Stocks rise as ECB is careful in dialing back stimulus

October 26, 2017

A woman walk past a bank electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Thursday, Oct 26, 2017. Asian shares were drifting Thursday as Wall Street's retreat from recent record highs and a widely awaited European Central Bank meeting gave investors reason to pause. (AP Photo/Vincent Yu)

HONG KONG (AP) — World stock markets rose Thursday after the European Central Bank was cautious in its move to dial back on its bond-buying stimulus program.

KEEPING SCORE: France’s CAC 40 rose 1 percent to 5,426 and Germany’s DAX gained 0.6 percent to 13,036. Britain’s FTSE 100 added 0.6 percent to 7,488. Wall Street was poised to open higher. Dow futures were up 0.2 percent while those for the S&P 500 gained 0.1 percent.

ECB: The ECB said it would reduce its bond purchases to 30 billion euros ($35 billion) per month starting in January, from 60 billion euros currently. The purchases would continue at least until September 2018. The bank kept some flexibility in its statement, saying that it could increase the purchases if the 19-country eurozone endures a new economic shock. Investors are watching the news conference of ECB President Mario Draghi for more details on the bank’s stimulus outlook.

PROFIT AND LOSS: Investors were digesting the latest round of quarterly corporate earnings reports. In South Korea, automaker Hyundai Motors reported its net income plunged by a fifth in the July-September period, adding to a nearly four-year long losing streak, while LG Electronics reported a wider loss for its mobile division even as its overall business stayed profitable. Germany’s Deutsche Bank reported that net income more than doubled on cost cuts and Finnish network operator Nokia posted a wider net loss. They follow shaky earnings reports from U.S. companies including telecom giant AT&T, aerospace company Boeing and chipmaker Advanced Micro Devices.

FED SHORTLIST: Anticipation is building for President Donald Trump’s decision on who should lead the Federal Reserve once Chair Janet Yellen’s term expires in February. His choice is expected before he leaves for an Asia trip on Nov. 3. In a TV interview, he praised Yellen but also acknowledged his conflicting desire to make his own mark. Among the four other candidates, Trump’s top economic adviser Gary Cohn is now seen as out of the running.

ASIAN SCORECARD: Japan’s benchmark Nikkei 225 index edged 0.2 percent higher to close at 21,739.78 while South Korea’s Kospi dipped 0.5 percent to 2,480.63. Hong Kong’s Hang Seng slipped 0.4 percent to 28,202.38 but the Shanghai Composite in mainland China added 0.3 percent to 3,407.57. Australia’s S&P/ASX 200 gained 0.2 percent to 5,916.30. Taiwan’s benchmark fell while Southeast Asian indexes were mixed.

CURRENCIES: The euro fell on the ECB’s announcement, a sign that investors find it will allow rates to be low for longer than they had expected. It fell to $1.1744 from $1.1813 the day before. The dollar slipped to 113.67 yen from 113.75 yen.

ENERGY: Oil futures fell. Benchmark U.S. crude gained 4 cents to $52.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 29 cents to settle at $52.18 a barrel on Wednesday. Brent crude, used to price international oils, sank 9 cents to $58.35 per barrel in London.

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