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London - European stocks and US share futures struggled as a bounce on optimism over the American economy faded and President Donald Trump battled to revive his legislative agenda. The pound weakened as the UK prepared to start its exit from the European Union (EU).
The Stoxx Europe 600 Index fell and futures for the S&P 500 erased early gains to trade little changed. Sterling pared losses of as much as 0.6% to edge lower before a letter formally triggering Britain’s departure from the EU is delivered. The rand weakened further as traders await clarity on the fate of Finance Minister Pravin Gordhan.
Global stocks remain on course for a fifth straight month of gains as the reflation trade triggered by Trump’s election proves its resilience. Stronger growth - from the world’s biggest economy to developing nations - has helped underpin the rally, even amid doubts about the president’s ability to enact pro-growth policies.
“Trump and markets are moving on, with the help of better US data,” Societe Generale strategists, led by Ciaran O’Hagan, wrote in a client note, referring to the rebound in risk appetite after last week’s failed health-care bill curbed reflation bets.
Here are this week’s key events:
Theresa May will formally begin two years of talks to leave the EU at around 13:30. President Jacob Zuma postponed the start of a cabinet meeting to later this afternoon to enable members to attend the funeral of anti-apartheid activist Ahmed Kathrada.
EIA data due at 17:30 time may show a 2 million-barrel expansion in American crude inventories. Proposals to design and build US President Donald Trump’s promised 2 000-mile border wall between the US and Mexico are due. Samsung Electronics will introduce its Galaxy S8 smartphone, the company’s first new mobile phone since the debacle with the Note 7 battery fires that led to its recall.
Here are the main moves in markets:
Stocks
The Stoxx Europe 600 Index erased gains to trade 0.1% lower as of 13:34. Futures on the S&P 500 were little changed. The underlying index rose 0.7% on Tuesday.
Currencies
The British pound trimmed earlier losses to trade 0.2% lower. The euro also weakened 0.2%. The Bloomberg Dollar Spot Index was little changed. The rand slipped 0.9%.
Bonds
European bonds mostly edged higher, with two-basis points decline in the yield of 10-year Spanish bonds among the largest moves. Treasuries gained, with the yield on the benchmark note due in a decade falling one basis point to 2.41%. The yield advanced four basis points on Tuesday.
Commodities
West-Texas Intermediate crude oil rose 0.5% to $48.61, extending Tuesday’s 1.3% advance as an unexpected disruption in Libyan crude output helps investors shrug off record US stockpiles. Gold was little changed at $1 251.70.
Asia
The MSCI Asia Pacific Excluding Japan Index rose 0.4%, with Australia’s S&P/ASX 200 Index and New Zealand’s S&P/NZX 50 adding at least 0.9%. Japan’s Topix Index fell as more than 1 500 of its constituent companies traded without the right to their latest dividend.
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