European stock markets extend recovery

London (AFP) – European stock markets rallied Wednesday following overnight gains in the US and a mixed Asian performance, as traders brushed off data showing expected slowdowns to economic recovery.

Business activity in the eurozone and Britain stagnated in September as a summer recovery faltered because of a resurgence in the spread of the coronavirus, IHS Markit said.

For the euro-currency bloc, the PMI index fell to 50.1 points from 51.9 points in August, barely above the key 50-point level indicating growth.

The UK level dropped to 55.7 from 59.1.

“PMIs underline the fragility of the recovery,” said Neil Wilson, chief market analyst at Markets.com.

“The manufacturing sector can sustain a recovery as firms can work out how to function in the new environment, but it’s harder for many service sector businesses to operate at all, which drags on the number.

“Service sector companies are also much more exposed to the caprice of lockdowns,” Wilson added.

British Prime Minister Boris Johnson has unveiled new steps that will from Thursday see English pubs and other hospitality venues close at 10 pm, while he also halted the planned phased return of fans to live sporting events that had been due from October 1.

Nearing the half-way stage in Europe on Wednesday, London’s benchmark FTSE 100 shares index was up 2.3 percent.

In the eurozone, Frankfurt’s DAX 30 jumped 1.7 percent and the Paris CAC 40 rallied 1.9 percent.

European indices had risen modestly on Tuesday following sharp losses on Monday.

The euro on Wednesday briefly dropped to around a two-month low under $1.17.

Oil prices climbed awaiting crude stockpiles data in the United States, a key indicator of demand.

“European equities have been taking their cues from the US a lot recently so the strong gains that were racked up in the US tech sector (Tuesday) have encouraged the bulls,” noted David Madden, analyst at CMC Markets UK.

Asian investors struggled to match their Wall Street counterparts Wednesday, with markets mixed as spiking infection rates, new containment measures and still no US stimulus fuel concerns about economic recovery.

After a global rally since March’s nadir, gloom has descended on equities this month, with uncertainty leading into November’s presidential election and ongoing China-US tensions adding to the mix.

US stocks broke an extended run of losses Tuesday as traders went bargain hunting, while the technology sector was boosted also by the prospect of people being forced to stay at home again.

With a record of nearly two million new virus infections last week, leaders are fighting to prevent another explosion of cases that forced economically devastating national lockdowns around the world earlier in the year.

In Washington, Fed boss Jerome Powell warned Congress the world’s top economy would see a slower recovery should US lawmakers not push ahead with a fresh rescue package, noting that stimulus cheques and expanded unemployment payments moderated the impact of the virus earlier this year.

– Key figures around 1035 GMT –

London – FTSE 100: UP 2.3 percent at 5,965.43 points

Frankfurt – DAX 30: UP 1.7 percent at 12,805.59

Paris – CAC 40: UP 1.9 percent at 4,862.30

EURO STOXX 50: UP 1.7 percent at 3,218.91

Tokyo – Nikkei 225: DOWN 0.1 percent at 23,346.49 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 23,742.51 (close)

Shanghai – Composite: UP 0.2 percent at 3,279.71 (close)

New York – Dow Jones: UP 0.5 percent at 27,288.18 (close)

Euro/dollar: UP at $1.1709 from $1.1707 at 2120 GMT

Pound/dollar: DOWN at $1.2723 from $1.2729

Euro/pound: UP at 92.03 pence from 91.96 pence

Dollar/yen: UP at 104.97 yen from 104.92 yen

West Texas Intermediate: UP 0.6 percent at $40.05 per barrel

Brent North Sea crude: UP 0.7 percent at $42.00 per barrel