Stock markets sit back, await earnings
Stock markets struggled to find a direction Friday with traders taking their foot off the pedal before a much-anticipated earnings season that could give fresh impetus to the recent global equities rally.
“Investors are unsure if the unwind from growth is over,” remarked OANDA senior analyst Edward Moya.
While some countries are having trouble with coronavirus vaccine programmes, there is a feeling that governments will get a grip on the crisis and their economies will start to expand, though possibly later than previously hoped.
In Europe, stock market indices in London and Frankfurt traded close to the break even point as trading ended, while in Paris the CAC 40 was essentially unchanged.
In midday New York trading, the Dow Jones index had gained a little ground.
In Germany, industrial production dropped for the second month in a row in February after eight months of gains, as the economic impact of the pandemic began to bite, official data showed Friday.
Analysts said the data raised fresh doubts about the health of Europe’s top economy after it bounced back from a coronavirus-triggered downturn early last year.
Separate data showed Chinese producer prices rose at their fastest pace in more than two years owing to a jump in the cost of commodities.
That has led to concerns the increases will filter through to the world economy, putting pressure on central banks as they try to keep borrowing costs down.
Axi strategist Stephen Innes said the figures “might add a ripple or two of angst to the inflation pacifist calm that has fallen on the market”.
The main stocks indices in Hong Kong and Shanghai gave up around one percent as traders kept tabs on China-US relations after Washington restricted trade with top Chinese supercomputing centres on security grounds.
In the US, Federal Reserve boss Jerome Powell has again said the bank would stand fast in its pledge to keep borrowing costs at record lows for as long as needed to support recovery in the world’s top economy.
While last week’s blockbuster US jobs report was welcome, he said the “recovery remains uneven and incomplete” and he wanted to see more of those before he was happy progress was being made.
There remains a concern that strong recovery expectations, President Joe Biden’s vast spending sprees, and the rollout of vaccines will fan inflation to a point that the Fed will be forced to hike rates earlier than it intends.
“If Treasury yields surge too quickly, that will force Fed action,” Moya forecast.
– Key figures around 1545 GMT –
New York – Dow: UP 0.2 percent at 33,585.30 points
EURO STOXX 50: FLAT at 3,977.46
London – FTSE 100: DOWN 0.3 percent at 6,920.15 (close)
Paris – CAC 40: FLAT at 6,169.41 (close)
Frankfurt – DAX 30: UP 0.2 percent at 15,227.34 (close)
Tokyo – Nikkei 225: UP 0.2 percent at 29,768.06 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent at 28,698.80 (close)
Shanghai – Composite: DOWN 0.9 percent at 3,450.68 (close)
Euro/dollar: DOWN at $1.1892 from $1.1915 at 2050 GMT
Pound/dollar: DOWN at $1.3725 from $1.3735
Euro/pound: DOWN at 86.65 pence from 86.75 pence
Dollar/yen: UP at 109.64 yen from 109.26 yen
Brent North Sea crude: FLAT at $63.22 per barrel
West Texas Intermediate: FLAT at $59.59 per barrel