B U S I N E S S

TUESDAY, MAY 3, 2016

PARIS: European shares rallied yesterday inholiday-thinned trading ahead of key USand eurozone data despite a sharp drop inTokyo as a surging yen hit expor ters.Frankfurt and Paris pushed slightly higherafter ending last week deep in the red asmarkets eyed possible clouds looming onthe global economic horizon and digested ashock decision in Japan.

Tokyo stocks plunged more than three per-cent leading a sell-off across Asia, also in limit-ed holiday trades, after the Bank of Japan sur-prised markets by opting Thursday not tounleash fresh stimulus despite signs of falter-ing growth.

After Friday’s public holiday in Japan, the

Nikkei closed 3.1 percent lower yesterday. “Weexpect short-term share market volatility toremain high,” Shane Oliver, the Sydney-basedhead of investment strategy AMP CapitalInvestors, told Bloomberg News.

“Failure by the BoJ to do more soon risksunwinding all the progress on inflation expec-tations seen under Abenomics, particularlywith the yen breaking to ever higher levels,”he added, referring to Prime Minister ShinzoAbe’s growth policy blitz.

But in the eurozone, Germany’s DAX 30climbed 0.7 percent, while France’s CAC 40rose 0.4 percent after both rounded off lastweek heavily lower as a strong jump in euro-zone growth was offset by another fall in con-

sumer prices. London’s FTSE 100 was closedfor a public holiday Monday.

Germany’s DAX rose 1 percent to 10,140.88and France’s CAC 40 added 0.6 percent to4,453.24. Britain’s FTSE 100 was closed for abank holiday. Wall Street looked set for anupbeat day, with Dow and S&P 500 futuresboth up 0.2 percent.

“Some disappointing earnings and ahigher euro versus the US dollar probablyled to profit taking in European equitiesdespite a better than expected eurozone Q1(first-quarter) GDP number,” ING CreditStrategy’s Quentin Gilletta said in a note toinvestors.

Despite Paris shares trading higher, a rise in

the euro against the dollar was holdinginvestors back, Philippe Cohen, ofBarclays Bourse, said. Investors were alsolikely keeping an eye on key manufactur-ing data in the US and eurozone due tobe released later. On Sunday, Chinareleased figures showing the country’sfactory activity eased slightly in April butcontinued to expand, helped by a recov-ery in the property market and indicat-ing some level of stability was returning.

Takata dives The yen has soared against the dollar

since the BoJ decision, which came soonafter the US Federal Reserve indicated itwas keeping its eye on market move-ments before hiking interest rates again.

And it remains elevated despite JapanFinance Minister Taro Aso trying to talk itdown by hinting at possible interventionif its strength continues. On Saturday hesaid the rally was “extremely worrying”,adding that “speculative moves are seenbehind it”.

“Tokyo will continue watching themarket trends carefully and take actionswhen necessary,” he said. The greenbackbought 106.49 yen yesterday, well downfrom the levels above 111 yen before theBoJ’s surprise announcement. With theyen rallying, Japan’s exporters wereunder pressure as it reduces the value oftheir overseas profits.

Sony and Fast Retailing each lost morethan four percent, while Toyota slipped3.8 percent. Troubled car parts makerTakata plunged 9.3 percent after reportsin various media said more than 100 mil-

lion vehicles equipped with air bagsmade by the company are likely to besubject to global recalls, up from the cur-rent 60 million.

The auto parts giant has been ham-mered by an exploding air bag defectblamed for at least 11 deaths. The sellingin Asia came after US stocks ended Fridaydeep in the red as a weak consumerspending reading compounded a below-forecast economic growth result and anuninspiring set of corporate reports.Markets in Hong Kong, China, Taiwan,Singapore and Malaysia were closed yes-terday. Japan is in the middle of itsGolden Week holidays and markets therewill be closed today, tomorrow andThursday of this week.

Investors have also turned broadlynegative on the dollar in the past twomonths, worried that the US FederalReserve will be unable to raise interestrates this year. A fall to a 6-1/2 month lowof $1.1493 against the euro bodes ill forthe run-up to payrolls data on Friday. Thedollar index of its strength against a bas-ket of six rival currencies, fell 0.2 percentto 92.868.

“The start of the new month does notmean a new trend. The technical tone ofthe dollar is weak,” Brown BrothersHarriman’s global head of currency strat-egy in New York, Marc Chandler, said in anote to clients. “The Federal Reserveacknowledges the continued improve-ment in the labour market. The problemis that it has not translated to strongerconsumption, and business investmentremains soft.” — Agencies

Europe stocks rally, shrug off Asia losses