Stock fall with commodities

London - Financial markets are ending the week the way they started, overshadowed by caution, as stocks fall with commodities, the yen advances and a selloff in Treasuries abates.

The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signalled further losses in US equities as investors shift focus to a report on American payrolls.

Oil led raw materials lower after climbing above $51 a barrel, Japan’s currency gained against all of its 16 major peers and gold rebounded from a 10-month low. While Treasuries edged higher, yields on 10-year notes are still near the highest since July 2015.

Global stocks are headed for their first weekly decline since Donald Trump’s election victory last month as investors turn more wary about the outlook for higher US rates and potential for rising political risks in Europe.
 
The rally in commodities following Trump’s victory and an Opec deal this week to cut output has boosted inflation expectations and bets the Federal Reserve will hasten increases.

Volatility in European stocks and its single currency has climbed ahead of Italy’s weekend referendum and Austria’s presidential vote.

"Few investors want to have a strong position either way," said Mohit Kumar, head of rates strategy at Credit Agricole’s corporate and investment-banking unit in London. "Less risk is a good strategy."

The Stoxx 600 slid 1.1% as of 10:20 in London, with more than five shares falling for every one that advanced. S&P 500 futures dropped 0.3%.  

Oil retreated 0.8% in New York, while the yen gained 0.2% against the dollar. The yield on 10-year Treasuries dropped two basis points to 2.43%.