A man looks at an electronic stock indicator outside a securities firm in Tokyo, Thursday, Nov. 7, 2013. Asian stock markets were mostly weaker Thursday, with a cautious mood prevailing ahead of key U.S. data that will provide further clues on when the Federal Reserve will cut monetary stimulus. Japan’s Nikkei 225 shed 0.7 percent to 14,238.95. (AP Photo/Junji Kurokawa)
LONDON (AP) — A stock market rally triggered by the European Central Bank’s surprise rate cut ran out of steam on Thursday amid concern the Federal Reserve will tighten its monetary policy earlier than expected. That did not, however, prevent shares in Twitter from soaring on their first day of trading.
The ECB unexpectedly cut its key rate by a quarter point to 0.25 percent, a fresh record low. A string of weak economic figures — particularly a drop in inflation — had raised pressure on the ECB to take action this week. But most analysts were expecting it to hold its fire, at least until next month, when it will have its staff forecasts.
The move pushed stocks, particularly in Europe, sharply higher and weighed on the euro. The stock rally ended, however, after upbeat U.S. growth figures suggested the Fed may ‘taper’ its monetary stimulus program earlier than expected — possibly as soon as next month.
“What began as a reason to bid equities was soon overtaken by a stronger one to sell,” said David White, a trader at Spreadex.
Germany’s DAX closed 0.4 percent higher at 9,081.03 while France’s CAC-40 fell 0.1 percent to 4,280.99. The euro was down 0.9 percent on the day, at $1.3389, having traded above $.13520 before the ECB announcement.
Britain’s FTSE 100 shed 0.7 percent to 6,697.22 after the Bank of England held its own interest rates unchanged.
On Wall Street, the Dow was down 0.1 percent at 15,727 while the S&P 500 shed 0.4 percent to 1,764, mainly on concerns that the 2.8 percent annualized growth rate the U.S. recorded in the third quarter will encourage the Fed to pull back on its stimulus, possibly as soon as December.
Friday’s nonfarm payrolls figures for October, often the most important piece of economic news in the month, may now carry even more weight than usual.
Shares in Twitter nevertheless had a great start to trading, opening at $45.10, up 73 percent from the initial public offering prices of $26 a share.
Earlier in Asia, Japan’s Nikkei 225 shed 0.8 percent to 14,228.44 and Hong Kong’s Hang Seng lost 0.7 percent at 22,881.03. China’s Shanghai Composite fell 0.5 percent to 2,129.40 and Seoul’s Kospi dropped 0.5 percent to 2004.04.
Benchmark crude for December delivery was down 59 cents at $94.21 in electronic trading at the New York Mercantile Exchange. The contract rose $1.43 to close at $94.80 a barrel on Wednesday.
