Stocks pause as US stimulus showdown weighs

A worker shelters from the rain as he passes the London Stock Exchange in London at lunchtime October 1, 2008. — Reuters pic
A worker shelters from the rain as he passes the London Stock Exchange in London at lunchtime October 1, 2008. — Reuters pic

LONDON, Aug 6 — Stock markets took a breather today after several stronger sessions as nervous investors kept an eye on stimulus talks in Washington and China-US tensions weighed on confidence.

In Europe, London did worst as the pound rallied on the back of a less pessimistic outlook by the Bank of England, hurting the earnings prospects of exporters in the FTSE 100 index. British interest rates were left unchanged.

“The FTSE 100 gave up a good portion of its recent gains... as investors weighed the latest decision on interest rates from the Bank of England,” said AJ Bell investment director Russ Mould.

On Wall Street, the Dow was steady shortly after the opening, following four straight sessions of gains which had been fuelled by bets that US lawmakers will eventually reach a deal on more stimulus for the world’s top economy.

While the two parties remain far apart on their proposals — with Democrats’ US$3.5 trillion (RM14.6 trillion) plan more than three times bigger than the Republicans’ offer — there was hope for a deal.

“For now our sense is that no politician in the US wants to be blamed for a failure to deliver a new round of stimulus ahead of the elections in November,” said National Australia Bank’s Rodrigo Catril.

A smaller number of US weekly jobless claims than analysts had expected was welcomed and prepared the ground for tomorrow’s key employment report for July, analysts said.

The China-US stand-off meanwhile continued to jar nerves, with a planned visit by US health secretary Alex Azar to Taiwan sparking a spat.

“China will likely interpret the trip as a provocative move ahead of planned US-China trade talks on August 15,” said Stephen Innes at AxiCorp.

Key figures around 1350 GMT

London — FTSE 100: DOWN 1.3 per cent at 6,023.17 points 

Frankfurt — DAX 30: DOWN 0.5 per cent at 12,602.85 

Paris — CAC 40: DOWN 0.9 per cent at 4,889.79 

EURO STOXX 50: DOWN 0.8 per cent at 3,243.79 

New York — Dow: FLAT at 27,199.79

Tokyo — Nikkei 225: DOWN 0.4 per cent at 22,418.15 (close)

Hong Kong — Hang Seng: DOWN 0.7 per cent at 24,930.58 (close)

Shanghai — Composite: UP 0.3 per cent at 3,386.46 (close)

Euro/dollar: DOWN at US$1.1862 from US$1.1863 at 2100 GMT 

Pound/dollar: UP at US$1.3171 from US$1.3113 

Euro/pound: DOWN at 90.05 pence from 90.47 pence

Dollar/yen: DOWN at 105.36 yen from 105.60 yen 

West Texas Intermediate: DOWN 0.9 per cent at US$42.58 per barrel 

Brent North Sea crude: DOWN 1.1 per cent at US$45.65 — AFP

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