Global stocks rise on hopes for post-Brexit stimulus

NEW YORK — Global stocks rose again Friday as worries about the British exit from the European Union continued to recede amid expectations of more stimulus from central banks. 

Equity markets in Paris, London and Frankfurt all gained about one per cent in their fourth straight day of moving up. 

US stocks also pushed higher for the fourth day running, but the S&P 500 mustered a gain of just 0.2 per cent. US markets will be closed Monday for a public holiday.

The European increases came as eurozone unemployment fell to a near five-year low in May, a welcome piece of good news for the struggling single-currency bloc. However, unemployment still stood at 10.1 per cent, well above the level prior to the 2008 financial crisis.

In the US, the Institute for Supply Management reported its purchasing managers’ index for manufacturing activity rose to an unexpectedly strong 53.2 in June from 51.3 in May.

Analysts said that Britain’s June 23 vote to quit the EU, which has unleashed global worries about its impact on the global economy, would probably push central banks to further ease monetary policy.

Bank of England chief Mark Carney hinted on Thursday of more monetary stimulus in the coming months. The Brexit vote is also expected to push back any plans by the US Federal Reserve to hike interest rates.

The Brexit “is not a bullish event”, said Mace Blicksilver, the director of Marblehead Asset Management. 

“But you’ve triggered this massive dose of liquidity.”

Blicksilver said investors are cautious about selling stocks since the market could rally even higher next week now that it is clear that Brexit has not emerged as a Lehman-type event, at least in the near term.

But S&P Global trimmed its 2016 and 2017 US growth forecasts on Friday, warning that “the vulnerabilities surrounding Brexit are far from resolved”.

“All told, we expect the repercussions from Brexit to weigh somewhat on US GDP,” S&P said.

Briefing.com analyst Patrick O’Hare said the growing unknowns emanating from questions about the political complexion of Britain and the EU will drag on the US earnings outlook.

“There is a heightened degree of uncertainty stemming from the Brexit vote and a weaker global economic outlook as a result of it,” said Briefing.com analyst Patrick O’Hare.

Moves by central banks have “helped put a band-aid on the bleeding, yet there still haven’t been any sutures beyond that to close the cut, which will likely remain an open wound for some time,” he said.

On Wall Street, Hewlett Packard Enterprise rose 1.4 per cent after a California jury awarded it $3.1 billion from software giant Oracle in damages after HPE sued Oracle for not providing support services. Oracle lost 0.2 per cent.

Tesla Motors rose 2 per cent despite news that US auto-safety regulators were probing a fatal crash involving a Tesla sedan operating in a self-driving mode. Global Equities Research said the incident was “sad” but a “non-event” from a stock perspective.