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GLOBAL MARKETS-ECB, Fed rate cut hopes lift stocks, sterling sags

Published 23/07/2019, 07:11
© Reuters.  GLOBAL MARKETS-ECB, Fed rate cut hopes lift stocks, sterling sags
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* MSCI Asia-Pacific index gains 0.15%, Nikkei adds 0.95%
* Prospect of ECB, Fed easing supports global equities
* Pound sags with eurosceptic Johnson seen becoming new UK
PM
* European stock futures up 0.4-0.6%
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Shinichi Saoshiro
TOKYO, July 23 (Reuters) - Expectations that the European
Central Bank and Federal Reserve will cut interest rates boosted
stocks globally, while the pound sagged on worries that likely
new prime minister Boris Johnson would lead Britain into a
no-deal exit from the European Union.
In early European trade, pan-region Euro Stoxx 50 futures
STXEc1 rose 0.46% while German DAX futures FDXc1 climbed
0.57% and FTSE futures FFIc1 0.40%.
In Asia, Japan's Nikkei .N225 rose 0.95% while MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.04%.
The Shanghai Composite Index .SSEC edged up 0.15%.
Australian stocks .AXJO added 0.4% and South Korea's KOSPI
.KS11 gained 0.45%.
The S&P 500 .SPX edged up towards a record high on Monday,
supported by expectations that the Federal Reserve would cut
interest rates at its July 30-31 policy meeting. .N
European stocks .STOXX had also nudged higher the day
before with the European Central Bank seen cutting rates by 10
basis points at its policy meeting on Thursday.
But with central bank easing no longer a fresh theme, market
gains were limited.
"The likelihood of easing by the Fed is supportive for
equity markets, but the probability of a 25 basis point rate cut
has already been factored in for the most part," said Soichiro
Monji, senior strategist at Sumitomo Mitsui DS Asset Management.
In currency markets, the pound GBP=D4 was 0.2% lower at
$1.2449 and headed for its third session of losses.
Sterling was under pressure due to the likelihood that
Britain's ruling Conservative party would elect eurosceptic
Johnson as its new leader and prime minister, replacing Theresa
May. The result of the weeks-long internal party election will
be announced on Tuesday. Some investors are worried Johnson could pull Britain out of
the European Union on Oct. 31 without a trade deal in place in
order to appease hardline anti-EU members of his Conservative
Party.
The dollar index .DXY against a basket of six major
currencies rose 0.2% to 97.463, helped by a rise in U.S.
Treasury yields.
The greenback gained 0.15% to 108.040 yen JPY= .
The euro dipped 0.17% to $1.1189 EUR= , weighed by the
possibility of easing by the ECB.
"It is going to take a bold stroke by the ECB to both
satisfy markets clamouring for incremental easing and make a
difference to the economy, all the while remaining inside its
institutional setting and not destabilising the financial
system," wrote Carl Weinberg, chief international economist at
High Frequency Economics.
The New Zealand dollar NZD=D4 slipped 0.4% to $0.6731,
pressured in part by news the Reserve Bank of New Zealand (RBNZ)
was taking a fresh look at unconventional monetary policy
strategies, with interest rates already at a record low of 1.5%.
Crude oil prices edged higher after two days of sharp gains
due to heightened tensions in the Middle East.
Brent crude LCOc1 added 0.19% to $63.38 per barrel after
rising 1.2% the previous day on concerns over possible supply
disruptions after Iran's seizure of a British tanker late last
week. O/R

(Editing by Simon Cameron-Moore and Jacqueline Wong)

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