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London - A slump in crude weighed on energy shares as global equity markets headed for a lower finish to the week. The British pound slid.
Stocks from Tokyo to Europe fell, dragged down by oil producers. Crude headed for a weekly loss after falling the most in three weeks on Thursday as OPEC’s move to prolong supply cuts for nine months disappointed investors hoping for more.
European carmakers dropped after President Donald Trump chided German producers for contributing to a lopsided trade surplus with the US 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 as the dollar declined.
“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 the Organisation of Petroleum Exporting Countries 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 Friday as investors approach the long weekend in the US and the UK, both of which have holidays on Monday.
Here are some upcoming events to watch out for:
First-quarter US GDP was probably better than the dismal 0.7% rate first estimated, data will show Friday, though analysts are already reducing expectations for the second quarter.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 Index dropped 0.5% by 12:25, with oil and gas producers falling 1.5%. Automakers slid 1%. Futures on the S&P 500 dropped 0.2%. The underlying gauge rose 0.4% on Friday as Best Buy and PVH results topped estimates and the Bloomberg Consumer Comfort Index signaled optimism among US shoppers.
Currencies
The Bloomberg Dollar Spot Index fell 0.1% and is poised for a second week of declines. The pound slid 0.7% to $1.2853. 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 0.8% to 110.96 per dollar, after dropping 0.3% on Thursday. The euro was flat at $1.1203
Commodities
West Texas Intermediate crude fell 0.2% to $48.81, after sinking 4.8% in the previous session. Crude is down 3.7% this week, the most since the five days ending May 5. Gold rose 0.9% to $1 267.13 an ounce, heading for the highest since April.
Bonds
The yield on 10-year Treasury notes fell two basis points to 2.23%. 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%.
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