LONDON: European stock markets edged higher on Wednesday, pausing for breath after strong and widespread gains for global indices in recent sessions.
Around 1000 GMT, London’s benchmark FTSE 100 index was up 0.2 percent compared with Tuesday’s close, as British Prime Minister David Cameron steps down Wednesday after his resignation in the wake of Britain’s vote to quit the European Union. In the eurozone, Frankfurt’s DAX 30 eked out a gain of less than 0.1 percent and the Paris CAC 40 gained 0.4 percent.
“Equity markets are hovering around break-even… taking a little breather from their recent uptrend after US bourses made fresh all-time highs, the UK prepares for a changing of the guard and investors get excited about more monetary and fiscal stimulus to foster economic growth and counter myriad headwinds,” Mike van Dulken, head of research at Accendo Markets, said in note to clients.Britain gets a new prime minister Wednesday, with Theresa May stepping up from the role of interior minister in the Conservative government. All eyes are also on the Bank of England, which markets are forecasting to cut its main interest rate on Thursday to a new record-low below 0.5 percent to curb any economic fallout from Britain’s vote in favour of exiting the European Union. Amid fears about the consequences of Brexit, Germany on Wednesday issued a 10-year bond at negative interest rate for the first time — selling more than 4.0 billion euros ($4.5 billion) with a yield of minus 0.05 percent.
The 10-year German government bond or “Bund” acts as a benchmark on the debt markets and is regarded as one of the safest investments.
It is the first time that investors have accepted negative returns in the first issue of a bond, meaning they will pay for the privilege of owning rock-solid Bunds.
In Asia meanwhile, markets rallied again on Wednesday with investors taking heart from another record close on Wall Street and talk of Japanese central bank stimulus, while China released better than expected export figures for June.
Japan’s Nikkei was once again the stand-out market, soaring on the back of a weaker yen and wiping out almost all the losses suffered after the shock of Britain’s June 23 referendum vote to leave the European Union. An optimistic tone has filtered through trading floors all week, after US data Friday showed the world’s number one economy created far more jobs than expected last month.