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Cape Town - Markets are balanced on a knife edge as the US opening looms after the S&P 500’s second-biggest selloff this year.
Stocks in Europe extended a global decline after a terrorist attack in Barcelona added to unease about US policy paralysis and lingering tensions over North Korea. Airlines and hotels led the decline of the Stoxx Europe 600 gauge as industries across the board got caught in the downturn.
S&P futures edged higher, signalling US markets may steady after the underlying index plunged 1.5% on Thursday. Traditional havens including gold and the yen gained with core bonds across the euro region, and the dollar weakened.
Investors pulled $1.3bn from equity funds in the week ending August 16 as tensions over the Korean peninsula escalated, according to EPFR Global data.
Outflows from US stock funds were triple that, suggesting doubts about Trump’s stimulus plans are an additional worry. Heightened terror fears added to the malaise after at least 13 people died when a van plowed into pedestrians in Barcelona on Thursday.
“The terror attacks in the US and Spain just add to all the other geopolitical mess,” Simon Quijano-Evans, a strategist at London-based Legal & General Investment Management, said in a note to clients. “At some stage that is likely to culminate into a more extreme market reaction.”
The fallout from Trump’s remarks on violence in Charlottesville continues to raise questions over his ability to retain his team and focus on the economic agenda. Speculation that his top economic aide, former Goldman Sachs Group Inc. executive Gary Cohn, was poised to resign roiled markets on Thursday until reports that he’d opted to stay on board steadied the ship.
Still, some investors said the selloff is temporary. Neither the terrorist attack in Spain nor political turmoil in the US should create a trend, said Naoki Fujiwara, chief fund manager of Shinkin Asset Management in Tokyo.
“Both the US and Japanese economies are doing well, and what’s most important is the direction of US monetary policy,” Fujiwara said. “As long as the fundamentals are steady, the market will recover.”
Here are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index sank 0.8% as of 8:41 in New York.
• Futures on the S&P 500 Index gained 0.1%.
• The MSCI All-Country World Index fell 0.3% to the lowest in almost five weeks.
• Germany’s DAX Index decreased 0.3%.
• The UK’s FTSE 100 Index tumbled 0.9%.
• The MSCI Emerging Market Index dipped 0.5%.
Currencies
• The euro advanced 0.2% to $1.1742.
• The Bloomberg Dollar Spot Index decreased 0.2%.
• The British pound gained 0.1% to $1.2881.
• The Japanese yen increased 0.5% to 109.05 per dollar, the strongest in almost four months.
Bonds
• The yield on 10-year Treasuries gained less than one basis point to 2.19%.
• Germany’s 10-year yield decreased two basis points to 0.41%.
• Britain’s 10-year yield fell less than one basis point to 1.084%.
Commodities
• Gold climbed 0.6% to $1 295.81 an ounce, the strongest in more than nine months.
• West Texas Intermediate crude gained 0.3% to $47.20 a barrel.
Asia
• Japan’s Topix index fell 1.1% at the close, down 1.2% over the week.
• Australia’s S&P/500 Index ended 0.6% lower.
• The Kospi index ended 0.1% lower.
• Hong Kong’s Hang Seng Index fell 0.6%.
• The MSCI Asia Pacific Index lost 0.5%t, paring gains for the week.
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