GLOBAL MARKETS-Stocks and euro steady as ECB taps brakes on stimulus

  • 9/9/2021
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European stocks, U.S. futures fall amid risk-off mood * Hong Kong benchmark falls 2% on China gaming crackdown * Dollar steady, euro nudges up as ECB reduces bond buying * Oil steady, aluminium perched at 13-year high, gold dips LONDON, Sept 9 (Reuters) - World share markets dipped for a third straight day on Thursday as the European Central Bank took its first tentative step in withdrawing stimulus and Beijing took another swipe at its big tech firms. Europe’s STOXX 600 was still in the red after the ECB announced it was slowing its 80 billion euro-a-month PEPP programme. But it was off earlier lows as there seemed some comfort that, with inflation in the euro zone now at a 10-year high, it hadn’t gone further. As focus turned to ECB Chief Christine Lagarde’s 1230 GMT news conference, equities edged away from earlier lows, the euro consolidated a modest 0.2% rise against the dollar, while bond markets cheered by sending French 10-yields negative again.I think it has been largely priced by the market,” said AXA Group Chief Economist Gilles Moec. He was waiting to see if Lagarde talked about a potential end date for the PEPP programme, which would be a “true” tapering. “I think the (ECB) council is far to divided for her to start deliberating on that.” Germany’s 10-year yield, the benchmark for the bloc, was down a fraction at -0.33%. Italy’s 10-year yield slid 5 basis points to 0.70%, while the euro climbed for the first time in four days to be worth $1.1827. CAUTION! FRAGILE CHINA Back in the equity markets it wasn’t just about the ECB. U.S. stock futures, the S&P 500 e-minis, were down 0.1% after falls from Apple and Facebook on Wednesday and after one of the Federal Reserve’s policymakers had urged the central bank to get on with its own stimulus wind-down plans. The UK’s FTSE 100 was leading Europe’s losses as low-cost airline easyJet tumbled nearly 10% as it tapped shareholders for 1.2 billion pounds ($1.7 billion). The broader travel sector was down as much as 1.8%. MSCI’s broadest index of Asia-Pacific shares ended down 1%, which was its worst daily performance since Aug. 19, the last time markets decided they were worried about the U.S. Federal Reserve tapering its massive asset purchase programme. China bears were once again the reason. Chinese tech giants Tencent, NetEase and Alibaba had slumped 8.5%, 11% and 6% respectively after online gaming chiefs were summoned by authorities to check they are sticking to strict new rules for the sector. “The global story is looking soft and it’s being hit by the Delta variant plus concern about potentially the Fed still moving towards a taper,” said Rob Carnell, Asia head of research at ING. “It’s an unsettling combination of things.” The China angst had meant Hong Kong, where many heavyweight Chinese firms are also listed, was among the biggest fallers shedding 2.3%. News that Chinese authorities had told gaming firms to resolutely curb incorrect tendencies such as focusing “only on money” and “only on traffic” had hurt companies with large gaming operations. Tencent fell 8.5%, Bilibili lost nearly 9% and NetEase slumped 11%. There was more turbulence too for the country’s most indebted property giant, Evergrande. Media reports the company would suspend some interest payments on loans and payments to its wealth management products sent its shares down more than 10% at one point, although they recovered almost half of the drop on news that some creditors had agreed to loan payment extensions. Korea’s Kopsi fell 1.5%, also under pressure from regulatory scrutiny of local tech players. In Korea’s case, fintech names such as Kakao Corp , which sank 7.2%, and Naver Corp, down 6.9%, were in the spotlight. Australian stocks lost nearly 2% after payrolls data showed a sharp drop in jobs in the first half of August. It was calmer in the commodities markets. Oil prices were steady as production in the U.S. Gulf of Mexico was slow to come back on line following Hurricane Ida, while aluminium hit a 13-year high, partly in response to a coup in Guinea, one of the world’s top bauxite producers. “Political unrest in Guinea has significantly raised the risk of disruption. At the same time, power shortages and environmental measures are restricting output in China,” ANZ analysts said in a note. ($1 = 0.7246 pounds)

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