German stocks index hits record high after more US peaks

LONDON (AFP/ APP): Germany’s bluechip stocks index on Friday breached 16,000 points for the first time following more record highs on Wall Street overnight as investors shrugged off data showing fresh US inflation pressures.
A jump in wholesale prices added to expectations the Federal Reserve will shift course and pull back on its stimulus efforts, starting with a slowdown in the pace of massive bond buying. “For now, markets appear… comfortable with that idea,” noted Michael Hewson, chief market analyst at CMC Markets.
“As long as the discussion doesn’t move onto the more sensitive topic of rate rises, then the current trend of… (stock market) highs looks set to continue.”
In Germany, Frankfurt’s DAX 30 index hit a record high of 16,030 points in Friday morning deals.
The first signal of a move to taper huge US stimulus could come as soon as this month when Federal Reserve chief Jerome Powell is due address the annual central banking conference in Jackson Hole, Wyoming.
The worry is that tapering, along with rises to interest rates to contain inflation as economies reopen from lockdowns, could hamper the recovery.
Elsewhere Friday, Asian stock markets closed lower following a broadly positive week.
The fast-spreading Delta virus variant, which is forcing governments to reimpose containment measures, and the Chinese government’s campaign to tighten its grip on the world’s number two economy were also playing on sentiment.
Data on Thursday showed US producer prices rose more than twice as much as forecast on-month in July, while the annual rate hit a record.
The producer price report came on the heels of Wednesday’s consumer price index which showed inflation moderating in July. “Global investors are assessing the implications of the spread of the Delta virus, the possible tapering by the Fed, and China’s clampdown,” said Geir Lode, of Federated Hermes.
“With equity markets almost doubling since the start of the pandemic and a bull market lasting over a decade, investors are questioning how far the bull market can rally.”
Investors were keeping an eye also on developments in China after officials said they would put in place tougher anti-monopoly rules and penalties over the next five years, as Beijing looks to tighten the screw further after a recent crackdown on a range of industries.
Tech and private equity firms have already been caught in the crosshairs of leaders, and a statement late Wednesday indicated finance, public health, and food and drug manufacturing would also be targeted.
Elsewhere, crude prices extended their recent sell-off fuelled by concerns that the Delta mutation would slam demand, with the International Energy Agency warning as much in a report Thursday.
“The oil market will likely continue to maintain a nervous watch, especially for a deterioration in China and the US,” said Vandana Hari, of energy consultant Vanda Insights, adding that the IEA report “validated fears over a slowdown in second-half demand”.
Tokyo’s Nikkei index closes down on virus worries
Tokyo’s benchmark Nikkei index closed lower on Friday as worries over rising coronavirus cases in Japan weighed on the market.
The Nikkei 225 index slid 0.14 percent, or 37.87 points, to end at 27,977.15, while the broader Topix index was up 0.15 percent, or 2.84 points, at 1,956.39.
“(The Nikkei index) rose following gains of US shares but was weighed down by rapidly expanding Covid-19 infections in Japan,” Okasan Online Securities said.
Although the country has seen a comparatively small Covid-19 outbreak overall, the latest wave driven by the more infectious Delta variant has been pushing daily case numbers to new records.
Tokyo’s virus advisory board on Thursday described the infection situation in the city as “uncontrollable”.
Tokyo and five other regions are currently under a virus state of emergency, which bans bars and restaurants from serving alcohol and asks them to close by 8pm.
Profit-taking following rallies in individual shares on sound earnings are also capping rallies in the Japanese market, analysts said.
The dollar fetched 110.40 yen in Asian trade, against 110.43 yen in New York.
In Tokyo, JFE Holdings surged 9.31 percent to 1,654 yen after it reported a better-than-expected net profit for the first quarter and raised full-year forecasts.
Toshiba dropped 4.37 percent to 4,265 yen after the troubled industrial conglomerate said it will seek shareholder approval for a new chairman this year.
Among other major shares, Toyota edged up 0.05 percent to 9,965 yen while SoftBank Group lost 0.10 percent to 6,647 yen.