European markets diverged yesterday while Asian stock markets slid back after a key weekend meeting of finance ministers failed to quash concerns about stalling global growth.
In London, the FTSE 100 up 0.02% at 6,097.09 points; Frankfurt - DAX 30 down 0.2% at 9,495.40 points and Paris - CAC 40 up 0.90% at 4,353.55 points at the close yesterday.
Wall Street saw modest gains as oil prices advanced modestly and ahead of the US February jobs report later this week.
Just over two hours into trade the Dow Jones Industrial Average had added 0.4% to 16,705.99, while the broad-based S&P 500 and the tech-rich Nasdaq Composite Index were posting similar gains.
“European equities are trading lower on the back of... the G20 meeting concluding in Shanghai without any major breakthrough where stimulating global growth is concerned,” said Markus Huber, a trader at City of London Markets.
“Souring the mood somewhat not only in Asia but also in Europe is the fact that China has once again fixed its currency lower... This does not only keep the spotlight on a slowing Chinese economy but also creates further uncertainty.”
Adding to the unease was official data yesterday showing eurozone inflation in February down sharply to negative 0.2%, in the clearest sign yet that several rounds of stimulus measures by the European Central Bank (ECB) are not working.
A further cause of uncertainty is Britain’s upcoming vote on whether or not to remain in the European Union (EU).
A possible outcome of ‘Brexit’ could be a slump in the value of sterling, with Swiss bank UBS calculating the risk of exit at 40% and indicating the currency could fall to near parity with the euro.
But Capital Economics suggested that Brexit implications “should not be overstated, nor would they all be negative,” while accepting the risk of eurosceptic “contagion” to other member states.
Pressure has been mounting across the board on central bankers to do more to stimulate growth and reassure investors after financial markets posted one of the worst starts to the year in living memory.
But G20 ministers disagreed over the best way to stem the turmoil, and their final text did not include a call for coordinated action that many had hoped.
The communique said the group “will use all policy tools—monetary, fiscal and structural—individually and collectively” to build confidence and strengthen the recovery.
Back in Europe, shares in Barclays rallied 1.74% after the British bank said it was evaluating options over its African division, on the eve of the group’s annual results after media speculation regarding a potential sale of its shareholding in Barclays Africa Group (BAGL).
Several media outlets reported that Barclays could sell its 62.3% stake in BAGL in an overhaul spearheaded by chief executive Jes Staley but BAGL stressed it “remained committed” to Africa, saying it was optimistic on prospects.
Barclays Africa shares, however, tumbled 6.1% in Johannesburg.
Global stock markets had been buoyed on Friday by firmer oil prices and after brighter-than-expected US growth data.
“It could be argued some of these (pre-weekend) gains were as a result of some optimism about this weekend’s events in Shanghai as G20 finance ministers met to discuss the global economy,” said Michael Hewson, chief market analyst at CMC Markets UK.