225: UP 0.6 per cent at 21,318.42 (close)

Hong Kong - Hang Seng: FLAT at 26,681.40 (close)

Shanghai - Composite: UP 0.8 per cent at 3,024.74 (close)

Pound/dollar: UP at US$1.2359 from US$1.2283 at 2100 GMT

Euro/pound: DOWN at 89.50 pence from 89.79 pence

Euro/dollar: UP at US$1.1061 from US$1.1029

Dollar/yen: UP at 107.10 yen from 106.92 yen

Brent North Sea crude: UP 95 cents at US$62.49 per barrel

West Texas Intermediate: UP US$1.26 at US$57.78 per barrel

Source: AFP/de

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