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London - Government bonds advanced and European stocks declined alongside US equity futures as investors switched their focus from the Federal Reserve to the uncertain outlook for global trade.
The dollar steadied, the euro fell and the pound jumped as the Bank of England held interest rates.
The tone of trading was largely risk-off, and the Stoxx Europe 600 Index dropped a second day as a slowdown in private-sector growth offset reports the European Union believes it’s on track to be exempted from imminent US tariffs.
The greenback was fractionally higher after plunging on Wednesday in the wake of the Federal Reserve meeting, where policy makers signaled the pace of monetary tightening won’t accelerate this year. In Asia, Japanese and Korean stocks advanced while Hong Kong and Chinese shares retreated after China’s central bank also lifted market interest rates.
There was plenty to digest from the Fed gathering, where the central bank raised the benchmark lending rate a quarter point and forecast a steeper path of hikes in 2019 and 2020, but downgraded its characterisation of economic growth from solid to moderate.
Traders won’t have long to dwell on it, though: President Donald Trump is set to announce tariffs against Asia’s largest economy on Thursday, according a person familiar with the matter, the latest escalation of his protectionist agenda.
Elsewhere, West Texas oil fluctuated before falling and the Australian dollar slipped after the country’s unemployment rate climbed. The British pound extended gains as the country’s central bank voted 7-2 to maintain interest rates.
Here are some key events on the schedule for the remainder of this week:
• The Bank of Russia’s rate decision is on Friday.
• US government funding is due to expire at the end of the day on Friday.
And these are the main moves in markets:
Stocks
• The Stoxx Europe 600 Index sank 1% as of 8:09 pm New York time, the lowest in more than two weeks.
• The MSCI World Index of developed countries increased less than 0.05%.
• The MSCI Asia Pacific Index rose 0.2%, the first advance in a week and the biggest advance in more than a week.
• The Shanghai Composite Index fell 0.5% to the lowest in more than two weeks.
• The MSCI Emerging Market Index decreased 0.5% to the lowest in two weeks.
• Futures on the S&P 500 Index sank 0.6% to 2 700.75, the lowest in almost three weeks.
Currencies
• The Bloomberg Dollar Spot Index increased 0.1% to 1 124.76.
• The euro fell 0.2%.
• The British pound gained 0.1% to the strongest in seven weeks.
• The Japanese yen climbed 0.4% to 105.65 per dollar, the strongest in more than 16 months.
Bonds
• The yield on 10-year Treasuries declined three basis points to 2.85%, the biggest drop in three weeks.
• Germany’s 10-year yield declined four basis points to 0.56%, the lowest in 10 weeks on the largest decrease in almost four weeks.
Commodities
• West Texas Intermediate crude fell 0.2% to $65.03 a barrel.
• Gold dipped 0.2% to $1 329.89 an ounce.
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