European stocks stutter as dollar weakens

January 19, 2018 | 10:15

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LONDON: Most of Europe's stock markets ran into profit-taking on Thursday (Jan 18) as the continent's main currencies posted fresh gains against the dollar, weighing on export-heavy stocks, as the Wall Street rally also stalled.

photo source: AFP

The underlying mood remained confident, however, traders said, buoyed by bullish Chinese data, strong corporate earnings and New York's record close the previous day amid optimism over the impact of US President Donald Trump's tax cuts.

Paris ended the day flat despite Airbus shares rising 0.7 per cent after Emirates Airlines struck a US$16-billion deal to buy 36 Airbus A-380 superjumbos, having traded as much as three percent up on the day during the morning session.

The Emirates order throws the A-380 programme a lifeline only days after the European manufacturer said it would have to halt production without new orders.

London also lapsed into the red as market participants eyed the strong pound, which weighs on the performance of multinational companies. The FTSE 100 closed down 0.3 per cent.

Frankfurt was the European standout, with the DAX 30 gaining 0.7 per cent as German semiconductor giant Infineon's shares surged a day after stellar annual results from Dutch computer chip maker ASML.

"Semiconductor bell weather ASML had blowout results, driving up European tech," Will Hamlyn, senior equity investment analyst at Manulife Asset Management, told AFP.

Wall Street was flat at the opening, with "the markets assessing the recent global rally", said Charles Schwab analysts.

But by late morning trading the Dow was showing a loss of 0.3 per cent.

HONG KONG SPARKLES

Once again, Hong Kong was the star performer in Asia, notching up an historic record as investors tracked another milestone on Wall Street.

Hong Kong rose 0.4 per cent, holding above the 32,000 mark it broke in the morning for the first time in its history. The market has fallen only once in the past 17 trading days.

Shanghai ended up 0.9 per cent. After the market closed data showed the Chinese economy grew a forecast-beating 6.9 per cent in 2017, the first annual improvement in the growth rate since 2010.

The GDP reading follows strong trade data last week, which showed the humming global economy had propelled China's export machine.

Hamlyn however sounded a note of caution about this year's global markets rally.

"There's a lot of froth in markets, valuations are right up there - not at the crazy levels of the bubble era, but there are signs of excess everywhere," he told AFP.

Bitcoin climbed more than six percent, according to Bloomberg data, a day after falling through the US$10,000 mark for the first time since mid-December.

"Fears over the demise of the sector have been rife since their inception, and with back-to-back double digit declines this week, many believed we were seeing the beginning of the end for this latest bubble," said market analyst Joshua Mahony at online trading firm IG.

"However, we are seeing signs of a recovery from here, with a host of money moving back into the crypto space as traders look to take advantage of bargain basement prices," he added.

Oil prices perked up after US crude stockpiles fell by nearly seven million barrels last week, more than double what analysts had expected.

Key figures around 1630 GMT:

London - FTSE 100: DOWN 0.3 per cent at 7,700.96 points (close)

Frankfurt - DAX 30: UP 0.7 per cent at 13,281.43 (close)

Paris - CAC 40: UP 0.02 per cent at 5,494.83 (close)

EURO STOXX 50: UP 0.09 per cent at 3,616.02

New York - DOW: DOWN 0.3 per cent at 26,027.10

Tokyo - Nikkei 225: DOWN 0.4 per cent at 23,763.37 (close)

Hong Kong - Hang Seng: UP 0.4 per cent at 32,121.94 (close)

Shanghai - Composite: UP 0.9 per cent at 3,474.75 (close)

Euro/dollar: UP at US$1.2244 from US$1.2198 at 2200 GMT

Pound/dollar: UP at US$1.3901 from US$1.3833