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European, Japanese markets up as UK chooses new PM
July 12, 2016, 10:29 am

Japan's Abe has supported the yen's fall as a means to reinvigorate the economy [Xinhua]

Japan’s Abe has supported the yen’s fall as a means to reinvigorate the economy [Xinhua]

European markets opened largely up on Tuesday as fears of Brexit’s adverse effects on the continent subsided and the UK smoothly transitioned to a new prime minister.

On Monday, the UK Conservatives’ Theresa May emerged as the sole candidate for the top job as David Cameron announced he would step down this week.

London’s FTSE was up 0.11 per cent at press time to 6,690.12. The sterling pound also rose by 1.38 per cent to 1.3177 dollars reversing a deep slide last week.

In Paris, the CAC 40 rose 1.67 per cent to 4,335 while in Frankfurt, the DAX jumped 1.62 per cent to 9,992.

But European markets have also been pulled up by a strong rally in Asian markets on Tuesday, largely tethered by expectations that the Bank of Japan will introduce a significant stimulus package to weaken the yen currency.

Japanese Prime Minister Shinzo Abe, who had pushed through often controversial economic plans, emerged with a clear cut parliamentary victory on Sunday when the ruling coalition – including his Liberal Democratic party (LDP) – won by two-thirds majority upper house elections.

“To support demand properly, we’ll put in place a bold and comprehensive economic package,” Abe told the press on Monday with many analysts predicting a stimulus of at least $100 billion.

The yen immediately weakened at its steepest decline since 2014.

At press time on Tuesday, the dollar was up 0.94 per cent to 103.77 yen from the previous day’s close.

The Nikkei index rallied 2.94 per cent at press time but slid slightly to 16,095 at closing bell.

China’s benchmark Shanghai Composite closed up 1.82 per cent at 3,049 while in Hong Kong the Hang Sang Index closed up 1.65 per cent to 21,224.

South Korea’s Kospi was up 0.16 per cent and in Australia, the ASX was up 0.3 per cent to 5,353.

In India, Bombay’s benchmark Sensex was up 0.68 per cent to 27,813.

US markets are likely to continue a second day of strong earnings on Tuesday.

The S&P 500 closed up 0.34 per cent at 2,137 Monday having set another record and still riding high on the better than expected Labor Department jobs report last Friday. It actually hit 2,143 during noon trading Monday.

The Nasdaq closed up 0.64 per cent at 4,998 while the Dow Jones rose 0.44 at 18,226.93.

The BRICS Post with inputs from Agencies

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