Dollar and equities back in fashion

The dollar held onto its gains and stocks climbed Thursday as strong concern over North Korea’s missile test faded, while oil prices shot higher.

“Equities remain in rebound mode, extending their bounces as relative geopolitical calm and positive macro data” in China, the United States and the eurozone “fuels fresh risk taking by investors,” said Mike van Dulken, head of research at Accendo Markets.

London closed 0.9 percent higher, followed by a 0.6 percent gain in Paris and 0.4 percent in Frankfurt.

The gains were more modest on Wall Street, with the Dow up 0.2 percent nearing midday.

“In light of the devastation wrought this week in Texas by Hurricane Harvey, and the provocative missile launch by North Korea, it’s a testament to the underlying bullish bias that the stock market has fared as well as it has,” said Patrick O’Hare of Briefing.com

But one notable heavy loss among individual companies was French supermarket giant Carrefour.

Its share price dived 13 percent in Paris after the group published disappointing results for the first half and warned of a drop in earnings for the whole year.

The dollar was mostly holding onto gains made Wednesday, when the US Commerce Department reported Wednesday the world’s largest economy expanded a forecast-beating three percent in the second quarter.

“The greenback still seems to be benefiting from yesterday’s better than forecast second-quarter GDP reading,” said Spreadex analyst Connor Campbell.

The data revived speculation that the Federal Reserve could consider lifting US interest rates for a third time this year, and the attention of investors is now shifting to the release of US jobs figures on Friday.

“So, it is now all down to Friday’s official nonfarm payrolls report,” said market analyst Fawad Razaqzada at Forex.com.

“If this shows further strength in the labour market and another rise in wages then calls for a December rate rise may increase, triggering further dollar buying interest.

“Conversely, a very weak jobs report may have the opposite effect,” he said.

In Asian trade, the weak yen supported Japanese exporters, with Tokyo’s Nikkei ending 0.7-percent higher, while Sydney added 0.8 percent and Singapore gained 0.5 percent. Wellington and Taipei were also higher.

However, Shanghai dipped 0.1 percent as official figures showed a rise in Chinese factory activity in August but not strong enough to ease concerns about the world’s number two economy, which is growing at its slowest pace in more than a quarter of a century.

Hong Kong eased 0.4 percent, with profit-takers also moving in after enjoying six days of gains in the previous seven trading days.

On oil markets, both main crude contracts shot higher after having slid this week on the impact of Hurricane Harvey, which has forced the temporary closure of dozens of refineries in the crude-rich Gulf of Mexico, thus depressing the demand for crude.

“WTI and Brent Crude oil prices jumped on the news that OPEC members had a 96 percent compliance rate with the coordinated production cut in August,” said David Madden, a market analyst at CMC Markets UK.

“We are now finally seeing proper adherence to the production cut among oil producers.”

– Key figures around 1530 GMT –

London – FTSE 100: UP 0.9 percent at 7,430.62 points (close)

Frankfurt – DAX 30: UP 0.4 percent at 12,055.84 (close)

Paris – CAC 40: UP 0.6 percent at 5,085.59 (close)

EURO STOXX 50: UP 0.7 percent at 3,427.32

New York – Dow: UP 0.2 percent at 21,925.74

Tokyo – Nikkei 225: UP 0.7 percent at 19,646.24 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 27,970.30 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,360.81 (close)

Euro/dollar: DOWN at $1.1876 from $1.1882 at 2100 GMT on Wednesday

Pound/dollar: DOWN at $1.2880 from $1.2924

Dollar/yen: UP at 110.11 yen from 110.29 yen

Oil – Brent North Sea: UP $1.56 at $52.29 per barrel

Oil – West Texas Intermediate: UP $1.06 at $47.02

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