LONDON: World stocks nudged higher Tuesday in cautious trading on the eve of a US Federal Reserve decision, dealers said, with European gains capped by news of plunging German investor confidence.
Equities were also wobbly over a continuing sell-off of Facebook shares, while concerns of a possible trade war sparked by President Donald Trump’s announcement on tariffs also weighed.
In Germany, a survey of 220 analysts and investors from the ZEW institute gave a reading of 5.1 points — a slump of 12.7 points from February’s level and far below the 13.1 forecast by analysts.
The last time confidence among financial players was so low was in the months after Britain’s June 2016 vote to quit the European Union.
– Facebook falls again –
London stocks meanwhile gained ground after data showing a slowdown in British annual inflation in February which analysts said took some pressure off the Bank of England to raise rates and led to a weakening of the pound.
“Small gains in UK and European markets have not put much of a dent in yesterday’s losses,” noted IG analyst Chris Beauchamp.
An alleged massive data breach at Facebook fuelled fears of a regulatory crackdown on the technology sector.
Reports said Cambridge Analytica, a firm hired by Trump’s 2016 presidential campaign, stole data from 50 million Facebook user profiles to help design software to predict and influence voters’ choices.
“The scandal surrounding Facebook in relation to Cambridge Analytica has dented the tech sector as a whole, and the longer the story looms, the more pressure is likely to be applied to the industry,” CMC Markets UK analyst David Madden said.
Facebook stock lost another five percent on the Nasdaq Tuesday after plunging 6.8 percent the previous day.
European lawmakers demanded answers from Facebook Tuesday and Britain’s information watchdog sought a warrant to search the London offices of the analysis firm involved.
The company’s “silence speaks volumes and we suspect Facebook are preparing a robust response,” said Jasper Lawler at London Capital Group.
“The tech giant’s fast-and-loose handling of private data will feed the niggling doubt investors have had all along that the big US tech stocks cannot keep going up so rapidly forever,” he said.
– Fed watch –
Investors are also keeping a close watch on the Fed’s meeting this week, seeking clues about its timetable for tightening monetary policy.
“The start of the Fed’s monetary policy meeting that will conclude tomorrow with a rate decision is gathering attention,” Charles Schwab analysts said.
Opinion is split on the number of rate rises it will announce this year, with some forecasting three and others four.
– Key figures around 1640 GMT –
New York – Dow: UP 0.5 percent at 24,740.01 points
London – FTSE 100: UP 0.3 percent at 7,061.27 (close)
Frankfurt – DAX 30: UP 0.7 percent at 12,307.33 (close)
Paris – CAC 40: UP 0.6 percent at 5,252.43 (close)
EURO STOXX 50: UP 0.5 percent at 3,412.08
Tokyo – Nikkei 225: DOWN 0.5 percent at 21,380.97 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 31,549.93 (close)
Euro/dollar: DOWN at $1.2261 from $1.2335 at 2200 GMT
Pound/dollar: DOWN at $1.3994 from $1.4024
Dollar/yen: UP at 106.44 yen from 106.10 yen
Oil – Brent North Sea: UP $1.16 at $67.21 per barrel
Oil – West Texas Intermediate: UP $1.27 at $63.40
Source: Brecorder.com
