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Sydney - The pound led most major currencies higher against the dollar, extending gains after the Bank of England’s (BoE) hawkish shift. Stocks across Asia and Europe were a mixed bag, while oil held steady near $50 a barrel.
The Stoxx Europe 600 Index edged lower as North Korea’s latest missile launch raised geopolitical tensions, though declines in the yen, gold and bonds showed investors are becoming inured to the provocation.
Sterling surged to a post-Brexit high, jumping another step Friday after BoE policy maker Gertjan Vlieghe said he may support raising interest rates in the near future. The dollar dipped and Treasury yields rose before US data on manufacturing and retail sales.
Vlieghe’s flip from dove to hawk, alongside BOE Governor Mark Carney, increases the chance of a hike as early as the next meeting in November. It also puts the British central bank on the same trajectory as the Federal Reserve, which is already tightening.
Thursday’s economic data from the US lent support to those expecting a further run up in US bond yields as inflation topped estimates. Data on retail sales and consumer sentiment Friday will provide further clues on the Fed’s policy path.
“The standout undervalued currency in G-10 is sterling,” Citigroup Inc. Strategists led by Jeremy Hale said in a report. “The possibility of a hike in the near term is now non-negligible and this, combined with the fact that the pound’s real effective exchange rate is close to its all-time low, could support the currency from here.”
With economic themes back in the foreground, markets are showing signs of becoming conditioned to provocative actions from North Korea, which has launched more than a dozen missiles this year and tested a nuclear device. Global equities climbed to a record high this week as earnings and confidence in economic growth overshadowed tensions on the Korean Peninsula.
Elsewhere, bitcoin has slumped nearly 40% from it’s all-time high earlier this month. China notified regional regulators that it aims to stop exchange trading of cryptocurrencies by the end of September, according to people familiar with the matter.
Stocks
• The Stoxx Europe 600 Index fell 0.2% as of 7:57am New York time, the biggest fall in more than a week.
• Futures on the S&P 500 Index fell 0.1%.
• The MSCI All-Country World Index climbed 0.1%.
• The MSCI Emerging Market Index gained 0.2%.
• The UK’s FTSE 100 Index sank 0.4% to the lowest in almost 19 weeks.
Currencies
• The Bloomberg Dollar Spot Index fell 0.2%.
• The euro climbed 0.3% to $1.1952.
• The British pound gained 1.3% to $1.3573, the strongest in almost 15 months.
Bonds
• The yield on 10-year Treasuries climbed two basis points to 2.20%, the highest in three weeks.
• Germany’s 10-year yield increased two basis points to 0.43%, hitting the highest in almost four weeks.
• Britain’s 10-year yield advanced less than one basis point to 1.087%.
Commodities
• Gold fell 0.6% to $1 322.32 an ounce, the weakest in more than two weeks.
• West Texas Intermediate crude increased 0.3% to $50.02 a barrel.
• Copper climbed 0.1% to $6 501.50 per metric ton.
Asia
• The Topix index rose 0.4% at the close in Tokyo to complete its best week since April.
• South Korea’s Kospi index ended 0.4% higher after dropping as much as 0.5%, while Australia’s S&P/ASX 200 Index fell 0.8%.
• Hong Kong’s Hang Seng Index swung between gains and losses, and the Shanghai Composite Index was also lower.
• The Japanese yen dipped 0.9% to 111.25 per dollar, the weakest in almost seven weeks.
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