Stock markets diverged and oil prices fell on Wednesday as China’s latest measure to bolster its economy, the world’s second-largest, failed to sustain another global rally.
Shanghai closed up 1.2 percent and Hong Kong advanced 0.7 percent after both markets surged more than four percent Tuesday following a slew of Chinese interest-rate cuts this week.
But European stocks broadly retreated while Wall Street’s main indexes finished mostly lower, with the Dow and S&P 500 both retreating from records.
“We’ve had consecutive days of a run-up and I think it’s expected that the market takes a bit of a pause here,” said Peter Cardillo of Spartan Capital.
China’s central bank on Wednesday announced a cut to its medium-term lending facility, the interest for one-year loans to financial institutions.
That came one day after the country unveiled some of its boldest measures in years to support an economy battered by a long-running debt crisis in the property sector and weak consumer spending.
“The problem is, the stimulus measures will take time to show in the economic data,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, adding that the actions “won’t do much to fix the country’s deepest issues” including a heavy debt burden.
Traders were awaiting the release Friday of the US personal consumption expenditures index — the Federal Reserve’s preferred inflation metric — hoping for an idea about its next move on interest rates.
The Fed’s jumbo rate cut last week ramped up hopes that it would embark on a series of reductions as prices rise at a less heated pace and the American jobs market slows.
“The Fed’s focus has switched towards unemployment which has ticked up recently, just as non-farm payrolls have come in below expectations over the last couple of months,” said David Morrison, a market analyst at Trade Nation.
The prospect of more cuts helped haven investment gold hit a new peak of $2,670.57 an ounce Wednesday, with the precious metal gaining also on geopolitical unrest, notably in the Middle East, according to analysts.
Oil prices slid, however, despite a larger than expected drop in the latest US crude stockpiles report on Wednesday.
Analysts pointed to speculation that Libya could soon boost oil output following a deal Wednesday announced by the United Nations mission in Libya aimed at resolving a crisis over its central bank.
– Key figures around 2030 GMT –
New York – Dow: DOWN 0.7 percent at 41,914.75 (close)
New York – S&P 500: DOWN 0.2 percent at 5,722.26 (close)
New York – Nasdaq Composite: UP less than 0.1 percent at 18,082.21 (close)
London – FTSE 100: DOWN 0.2 percent at 8,268.70 (close)
Paris – CAC 40: DOWN 0.5 percent at 7,565.62 (close)
Frankfurt – DAX: DOWN 0.4 percent at 18,918.50 (close)
Tokyo – Nikkei 225: DOWN 0.2 percent at 37,870.26 (close)
Hong Kong – Hang Seng Index: UP 0.7 percent at 19,129.10 (close)
Shanghai – Composite: UP 1.2 percent at 2,896.31 (close)
Euro/dollar: DOWN at $1.1130 from $1.1180 on Tuesday
Pound/dollar: DOWN at $1.3317 from $1.3413
Dollar/yen: UP at 144.81 yen from 143.23 yen
Euro/pound: UP at 83.54 pence from 83.34 pence
Brent North Sea Crude: DOWN 2.3 percent at $73.46 per barrel
West Texas Intermediate: DOWN 2.6 percent at $69.69 per barrel
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