NEW YORK, June 2, 2018 (BSS/AFP) – European stock markets rallied Friday
after Italy reached a coalition deal while US stocks rose on strong jobs data
as global investors brushed aside trade war fears — for now.
Milan’s stock market was up around 1.5 percent at the close, with other
European bourses not far behind.
“With Italian coalition confirming its cabinet selections and averting
fears of a fresh Italian election, markets were once again breathing easier,”
said Artjom Hatsaturjants, an analyst at Accendo Markets.
Madrid’s main index climbed by nearly two percent after Spain’s parliament
ousted Mariano Rajoy in a no-confidence vote and installed a new prime
minister.
“It’s been quite a week for investors which has been reflected by a spike
in volatility, with politics being the main driver of the unrest,” said Craig
Erlam, senior market analyst at Oanda trading group.
– America’s jobs machine –
Wall Street rallied after US jobs numbers came in much higher than
expected, confirming the health of the US economy, resulting in an
unemployment rate that is at a near five-decade low — without sparking fears
of overly aggressive Fed rate hikes.
A report on US manufacturing by the Institute for Supply Management also
topped expectations.
“A lot of the economic data today were stronger than expected,” said Karl
Haeling of LBBW.
“It gives some more confidence to equity investors that all the trade
disputes we are having is not going to hurt down the economy.”
Earlier, Asian stock markets closed lower as fears of a trade war returned
to the fore after US President Donald Trump imposed stiff tariffs on steel
and aluminum from Europe, Mexico and Canada.
The move sparked immediate counter-measures by the three US allies,
raising the prospect of a painful conflict between some of the world’s
biggest economies.
The EU and Canada also filed complaints at the World Trade Organization in
response to “illegal” US tariffs.
– Italian populists take office –
European investors meanwhile took their lead Friday from Italy, whose
populist parties reached a deal to revive a coalition government and avoid a
snap election that many had feared could be used as a referendum on the
country’s euro membership.
New Prime Minister Giuseppe Conte, 53, was sworn in as the head of the
first populist government in an EU founding member, forged by the Five Star
Movement and the far-right League.
The spread, or difference in yield, between Italian and German 10-year
government bonds, fell to 217 basis points after crossing the symbolic
threshold of 300 basis points on Tuesday.
However the new government will have to square its reforms with its debt
pile which represents 132 percent of its gross domestic product, more than
double the EU’s 60-percent ceiling.
Pictet Wealth Management economist Frederik Ducrozet said Italy was the
only “highly indebted” euro nation not to embark on a structural reform
program yet, while the European Central Bank tries to wean the eurozone off
its massive monetary support.
“It’s the elephant in the room, because the problem was never resolved.
There’s no easy option if Italy needed help tomorrow.”
– Key figures around 2100 GMT –
Milan – FTSE MIB: UP 1.5 percent at 22,110 points (close)
Madrid: IBEX 35: UP 1.8 percent at 9,632.40 (close)
London – FTSE 100: UP 0.3 percent at 7,701.77 (close)
Paris – CAC 40: UP 1.2 percent at 5,465.53 (close)
Frankfurt – DAX 30: UP 1.0 percent at 12,724.27 (close)
EURO STOXX 50: UP 1.2 percent at 3,448.62 (close)
New York – Dow Jones: UP 0.9 percent at 24,635.21 (close)
New York – S&P 500: UP 1.1 percent at 2,734.62 (close)
New York – Nasdaq: UP 1.5 percent at 7,554.33 (close)
Tokyo – Nikkei 225: DOWN 0.1 percent at 22,171.35 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 30,492.91 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,075.14 (close)
Euro/dollar: DOWN at $1.1659 from $1.1693 at 2100 GMT
Pound/dollar: UP at $1.3347 from $1.3298
Dollar/yen: UP at 109.50 yen from 108.82 yen
Oil – Brent Crude: DOWN 77 cents at $76.79 per barrel
Oil – West Texas Intermediate: DOWN $1.23 at $65.81 per barrel