LONDON (Reuters) – Shares fell on Thursday as investors waited for signs of an agreement on a US stimulus package, while the US dollar fell to a two-year low on fears that the recovery in the world’s largest economy is lagging behind others.
FILE PHOTO: London Stock Exchange Group’s office in London, UK, December 29, 2017. REUTERS / Toby Melville
European equities declined in volatile trading, with Frankfurt up 0.2% as investors melted a new group of the company’s earnings reports.
The wide Euro STOXX 600 fell 0.2% after opening in black. London lost 1.3% as the pound jumped to a 5-month high after the Bank of England kept interest rates stable and signaled that a move to below-zero territory was not imminent.
Siemens jumped 2.9% because the CEO said it saw an improvement in its operations in China, although the US was less clear.
S&P 500 futures pointed to a 0.2% gain.
The MSCI World Equities Index, which tracks equities in 49 countries, narrowly entered the red, with the prospect of a fourth straight day of uncertainty.
The mood in Europe reflected that in Asia, where stocks outside Japan < .MIAPJ0000PUS> rose to a peak of six and a half months before giving up some of those gains.
Markets are waiting in the direction of a US fiscal recovery package, currently facing political turmoil in Washington, says Hugh Gimber, global marketing strategist at JP Morgan Asset Management.
“Equities are really struggling to find direction until we know the outcome of these negotiations,” he said. “The clock is ticking for American decision-makers to get something done.”
The best congressmen and White House officials seemed to be hardening their positions on the aid plan on Wednesday, with few hints of compromise or that an unemployment benefit as generous as $ 600 a week could be reintroduced.
Fears that economic recoveries in large economies differ have played out in the foreign exchange markets, with the dollar’s two – year dominance in jeopardy.
With unemployment claims in the US labor market plummeting at 1230 GMT, the dollar fell to a two-year low as investors weighed in on the US economic recovery from the coronavirus, releasing other major economies.
The euro climbed to its highest level against the greenback since May 2018 before giving up its winnings. It was last apartment for $ 1,18645.
The weak dollar, the strong euro trend will continue into next year, a Reuters survey showed, according to expectations, that the US economic recovery is flagged, especially compared to Europe.
The British pound jumped to a new 5-month high against the dollar after the Bank of England kept interest rates stable at 0.1%, as it warned of possible risks from taking interest rates into negative territory.
BOE offered less bleak predictions about unemployment and GDP reduction. It still said the UK economy would not recover to its size by the end of 2019 until the end of next year. In May, it had said that the milestone would be reached in the second half of 2021.
Sterling last rose 0.3% to $ 1.3159.
“More important for short-term pound performance was the BoE’s comments on the likelihood of further easing of policy later this year,” wrote analysts at MUFG. The comments did not send a strong signal that the BoE is approaching adopting negative rates.
For the Reuters Live Markets blog on European and UK stock markets, please click on: [LIVE/]
Reporting by Tom Wilson; Editing by Giles Elgood