European indexes close sharply up

July 04, 2014 - 9:39:42 am
A board at the New York Stock Exchange displays the Dow Jones Industrial Average totals before the closing bell on Wall Street in New York City yesterday. The DJIA closed at 17,068.26 above the 17,000 mark for the first time.

LONDON: Europe’s main stock markets closed sharply higher yesterday, with Germany’s main index at a record, as traders welcomed strong US jobs data and digested another surprise from ECB.

Frankfurt’s DAX 30 gained 1.19 percent to close at 10,029.43 points, just beating its previous record close last month. 

London’s FTSE 100 index of top companies ended up 0.72 percent at 6,865.21 while the CAC 40 in Paris rose more than 1.0 percent to 4,489.88 points compared to Wednesday’s closing levels.

The euro dropped to $1.3607 from $1.3659 late on Wednesday in New York, while the pound eased back from a six-year high against the dollar.

In New York, the Dow Jones Industrial Average bolted above 17,000 points for the first time in opening trade after data showed the US added a better-than-expected 288,000 jobs in June. 

In mid-afternoon deals, the Dow stood at 17,063.97, up 0.50 percent, while the S&P 500 gained 0.47 percent to 1,983.92. The tech-rich Nasdaq Composite Index added 0.50 percent at 4,480.05.

Both the Dow and S&P 500 closed at records for the second day in a row on Wednesday.

“The US labour market gave a boost to growth prospects for (the second half of the year) as payrolls and the unemployment rate both portrayed a picture of a fast-improving economy,” Alpari analyst Joshua Mahony said. 

ECB keeps rates

In Frankfurt, the ECB kept its main interest rate unchanged at 0.15 percent, and said that from January 2015 it would hold rate-setting meetings every six weeks instead of once a month.

The ECB will also start publishing “regular accounts” from the same date, central bank president Mario Draghi told a news conference.  “In the absence of shocking monetary policy decisions, the ECB presented another surprise,” ING economist Carsten Brzeski noted. The decision was taken to reduce market pressure on the ECB for action every time its governing council meets.

After cutting rates last month and unveiling new liquidity measures, the ECB downplayed expectations for another rate change before 2017. 

“Draghi highlighted that the change did not mean the ECB would be less active, but might help market volatility due to pre-meeting speculation,” remarked Berenberg Bank economist Christian Schulz.

Meanwhile, Vodafone shares rose more than one percent after Brussels gave it the green light for its acquisition of Spanish telecommunications operator ONO. Shares in Balfour Beatty shares lost 4.5 percent after the infrastructure group reported a further deterioration in its British construction business.

The strong US jobs data also pushed the dollar higher against the pound, which hit a six-year high against the greenback this week on expectations London could raise rates soon. 

In foreign exchange trading in London yesterday, the British pound eased to $1.7144 from $1.7165 late in New York on Wednesday. That’s down from the near six-year high of $1.7177 it hit on Wednesday. The euro firmed to 79.36 British pence, from 79.57 pence the day before.

On the London Bullion Market, the price of gold dipped to $1,317.50 an ounce from $1,326.50 on Wednesday.

Earlier, Asian equities had posted mixed results after some investors booked profits ahead of the US data. Tokyo stocks dipped 0.14 percent, Seoul lost 0.21 percent and Hong Kong was only marginally lower. Sydney added 0.66 percent and Shanghai closed 0.19 percent higher.

BSE shut after outage

The Bombay Stock Exchange shut down during morning trade yesterday owing to computer network problems, a spokesman said. “Due to a network outage... BSE decided to close all markets,” spokesman Yatin Padia said, after trading stopped just before 10am.

The outage lasted roughly three hours, with trade resuming after technicians scrambled to resolve the problems, BSE chief executive Ashish Chauhan said. 

The Sensex ended at a record high Wednesday on hopes the newly elected government will announce reforms to revive the economy in its first budget next week.