Global stocks were mixed Friday on worries that the Italian government’s budget plans will not align with the European Union’s wishes for the country to reduce its debt.
KEEPING SCORE: In Europe, France‘s CAC 40 lost 0.3 percent to 5,523.90. Germany‘s DAX dropped 0.7 percent to 12,351.59. The FTSE 100 index in Britain was less than 0.1 percent lower at 7,542.33. Wall Street was set for a flat open. Dow futures added less than 0.1 percent to 26,480.00. The broader S&P 500 futures also was flat at 2,920.70.
ITALIAN SPENDING: On Friday, Italy’s new populist government announced a sharp increase in spending that will push the budget deficit to 2.4 percent of gross domestic product next year, a significant jump from the 2018 target of 1.6 percent, set by the former center-left government, but still within the 3-percent ceiling set by the EU. The bloc has been pressing Italy to reduce its debt, the second largest in the EU after Greece. After the announcement, the benchmark FTSE MIB tumbled 2.8 percent.
ANALYST’S TAKE: “There are concerns over how the EU will respond to the Italian budget that showed less fiscal rectitude than expected,” Chang Wei Liang of Mizuho Bank said in an interview.
ASIA’S DAY: Markets rebounded on Friday as strong U.S. economic data supported the Federal Reserve’s decision to raise interest rates. Hong Kong’s Hang Seng index added 0.3 percent to 27,788.52. The Shanghai Composite Index rallied 1.1 percent to 2,821.35. Australia’s S&P ASX 200 was 0.4 percent higher at 6,207.60. South Korea’s Kospi bucked the regional trend, losing 0.5 percent to 2,343.07. Shares fell in Taiwan and the Philippines but rose in Singapore and Indonesia.
JAPAN-US-TRADE: Japan’s Nikkei 225 jumped 1.4 percent to 24,120.04 after the country agreed to open negotiations on a bilateral trade agreement with the United States. The move won Japan relief from the immediate threat of punitive tariffs on its auto exports to the U.S. The yen rose sharply against the dollar overnight.
U.S. ECONOMY GROWS: The U.S. economy grew at a robust annual rate of 4.2 percent in the second quarter, its best performance in nearly four years, the government reported Thursday. “We’re doing much better than anybody thought possible,” President Donald Trump said at a news conference. But economists believe growth has slowed in the current quarter partly because of a drag from trade.
WEEK AHEAD: On Monday, investors will be watching Eurozone unemployment data and the Bank of Japan’s “tankan” survey, which measures confidence among large-scale manufacturers. The Labor Department will release its monthly tally of hiring by nonfarm employers at the end of the week. Chinese markets will be closed for the Golden Week holiday.
ENERGY: Benchmark U.S. crude rose 11 cents to $72.23 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 0.8 percent on Thursday to close at $72.12. Brent crude, used to price international oils, added 18 cents to $81.56. It settled at $81.38 per barrel in London.
CURRENCIES: The dollar rose to 113.49 yen from 113.42 yen. The euro weakened to $1.16042 from $1.1658.