London: Eurozone stocks pulled back on Wednesday ahead of an ECB meeting likely to cut market stimulus, while a stronger pound hammered London’s FTSE 100.
Britain’s GDP grew 0.4 percent in the third quarter, slightly outperforming expectations.
The pound, which has been under pressure over suggestions that a hike in interest rates may be delayed, spiked after the positive GDP results, rising against the dollar and the euro.
However the rise in the value of the pound put pressure on stocks, as many FTSE 100 firms have most of their earnings in dollars, and a rebound in the pound will crimp profits when converted into sterling.
“Ultimately, a respectable growth rate in the UK economy will assist the equity benchmark in the long run, but for now the pound is putting pressure on it,” said David Madden, market analyst at CMC Markets UK.
Losses in the mining sector triggered in part by a sharp fall in copper prices overnight also weighed on the FTSE 100, which ended the day down nearly 1.1 percent.
Eurozone stocks also retreated ahead of the European Central Bank’s policy meeting Thursday, at which it is expected to announce a big reduction in its bond-buying stimulus as the eurozone economy picks up.
Frankfurt fell 0.5 percent to drop back below the 13,000 point level. Paris shed 0.4 percent.
“Eurozone stock markets are selling-off ahead of the European Central Bank (ECB) meeting tomorrow,” said Madden.
Analysts expect the ECB will slash in half the volume of corporate and government bonds it buys each month, from 60 billion to 30 billion euros, although extend the duration of the programme while pledging to keep the monetary tap open and interest rates at historic lows for longer in order to help financial markets.
– Nikkei record run ends –
In Asia, a phenomenal run of 16 straight days of gains finally ended in Tokyo on Wednesday as a late bout of profit-taking saw the Nikkei close in negative territory for the first time this month.
However, most other Asian markets rose following another record close on Wall Street on Tuesday, as a fresh round of strong corporate earnings reinforced confidence in the global economy.
Stocks turned lower on Wall Street on Wednesday, with the Dow sliding 0.5 percent in late morning trading.
The stock rally paused even though data showed US manufacturers saw rising sales of major durable goods for the second straight month in September, boosted by orders for aircraft and telecoms equipment.
US sales of new single-family homes also spiked in September, hitting their highest level in a decade after months of declines and sluggish growth.
However there were no blockbuster earnings reports by US firms to drive stocks higher.
Meanwhile, crude prices slid lower after data showed US oil inventories rose by 856,000 barrels while analysts had expected a drop of nearly 2.5 million barrels.
Source: Brecorder.com
