Equity markets in the European continent finished Wednesday session on a disappointing note, FTSE 100 closed 0.6% down. As the European bourses end at record low in more than two months. What caused the drop?
29 June, ITRADER.com – The Stoxx Europe 600 gave up 0.7% to close at 385.52, its lowest point since April 21, paired with a steep drop on euro to 1.1292 from 1.14 per greenback after European Central Bank President Mario Draghi’s dovish remarks.
Factors influencing European bourses end at record low
Alongside, the sharp decline in technology shares and major oil prices were the other factors influencing European bourses end at record low. The slump in tech shares that cast a cloud on European markets as it fell down 1.2%, its biggest daily loss in two week, following a reported cyberattack that disrupted computers and major bank firms around the globe.
In Germany, the DAX 30 shed 0.2% at 12 647.27 while France’s CAC 40 index closed 0.1% lower at 5 252.90. The blue-chip FTSE 100 index of Great Britain finished down 0.6% at 7 387.80 while Spain’s IBEX bucked the trend, settling 0.5% higher at 10 702.70. Meanwhile, lower oil prices resulted to a weaker performance in oil and gas stocks including Tullow, which was the biggest decliner in yesterday’s session.
British pound gains ground as BoE hints on potential rate hike
The British pound posted strong gains on Wednesday. As the Governor of Bank of England Mark Carney gave a positive outlook on lifting the country’s interest rates.
Versus the dollar, pound sterling inched up 0.9%, equivalent to a cent, to settle at 1.2934 per greenback. Against the euro, it appreciated by 0.5% to close at 1.1136. The surge in pound was an effect of Carney’s remarks that the central bank may remove the monetary policy. Whilst the BoE may use a potential rate hike soon to fight inflation.
The governor stated, “Some removal of monetary stimulus is likely to become necessary. If the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.” This spurred huge leap in currency markets. As investors warmly accepted the prospect of ending stimulus measures that were introduced after the financial crisis of 2008.
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