Global stocks higher after UK rate cut ahead of US jobs

BEIJING, China – Global stock markets mostly rose Friday following a British interest rate cut as investors looked ahead to U.S. data that are expected to show faster job growth in July.

KEEPING SCORE: In early trading, France’s CAC-40 rose 0.8 per cent to 4,381.65 and Germany’s DAX advanced 0.3 per cent to 10,256.53. London’s FTSE 100 added 0.3 per cent to 6,762.63. On Thursday, the FTSE 100 rose 1.6 per cent and the DAX and CAC-40 both added 0.6 per cent. Wall Street looked set for gains, with futures for the Dow Jones industrial average and Standard & Poor’s 500 index up 0.2 per cent. On Thursday, both were little-changed while the Nasdaq composite rose 0.1 per cent.

ASIA’S DAY: Hong Kong’s Hang Seng gained 1.4 per cent to 22,146.09 and Sydney’s S&P-ASX 200 added 0.4 per cent to 5,497.40. The Shanghai Composite Index shed 0.2 per cent to 2,976.70 and Tokyo’s Nikkei 225 was unchanged at 16,254.45. India’s Sensex advanced 0.8 per cent 27,945.46 and benchmarks in New Zealand, Taiwan and Indonesia also rose. Singapore and the Philippines declined.

BRITISH RATES: The Bank of England cut interest rates to new lows, its first reduction since the 2008 financial crisis, to offset the shock of Britain’s June vote to leave the European Union. The British central bank also unveiled a raft of stimulus measures that include resuming a bond-buying program to pump money into the economy and offering cheap loans to banks. The measures seemed to exceed investors’ expectations, and the bank said the measures could be expanded later if it proves necessary. In Europe, Britain’s FTSE 100 rose 1.6 per cent while Germany’s DAX and France’s CAC 40 both rose 0.6 per cent.

ANALYST’S TAKE: More easing looks “very likely” in light of Bank of England Governor Mark Carney’s “very negative” outlook in the event of Britain leaving the EU, which foresees a rise in unemployment from 4.9 per cent to 5.5 per cent, said Angus Nicholson of IG in a report. “The main focus for the UK is what sort of fiscal stimulus package new Chancellor Phillip Hammond announces at his ‘Autumn Statement’,” said Nicholson. “It’s safe to say former Chancellor George Osborne’s many years of austerity policies are set to be dramatically reversed.”

U.S. JOBS: Investors looked ahead to Labor Department data due out Friday that are expected to show the unemployment rate dipping slightly. Economists expect the data to show the U.S. economy added 175,000 jobs July, with the unemployment rate dipping to 4.8 per cent from 4.9 per cent. The Labor Department said Thursday applications for unemployment aid rose to 269,000 last week, a level close to historical lows and a positive sign for the job market. The number of Americans collecting unemployment benefits has fallen more than 5 per cent in last year, but the pace of hiring and economic growth slowed in the first half of 2016.

JAPANESE WAGES: Wage growth rebounded in June but the increase appeared to be too slow to achieve the Bank of Japan’s goal of generating 2 per cent inflation. Cash earnings rose 1.3 per cent compared with a year earlier, compared with a 0.1 per cent decline in May. “The bigger picture is that wage growth will likely remain too week to create major cost pressures,” said Marcel Thieliant of Capital Economics in a report.

ENERGY: Benchmark U.S. crude shed 27 cents to $41.66 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.10 on Thursday to close at $41.93. Brent crude, used to price international oils, fell 33 cents to $43.96 in London. It rose 81 cents the previous session to close at $44.29.

CURRENCY: The dollar declined to 100.88 yen from Thursday’s 101.21 yen. The euro edged up to $1.1149 from $1.1128.