The year-end rally on Europe’s major stock exchanges edged into its sixth day on Tuesday, just managing to ride out growing concerns over Greece and the pace of growth in China, in markets thinned out by the Christmas holiday season.
Britain’s FTSE 100 index was up 0.3 per cent, Germany’s DAX index up 0.1 per cent and France’s CAC 40 up 0.3 per cent.
But Greek shares fell almost 2 per cent as investors looked nervously at a presidential election that may spark a snap election and eventually threaten the country’s commitment to its international bailout.
Shanghai shares also fell the most in two weeks as investors took some profit on infrastructure stocks and a fall in prices of iron for construction — an indicator that property investment in China is weakening — spooked the Australian dollar.
But the tone overall has been steadier for the past few days, thanks largely to a stabilisation of oil prices — and a resulting quietening of Russia’s currency problems. A pre-Christmas rush of US data due later may also underline the improvement in the world’s biggest economy.
“We are likely to see some impressive US data on Tuesday. This would be the first time since 2003 we have seen two consecutive quarters of GDP growth above 4.0 per cent,’’ analysts at BNP Paribas wrote in a note to clients.
Trading was light in Asia with Japan on holiday and markets moved only marginally. MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.3 per cent.
Trade was also thin in Europe.
“Most investors have closed their books for the year. There’s not a lot of volume, and indexes are mostly in a neutral zone for now,’’ said Jean-Louis Cussac, head of Paris-based firm Perceval Finance.
There was a brief blip lower for sterling on the back of a shockingly large current account deficit and downward revisions of gross domestic product.
Olivier Blanchard, chief economist at the IMF, and Rabah Arezki, head of the commodities research team, talked up the impact of lower oil prices on economic growth forecasts in a blog on Monday.
They estimated the boost to world growth would be between 0.3 and 0.7 percentage points above the Fund’s baseline forecast of 3.8 percent in 2015, with the gain to China ranging from 0.4 to 0.7 percentage points.
Greek bond yields rose before the second round of the presidential vote. There have been some positive signs, but local media calculate Prime Minister Antonis Samaras is still 11 votes short of the parliamentary support he needs in a final vote next week to elect a new president and avoid an election.
“Any number that’s coming closer to 180 would lead to higher expectations of a remaining chance for the current government staying in charge,’’ DZ Bank strategist Christian Lenk said.
“But it's like a poker game. MPs will not show their hand in the second round.’’