LONDON: European stock markets rose Wednesday, tracking some key Asian indices higher as the dollar extended gains against peers on expectations of further US interest rate rises, traders said.
Looking ahead, dealers awaited a first budget from the government of French President Emmanuel Macron, set to include a major tax cut for wealthy investors that he sees as crucial for his business-friendly agenda.
US President Donald Trump’s own tax reform plan was also eagerly awaited.
“The rising dollar continues to be a great friend to UK and eurozone markets, as it takes down the euro and sterling”, noted Chris Beauchamp, market analyst at IG trading group, as weakness for the European currencies in turn boosts share prices of British and French exporters.
A standout performer among individual share prices Wednesday was Alstom, whose stock was up 5.5 percent at 35.5 euros on news of the merger of its rail activities with those of German industrial giant Siemens.
Siemens’ stock meanwhile won 1.8 percent to stand at 118.6 euros in midday deals.
Earlier in Asia, major stock markets were mixed as US-North Korea tensions continue to jangle nerves and keep investors from buying with any conviction.
The yen — which had surged in safe-haven buying Tuesday after Pyongyang accused Trump of declaring war and said it may shoot down US bombers — was being pegged back by the dollar.
– Yellen upbeat –
The greenback returned to favour after Federal Reserve boss Janet Yellen indicated the central bank would press on with its plan to raise borrowing costs, saying the US economy was strong enough to withstand it.
Analysts interpreted her comments as suggesting she did not want to delay raising rates and end up having to introduce sharper increases down the line — which could risk a recession.
The US unit meanwhile climbed ahead of a long-awaited release of details on Trump’s tax plan, which he said would cut the burden “not just a little bit, but tremendously” for the middle class.
His market-friendly promises to cut taxes, ramp up infrastructure spending and slash red tape have helped drive a global rally after his November election. But a series of crises and setbacks in Congress have thrown his agenda off track.
Elsewhere, the euro continued to struggle on worries about the difficulties German Chancellor Angela Merkel will have putting together a coalition in Europe’s biggest economy, and the implications for the eurozone.
Merkel won a fourth term Sunday, but a hard-right opposition party entered parliament for the first time.
Across the border in France, Wednesday’s budget is set to include a forecast for reducing the nation’s deficit to 2.6 percent of gross domestic product next year, below an EU ceiling of 3.0 percent.
On Tuesday, Macron set out his vision for far-reaching EU reforms, urging his European partners — particularly Germany — to go further in linking their economies, governments and armies.—AFP