🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

GLOBAL MARKETS-BoE stimulus lifts stocks as US jobs data looms

Published 05/08/2016, 09:40 pm
Updated 05/08/2016, 09:50 pm
© Reuters.  GLOBAL MARKETS-BoE stimulus lifts stocks as US jobs data looms
UK100
-
DJI
-
JP225
-
NWG
-
ESZ24
-
CL
-
NQZ24
-
GB10YT=RR
-
STOXX
-
MSCIEF
-
MIAPJ0000PUS
-
MIWD00000PUS
-
DXY
-

* UK shares hit one-year highs

* Dollar slips before payrolls numbers

* Data could clarify Fed rate hike picture

By Sujata Rao

LONDON, Aug 5 (Reuters) - British equities surged to one-year highs on Friday, lifted by the Bank of England's new stimulus plan, while sterling clambered off one-week lows and the dollar slipped as currency markets positioned for U.S. jobs data.

Other share markets also rose and, before the 1230 GMT non-farm payrolls numbers that a Reuters poll predicted would show the world's biggest economy added 180,000 jobs last month, U.S. futures pointed to a slightly firmer opening on Wall Street.

Coming a week after surprisingly tepid U.S. second-quarter growth numbers, the data will be scrutinised by markets trying to gauge the likely timing of the next U.S. rate rise.

The dollar, which fell 2 percent last week and slipped almost 0.2 against a basket of currencies .DXY on Friday, could get a boost from a strong jobs reading.

Global stocks stayed firmly on the front foot after the BOE re-joined the stimulus party on Thursday.

Acting on its chief economist's wish to use "a sledgehammer to crack a nut", the BoE cut interest rates to next to nothing and unleashed billions of pounds of quantitative easing (QE) stimulus to cushion against the impact of Britain's vote to leave the European Union UK's main FTSE 100 index .FTSE rose to its highest level since July 2015, adding to Thursday's 1.6 percent surge.

MSCI's world equity index rose for a second day, while emerging equities jumped 1 percent, approaching one-year highs .MSCIEF . .MIWD00000PUS .

The pan-European STOXX600 index .STOXX was up 0.4 percent.

"(Markets) are infatuated with QE. We are all buying ...purely on the fact that more money is going to flood into markets, depressing bond yields and increasing the value of risk assets such as equities," said Peter Lowman, chief investment officer at wealth manager Investment Quorum in London.

(For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets)

Stock futures for the Dow Jones, S&P500 and Nasdaq indexes were up a quarter percent each YMc1 ESc1 NQc1 .

Earlier, MSCI's index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.1 percent, heading for a 0.8 percent weekly gain.

But Japan's Nikkei .N225 surrendered earlier gains to close flat. It fell 1.9 percent in a week marked by investor disappointment over the new stimulus measures announced by the country's central bank and government.

'BUYING CENTRAL BANKS'

Share markets gained despite warnings from BoE governor Mark Carney of a further likely downturn in the UK economy, and despite relatively weak corporate earnings and subdued economic growth indicators in most parts of the world.

Britain's Royal Bank of Scotland RBS.L reported widening first-half losses, sending its shares down 4.5 percent. data on Friday showed an unexpected fall in June industrial orders, and oil prices stumbled again, falling 1 percent on fresh signs of weakening demand from China CLc1 .

"It's obvious the world is now buying central banks rather than the fundamentals attached to the economies," Lowman said.

The BOE move pushed sterling 1.6 percent lower against the dollar on Thursday. The pound climbed 0.4 percent on Friday GBP=D4 and stands around 2.7 percent off the three-decade lows hit in the days after the Brexit vote.

British government bond yields also inched off record lows GB10YT=RR , and German yields rose after a 5 basis-point tumble following the BOE move.

The U.S Federal Reserve is now the only central bank in the developed world that is on a path to tighter monetary policy - mainland Europe, Japan and Australia are all trying to prop up growth and inflation with a looser approach.

Christian Lenk, a strategist at DZ Bank in Frankfurt expects the payrolls number to be roughly in line with this year's average of 171,500 job adds a month.

But he added: "Even this figure is unlikely to entirely convince the (Fed's) FOMC of the necessity of another rate hike, especially in light of last week's weak U.S. GDP."

The U.S. central bank hiked rates in December for the first time in nearly a decade but has held them steady since. Money markets are priced just a 30 percent chance of another rise by year-end, according to CME's FedWatch tool.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.