Global stock markets are higher on speculation of an imminent cut in US interest rates

London (AFP) - Stock markets mostly rose Friday, after Federal Reserve chief Jerome Powell all but flicked the switch on a US interest rate cut at the end of the month.

After big losses at the start of the week, trading floors have been much more upbeat since a two-day congressional testimony in which Powell hinted at a possible reduction in borrowing costs, with markets now betting on the size of the anticipated cut.

On Wall Street Thursday, the Dow stocks index ended above 27,000 points for the first time, with the positive sentiment filtering through to Asia and Europe on Friday.

The dollar dipped against main rivals, while oil prices rose slightly amid tensions over Iran.

“Dealers remain divided as to the size of the (Fed) cut… but the view across the board is that monetary policy will be loosened,” said analyst David Madden at CMC Markets UK.

Further stock market gains came despite unease caused by US President Donald Trump accusing China of backsliding on a trade promise – just days after the two sides tentatively began telephone talks on resolving their tariffs war.

Meanwhile, China’s economy grew at its slowest rate in nearly three decades in the second quarter, hit by the US-China trade war and weakening global demand, according to an AFP survey of analysts.

The world’s second largest economy expanded 6.2 percent in April-June, the poll of 10 economists estimated, ahead of the official release of gross domestic product figures Monday.

- Oil prices firm -

Elsewhere, oil prices continued to win support from geopolitical tensions after armed Iranian boats threatened a British oil tanker earlier in the week.

Iran’s menacing of the BP supertanker on Wednesday appeared to be in retaliation for Britain’s seizure of the Iranian Grace 1 tanker off Gibraltar on July 4.

“With Iran seeking retribution for the UK’s actions around Gibraltar, there is a distinct possibility that we could see an upside shock to prices,” said IG trading group analyst Joshua Mahony.

“That being said, in the absence of such shocks, US production is likely to remain a drag on prices.”

Iran’s Revolutionary Guards denied involvement in the British Heritage incident but said the United States and Britain would “strongly regret” British detention of the fully-loaded Iranian tanker off Gibraltar for violating sanctions on Syria, allegedly the planned recipient of its cargo.

The Pentagon said Thursday it was discussing military escorts for vessels in the Gulf.

Rises in oil prices as a result of the incident have been capped by an oversupplied oil market, according to traders.

And the IEA on Friday said the recent decision by oil producing countries to prolong cuts in output will not fundamentally change the outlook for the market.

“The widely-anticipated decision by OPEC+ ministers to extend their output agreement to March 2020 provides guidance but it does not change the fundamental outlook of an oversupplied market,” the International Energy Agency said in its latest monthly report.

At a meeting two weeks ago in Vienna, OPEC countries and other oil producers such as Russia agreed to prolong by nine months daily output cuts aimed at supporting prices and soaking up excess supplies.

But supply is currently well in excess of demand, said the Paris-based institution that provides advice to oil-consuming nations.

- Key figures around 1100 GMT -

London - FTSE 100: UP 0.2 percent at 7,524.48 points

Paris - CAC 40: UP 0.5 percent at 5,581.51

Frankfurt - DAX 30: UP 0.1 percent at 12,342.03

EURO STOXX 50: UP 0.2 percent at 3,502.69

Tokyo - Nikkei 225: UP 0.2 percent at 21,685.90 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 28,471.62 (close)

Shanghai - Composite: UP 0.4 percent at 6,696.50 (close)

New York - Dow: UP 0.9 percent at 27,088.08 (close)

Euro/dollar: UP at $1.1259 from $1.1255 at 2130 GMT

Pound/dollar: UP at $1.2531 from $1.2526

Dollar/yen: DOWN at 108.33 yen from 108.45 yen

Brent North Sea crude: UP 0.4% at $66.76 per barrel

West Texas Intermediate: UP 0.1% at $60.20 per barrel

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