LONDON (Reuters) – Global equities dipped on Friday as eurozone data did not bode well for investors already worried about insufficient Chinese economic numbers and a slowdown in US fiscal stimulus.
FILE PHOTO: A pedestrian in the offices of the London Stock Exchange in the City of London, UK, 29 December 2017. REUTERS / Toby Melville
European stocks were also dragged down by a hit for travel stocks after Britain added more European countries to its quarantine list, including neighboring France.
The pan-European STOXX 600 was 1.2% down, although still on course to win for a second straight week.
The MSCI world index was 0.3% lower, drifting further from all highs in February. The index is still up close to 50% from the March trough in the wake of the COVID-19 pandemic.
“The rally was extended too long and most of the good news is already in price,” said Francois Savary, chief investor at Swiss wealth manager Prime Partners.
“There are no more positive than expected revenues, and we are going back to the macro background and checking the data regularly to see if the recovery is sustainable. Markets price a lot of good news and we will enter a period of volatility with the upcoming US elections. ”
The eurozone reported the biggest drop it ever had in employment in the second quarter. Data also confirmed a record decline in gross domestic product last quarter and an expansion in the eurozone’s trade surplus with the rest of the world.
Investors are concentrating following links to retail sales figures at 1230 GMT.
Data showing a slower-than-expected rise in Chinese industrial production and a surprising drop in retail sales put Asian stocks on the defensive.
MSCI’s broadest index of shares in Asia-Pacific outside Japan fell 0.2%, although shares in Japan increased 0.2%.
Chinese shares increased 1.5% in choppy trading, with data suggesting that domestic demand is still struggling following the outbreak of coronavirus.
E-mini futures for the S&P 500 were 0.1% negative.
The benchmark German 10-year Bund yield fell to -0.42% after rising for three sessions and following a six-week peak in early trading.
Yields on U.S. treasuries continued to rise after an auction of 30-year bonds on Thursday met weak demand.
Further equity gains are likely to be limited as investors wait for progress in negotiations on U.S. economic stimulus, which is necessary to prevent an emerging recovery in the world’s largest economy from slipping in reverse.
Some traders stuck to the sidelines before a meeting between US and Chinese officials on Saturday discussed their Phase 1 trade.
Spotgold fell 0.3% to $ 1,948.12 as high-yield U.S. Treasury bills prompted investors to re-evaluate their positions. Bullion has declined more than 4% so far this week, its largest weekly percentage since early March.
Data on Thursday showed the number of Americans looking for unemployment benefits to fall below one million for the first time since the pandemic began, but were not enough to change economists’ perceptions that the job market is false.
Proceeds from the U.S. Treasury also supported the U.S. dollar, which held stable and was close to a seven-week losing streak against the risk-sensitive Aussie. The yen was set for its worst week against the greenback in two months and fell about 0.9% to 106.74 from last Friday.
The dollar was heading for an eighth consecutive week of losses, its longest weekly losing streak since June 2010, according to a Refinitiv index.
Oil recovered from early losses, with Brent crude flat at $ 44.96 and US West Texas Intermediate also largely unusual at $ 42.24. [O/R]
Graph: World FX rates in 2020 here
Additional report by Stanley White in Tokyo; Edited by Kirsten Donovan and Hugh Lawson
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