Despite U.S. Federal Reserve’s assurances, numbers emerging from global equity markets point to continued instability worldwide. European shares dropped back to negative territory on Thursday, following the data released from the most recent Fed meeting. Investors are still worried whether markets could make it alone without falling back on U.S. central bank's emergency support.
The minutes from the U.S. central bank's last meeting, published after European markets had closed on Wednesday, offered no sign it was any closer to implementing an immediate increase in official interest rates to cool the economy.
Faith in a rally in share prices were more shaky over the past month than for some time, as the Fed nears what looks like a definitive end to its program of new money-printing.
U.S. and Asian markets rallied overnight on the news. But the bottom line is Europe’s concern about companies’ bottom line and the economy's ability to survive without the funds which the Fed's bond-buying has been infusing into the system each month.
The U.S. dollar, considered the major beneficiary of any move by the Fed toward higher interest rates, fell by as much as half a cent in response to the minutes but was broadly steady in early European trade.
Norway's largest bank DNB added to a discouraging start to the second quarter earnings for some of Europe's biggest companies while construction firm Skanska said it would significantly scale down its loss-making Latin American operations.
Britain's FTSE 100 index was up almost 4 percent rise Burberry, with the luxury brand reporting a strong batch of earnings for the first quarter, boding well for other high-end consumer companies.
Oil prices dropped, however, normally a negative for the commodity heavy index, and the market was struggling to eke out any gains after a week of steady losses. Markets in Germany's and France's were both down between almost 0.2 percent.
Asian markets moved in total contrast to its European counter-parts as the MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.3 percent. Indonesian stocks hit their highest level in over a year as the market welcomed the prospect of reform-minded Jakarta Governor Joko "Jokowi" Widodo becoming the next president and the Jakarta market was up 1.7 percent after earlier rising more than 2 percent.
Tokyo's Nikkei, however, fell 0.3 percent, weighed down by a record drop in machinery orders in May that cast doubt over the outlook for capital spending and the strength of its economic recovery.
China's export data didn’t cause much of a stir in regional markets as it fortified expectations that Beijing will have to unveil more stimulus measures to stabilize the economy and meet its 2014 growth target.