Stocks fall as markets await US stimulus

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LONDON (Reuters) – Shares slipped on Thursday as investors waited for signs of an agreement on a U.S. stimulus package, while the U.S. dollar fell to its two-year low amid fears the recovery of the larger the world’s economy does not lag behind the others.

FILE PHOTO: The offices of the London Stock Exchange Group are seen in the City of London, Britain December 29, 2017. REUTERS / Toby Melville

European stocks edged down in volatile trading, with Frankfurt gaining 0.2% as investors digested a new batch of corporate earnings reports.

The large Euro STOXX 600 fell 0.2% after opening in the dark. London lost 1.3% as the pound jumped to a 5-month high after the Bank of England kept interest rates stable and signaled a move into sub-zero territory was not imminent .

Siemens jumped 2.9% as its CEO claimed to see an improvement in its business in China, although the United States was less clear.

Futures contracts on S&P 500 showed gains of 0.2%.

The MSCI World Stock Index, which tracks shares of 49 countries, narrowly slipped into the red, with prospects for a fourth straight day of questionable gains.

The mood in Europe mirrored that of Asia, where stocks outside of Japan hit a six-and-a-half-month high before relinquishing some of those gains.

Markets are waiting for direction in the form of a US fiscal stimulus package, which is currently the subject of political disputes in Washington, said Hugh Gimber, global markets strategist at JP Morgan Asset Management.

“Stocks are really struggling to find direction until we know the outcome of these negotiations,” he said. “Time is running out for US policymakers to do something.”

Top Congressional Democrats and White House officials appeared to harden their stance on the relief plan on Wednesday, with little indication of compromise or that an unemployment benefit as generous as $ 600 a week could be restored.

Fears that economic recoveries in major economies will diverge have surfaced in currency markets as the two-year dollar supremacy is threatened.

As US labor market unemployment claims figures loomed at 12:30 p.m. GMT, the dollar fell to its lowest level in two years as investors assess whether the US economic recovery from the coronavirus was in the pipeline. lag behind other major economies.

The euro climbed to its highest against the greenback since May 2018 before giving up its gains. It was the last dish at $ 1.18645.

According to a Reuters poll, this trend of dollar weakness and euro strength is expected to continue next year, depending on expectations of the US economic recovery, especially compared to Europe.

BoE STEADY

The British pound jumped to a new 5-month high against the dollar after the Bank of England kept interest rates at 0.1%, warning of the possible risks of pushing rates down ‘interest in negative territory.

The BOE offered less gloomy forecasts on unemployment and GDP contraction. Still, he said the UK economy will not return to its size at the end of 2019 until the end of next year. In May, he announced that the milestone would be reached in the second half of 2021.

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The British pound was the latest up 0.3% to $ 1.3159.

“The BoE’s comments on the likelihood of further policy easing later this year have been more important to the pound’s performance in the near term,” MUFG analysts wrote. “The comments did not send a strong signal that the BoE is moving closer to adopting negative rates.

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Reporting by Tom Wilson; Editing by Giles Elgood

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