Stocks react to oil slump, Trump, pound slides

Cape Town - Global equity markets headed lower as a slump in crude weighed on energy shares and President Donald Trump chided German producers for contributing to a lopsided trade surplus with the US.

The dollar erased declines as US economic growth beat economists' expectations.

European stocks fell with S&P 500 futures as crude headed for a weekly loss after the Organisation of Petroleum Exporting Countries' (Opec) move to prolong supply cuts for nine months disappointed investors hoping for more.

An index of European car-makers dropped to a one-month low.

The pound fell as a poll showed UK Prime Minister Theresa May losing ground to her main opponent ahead of next month’s election. Gold was poised for a third week of gains.

"Markets ultimately found the renewed deal among Opec and friends underwhelming," Cole Akeson, a strategist at Sberbank CIB in Moscow, wrote in an emailed note.

"Essentially, the market consensus seems to have come around to a view that regardless of what effect on global inventories the deal may have for now, Opec and its partners have little insight as to what to do later on."

Before this week’s deal, oil had climbed back above $51 a barrel after Saudi Arabia and non-Opec member Russia rallied support from Opec and other nations to extend the supply pact into 2018.

In Vienna this week, Opec left the market guessing about its exit strategy.

The British pound dropped after a poll showed the Conservative party lead narrowed after the Manchester attack, and as investors in Asia sold the currency after UK’s first-quarter economic growth missed estimates.

The poll results come less than two weeks before the June 8 general election.

Trading volumes may be lower than normal in some markets on Friday as investors approach the long weekend in the US and the UK, both of which have holidays on Monday.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index dropped 0.3% by 7:25 in New York, with oil and gas producers falling 1.3%. Automakers slid 0.8%, led by Porsche Automobil HLDG-PRF and Bayerische Motoren Werke.

Futures on the S&P 500 dropped 0.1%. The underlying gauge rose 0.4% on Friday as Best Buy and PVH results topped estimates and the Bloomberg Consumer Comfort Index signalled optimism among US shoppers.

Currencies

The Bloomberg Dollar Spot Index was little changed after falling as much as 0.2%, poised for a second week of declines. The pound slid 0.8% to $1.2837. A YouGov poll for the Times late on Thursday put the Conservatives at 43% with Labour at 38% - a dramatic narrowing of the gap that even this month has been as high as 24 points in some polls.

The yen rose 0.7% to 111.11 per dollar, after dropping 0.3% on Thursday. The euro fell 0.2% to $1.1190.

Commodities

West Texas Intermediate crude fell 0.7% to $48.56, after sinking 4.8% in the previous session. Crude is down 4.2% this week, the most since the five days ending May 5.

Gold rose 0.8% to $1 265.94 an ounce, heading for the highest since April.

Bonds

The yield on 10-year Treasury notes fell two basis points to 2.24%. US bonds are on course for a fourth month of gains. Benchmark German and French yields dropped three basis points.

Asia

Japan’s Topix slipped 0.6%, trimming its weekly advance to 0.6%. Australia’s S&P/ASX 200 Index fell 0.7%, with BHP Billiton dropping 2%.  South Korea’s Kospi rose 0.5% to another record.

The index is up 2.9% for the week, the biggest gain in two months.  

Hong Kong’s Hang Seng Index was flat, keeping its weekly gain at 1.8%, while the Shanghai Composite increased 0.1%.