London (AFP) – Asian and European stock markets rallied on Friday on forecast-busting Chinese economic data but Wall Street shares fell as a historic strike hit the US auto sector.
Investors are also gearing up for next week’s US Federal Reserve meeting on interest rates after the European Central Bank signalled on Thursday the latest rate hike could be its last.
Wall Street indices opened in the red, hours after the US auto workers union launched simultaneous strikes at three factories of the “Big Three” car manufacturers — an unprecedented move.
The stoppages started after midnight as contract negotiations with General Motors, Ford and Jeep-owner Stellantis failed to produce an agreement on wage hikes before a union deadline.
“This is not a surprise to the market given the tenor of remarks leading up to the deadline, but that doesn’t mean it is a good thing for the economy,” Patrick O’Hare, market analyst at Briefing.com, said.
“It will become less of a good thing the longer it persists given the reach and importance of auto manufacturing supply chains,” he added.
President Joe Biden, who has sought to lock up support from organised labour for his re-election effort, even called union leaders on Thursday.
US markets were also digesting retail sales figures that were hotter than anticipated, boosted by energy prices.
The mood was positive among traders in Asia and Europe after data showed Chinese retail sales and industrial production jumped more than expected last month.
The figures were the latest suggesting the economy could be stabilising after months of sluggishness, with inflation, trade and services all showing a marked improvement in recent weeks.
They also came a day after the People’s Bank of China announced a cut in the amount of cash lenders must hold in reserve, a decision aimed at freeing up cash for loans that can juice business activity.
The Paris CAC 40 index led the way in Europe, rising 1.3 percent in afternoon deals.
Tokyo closed up more than one percent, helped by a rally in tech investor SoftBank that came after the firm’s chip design unit Arm soared 25 percent on its trading debut in New York a day earlier.
Arm rose further on Friday, bucking the trend on Wall Street.
Equities were “building on strong gains in yesterday’s session after the European Central Bank signalled its hiking cycle is over, whilst stronger-than-expected Chinese data overnight has helped secure the upbeat mood,” said Neil Wilson, chief market analyst at Finalto.
Traders will shift their attention to the Fed next week, with expectations of a pause in the rate-hike campaign when it wraps up a two-day meeting on Wednesday.
The ECB gave a strong hint it may be done with the monetary tightening campaign on Thursday after pushing rates to their highest level since the introduction of the euro in 1999 and forecasting inflation would come down to a near-target 2.1 percent in 2025.
– Key figures around 1400 GMT –
New York – Dow: DOWN 0.1 percent at 34,863.94 points
London – FTSE 100: UP 0.8 percent at 7,737.75
Frankfurt – DAX: UP 0.8 percent at 15,924.94
Paris – CAC 40: UP 1.3 percent at 7,404.55
EURO STOXX 50: UP 0.7 percent at 4,307.38
Tokyo – Nikkei 225: UP 1.1 percent at 33,533.09 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 18,182.89 (close)
Shanghai – Composite: DOWN 0.3 percent at 3,117.74 (close)
Euro/dollar: UP at $1.0682 from $1.0645 on Thursday
Pound/dollar: UP at $1.2421 from $1.2409
Dollar/yen: UP at 147.65 yen from 147.46 yen
Euro/pound: UP at 86.00 pence from 85.73 pence
Brent North Sea crude: DOWN 0.6 percent at $93.16 per barrel
West Texas Intermediate: DOWN 0.3 percent at $89.87 per barrel
burs-lth/bp
