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U.S. Helps Give European Markets a Lift Despite Brexit Fears

Positive news came in solid U.S. economic data and growing expectations that the Federal Reserve may hold off from raising interest rates
By The News · 07 of July 2016 08:05:51
Stocks are opening lower on Wall Street following bigger losses in Europe as investors continue to grapple with the fallout of Britain's vote to leave the European Union, Stocks are opening lower on Wall Street following bigger losses in Europe as investors continue to grapple with the fallout of Britain's vote to leave the European Union., photo: AP/Richard Drew

LONDON — European stock markets rallied Thursday after some solid U.S. economic data and growing expectations that the Federal Reserve may hold off from raising interest rates this year in light of Britain’s decision to vote to leave the European Union.

KEEPING SCORE: In Europe, France’s CAC 40 was up 1.2 percent to 4,133 while Germany’s DAX rose 0.8 percent to 9,445. The FTSE 100 index of leading British shares was 1 percent higher at 6,526. Wall Street was poised for a steady opening with Dow futures and the broader S&P 500 futures down 0. 1 percent.

US DRIVER: The solid tone in Europe was largely stoked by developments in the U.S. in the run-up to Friday’s nonfarm payrolls data, which usually have the potential of driving market activity for a week or two after their release. Though the U.S. economy appears to be in fairly rosy shape, the Fed is not expected to raise interest rates again soon. Minutes to its last meeting showed that policymakers thought it would be wise to delay a hike until more data showed whether May’s anemic U.S. hiring report was a blip or the start of a trend. Officials also worried about the outcome of Britain’s vote to leave the European Union, so-called Brexit, which had not yet been held when they met June 14-15.

Most Asian stock benchmarks rose Thursday after an upbeat U.S. economic report helped ease persistent investor concerns over Brexit-related global turmoil. Photo: Shizuo Kambayashi

Most Asian stock benchmarks rose Thursday after an upbeat U.S. economic report helped ease persistent investor concerns over Brexit-related global turmoil. Photo: Shizuo Kambayashi

ANALYST TAKE: “The Brexit vote alone is likely to deter them from raising rates until at least the end of the year as they wait to see what the knock on effects will be, both from an economic and financial markets perspective,” said Craig Erlam, senior market analyst at OANDA.

ASIA’S DAY: Japan’s benchmark Nikkei 225 index slipped 0.7 percent to 15,276.24 as shares of the country’s export giants were hit by the rising yen as investors looking for safety flocked to the currency. South Korea’s Kospi climbed 1.1 percent to 1,974.08 and Hong Kong’s Hang Seng rose 1 percent to 20,706.92. The Shanghai Composite Index was practically unchanged at 3,016.85 and Australia’s S&P/ASX 200 added 0.6 percent to 5,227.90.

CURRENCIES: The euro was down 0.2 percent at $1.1077 while the dollar rose 0.1 percent to 101.05 yen. The British pound meanwhile pushed back above $1.30, trading 1 percent higher at $1.3022.

ENERGY: Oil prices extended gains, with benchmark U.S. crude futures rising 50 cents to $47.94 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 53 cents to $49.33 a barrel in London.