LONDON – Stock markets turned higher on Friday after surveys suggested the eurozone economy is proving resilient to the uncertainty surrounding Britain’s Brexit vote. A big drop in business activity in the U.K. raised expectations of more central bank stimulus there.
KEEPING SCORE: Britain’s FTSE 100 rose 0.4 per cent to 6,728 and Germany’s DAX was up 0.1 per cent to 10,163. France’s CAC 40 gained 0.3 per cent to 4,388. U.S. futures indicate a positive opening on Wall Street. Dow and S&P futures were both up 0.2 per cent.
BREXIT IMPACT: A survey of services and manufacturing in the 19-country eurozone declined only modestly in July, suggesting the currency bloc has not suffered much damage so far from Britain’s vote to leave the European Union. The contrary was found in an equivalent survey of business activity in Britain, which indicated the country’s economy was shrinking at its fastest pace since early 2009.
ANALYSTS’ VIEW: Edoardo Campanella, economist at UniCredit, said that while the Brexit vote may yet affect the eurozone with some time lag, Friday’s report is “consistent with our view that most of the economic damages will be concentrated in the U.K.”
Britain’s survey, on the other hand, was “truly horrible,” according to Howard Archer, economist at IHS Global Insight. It “boosts the case for the Bank of England to come up with a substantial package of measures at its Aug. 4 meeting.”
ASIA’S DAY: Earlier, Japan’s Nikkei 225 fell 1.1 per cent to 16,627.25 after the Bank of Japan governor, Haruhiko Kuroda, was cited ruling out direct cash injections to the economy. Hong Kong’s Hang Seng index shed 0.2 per cent to 21,964.27. China’s Shanghai Composite Index lost 0.9 per cent at 3,012.82. Australia’s S&P ASX 200 slipped 0.3 per cent to 5,498.20. South Korea’s KOSPI edged down 0.1 per cent at 2,010.34. Southeast Asian markets were down.
OIL: U.S. crude shed 6 cents to $44.69 in New York. On Thursday, it sank $1. Brent crude, the global benchmark, rose 4 cents to $46.24, after falling 97 cents on Thursday.
CURRENCIES: The pound plunged against the dollar on the prospect of more stimulus from the Bank of England. It was down 1 per cent at $1.3104, from $1.3280 the previous day. The dollar rose to 106.08 yen from 105.76 and the euro fell to $1.1017 from $1.1027.