European stock markets rose yesterday after a volatile week in which company earnings and growth worries hit stocks, although the euro sank after weaker-than-expected business surveys from Germany and the eurozone.
Italian stocks led the bounce in equities, rallying hard after the country’s bond yields fell after a press report that EU Affairs Minister Paolo Savona is considering resigning over the government’s decision to challenge European Union budget rules.
The pan-European STOXX 600 index was up 0.1 per cent. Europe’s performance yesterday stood in contrast to Asia, where steep losses in Chinese markets hit stocks amid lingering trade war tensions and worries about global growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 per cent as Chinese blue-chips tumbled 2 per cent and the Shanghai Composite index lost 2.2 percent. Not all was cheerful in Europe though – surveys of German and euro zone purchasing managers came in weaker than expected, pushing the euro to its lowest in three days and setting up the single currency for its worst week in a month.
The disappointing readings will likely be of concern to policymakers at the European Central Bank, who are expected to draw a line under their 2.6 trillion euro asset purchase programme at the end of the year.
US equity futures were pointing to weakness on Wall Street when trading resumed yesterday. S&P E-mini futures were down half a per cent.
On Thursday, stock markets in Europe were hit by disappointing earnings, underscoring the lingering anxiety among equity investors as trade tensions, slowing global investment and growth.
In the currency market, the pound was down 0.3 per cent, buying $1.2830 after rising more than one per cent on the news of the draft agreement between Britain and the EU, which describes a close post-Brexit relationship. The agreement follows a draft treaty last week that set the terms for Britain’s departure from the EU in March.
The dollar weakened 0.1 per cent against the yen to 112.84. Against a basket of currencies, the greenback was higher 0.13 per cent.
China’s yuan fell to 6.9498 per dollar, with trade concerns weighing. The currency has also come under pressure in recent weeks in sympathy with falling Chinese rates, with yields on shorter-term Chinese government bonds below their US counterparts.
In commodities markets, oil prices fell to their lowest in a year, on course for their biggest one-month decline since late 2014, even as oil producers consider cutting production to try to stem a rising global surplus.
US crude was trading down 4.4 per cent at $52.23 while Brent crude futures were last down 2.5 per cent at $61.05 a barrel.
Spot gold was down 0.4 per cent at $1,222.33 per ounce.