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EUROPE-MARKETS
European markets push higher after Fed hike
LONDON, Sept 28, 2018 (BSS/AFP) – Most of the world’s stock markets pushed
higher and the dollar rose Thursday as investors basked in the Fed’s sunny
assessment of the US economy and the possibility of another rate hike just in
time for the holidays.
The US central bank on Wednesday hiked interest rates for the third time
this year, as expected, citing an increasingly strong economy and jobs
market, with Fed governor Jerome Powell saying he saw no vulnerabilities in
the financial system.
Powell also said there remained risks from trade tensions, which could
lift inflation, but added it was too soon to tell what impact it would have.
While Wall Street stocks ended the day down on Wednesday, they pushed
higher on Thursday. The Dow was 0.5 higher approaching midday.
Market analyst David Madden at CMC Markets UK said that although the rate
hike was expected, the Fed’s “statement was on the hawkish side, and traders
are pricing in a high possibility of a rate hike in December.”
Meanwhile Joshua Mahony at IG added “the fact that we are looking for
another four hikes by the end of 2019 provides plenty of reasoning to keep
buying the dollar.”
The rise in the dollar helped perk up European stocks as the slide in the
value of the euro and pound helps exporters, thus perking up share prices.
The odd man out was Milan’s FTSE MIB index, which slid 0.6 percent.
percent as Italy’s populist government was set to unveil the outlines of
its first budget, as fears deepen that it could breach EU fiscal rules and
worsen the country’s already mammoth debt burden.
On oil markets meanwhile, both main contracts have jumped since US energy
secretary Rick Perry pushed back against speculation the government could tap
its emergency stockpiles in order to lower prices.
Crude is at around four-year highs after OPEC and other key producers
decided against lifting output, despite being urged to do so by Trump.
Traders remain concerned their won’t be enough oil supplies on the market
when the US implements sanctions on Iran in November.
In company action, shares in German industrial conglomerate Thyssenkrupp
shot up 17 percent after its board decided to split the historic group into
two listed companies.
Shareholders have demanded splitting up the massive conglomerate, whose
businesses range from building elevators, submarines and car parts to
steelmaking. Such a reorganisation could help unlock value for investors.
Thyssenkrupp shares ended the day with a 9.9 percent gain.
BSS/AFP/HR/1005