European Stocks Steady On Independence Day
Independence Day is a federal holiday in the United States commemorating the Declaration of Independence of the United States, which was ratified by the Second Continental Congress on July 4, 1776.
European stock markets flatlined Thursday, after an uneventful session earlier in Asia, with trading volumes thin on the United States Independence Day holiday, dealers said.
Asian equity markets experienced mixed fortunes, despite a record-breaking performance on Wall Street, as investors turned their focus to Friday’s upcoming data while hoping for a big Federal Reserve interest rate cut.
United States traders went on a pre-July 4 spending spree Wednesday to push all three main indexes to their all-time highs as a string of weak economic indicators reinforced the case for the Fed to reduce borrowing costs.
With the relief rally from Donald Trump and Xi Jinping’s trade war ceasefire running its course, dealers were turning their attention to the global outlook and pinning their hopes on central bank support.
The release Friday of United States non-farm payroll figures is key, analysts say, with a weak reading likely to reinforce expectations of a rate cut.
Talk of a reduction and concerns about the economy have seen the yield on safe haven 10-year Treasuries fall below two percent.
European Stock Market
Stephen Innes, at Vanguard Markets, said the fall in yields across several asset classes “has increased investor appetite for high dividend-yielding equity risk”.
In Europe meanwhile, the French Treasury issued 10-year bonds at negative interest rates for the first time ever, meaning investors are now willing to pay, rather than receive, interest on their bond purchases.
Dealers attributed part of the rally in eurozone bond markets to the nomination of IMF chief Christine Lagarde as head of the ECB where she would be expected to pursue loose money policies.
The increasing likelihood of a Fed cut has, however, weighed on the dollar, with riskier currencies such as the South Korean won, Australian dollar and Indonesian rupiah all strengthening.
However, Trump hit out at China on Wednesday in a Twitter rant, accusing it and Europe of artificially keeping the yuan and euro weak to gain an advantage over the United States.
He said they were playing a “big currency manipulation game” and “pumping money into their system”, adding that the United States should step up to the fight by matching them.
Oil prices meanwhile sagged, with traders disappointed by the size of the drop in United States stockpiles of the commodity, while worries over the global economic outlook weigh on demand expectations.