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Global stocks are mixed as oil swings, pound gains

Jun 23 2017 09:44
Adam Haigh and Fox Hu, Bloomberg

Hong Kong - Global equities were mixed after Federal Reserve speakers did little to alter projections for the path of interest rate, while oil fluctuated, poised for a fifth straight week of declines.

Crude was little changed as concerns of a supply glut persisted, helping gold to continue climbing back from a one-month low. European shares were slightly lower and the pound strengthened for a third day on the anniversary of the Brexit vote.

Chinese equities remain in the limelight as the nation’s banking watchdog raises scrutiny on some of the biggest dealmakers. The dollar headed for a weekly gain despite weakness in the past three sessions.

Global equities, helped by a rebound in tech shares, have been resilient this week in the face of investor concerns about a policy misstep from the Fed and a rout in the oil market that extended for a fifth week. With signs that inflation is lagging expectations and the US economy isn’t quite as rosy as Fed Chair Janet Yellen has pictured, the market is gauging the odds for one more interest-rate hike this year. 

"The market is taking a pause at a relatively high level," said Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong. "Investors need to watch for signs of economic slowdown and see whether the Fed will adamantly carry on rate hikes."

China stocks are closing out a rocky week. They got a boost from MSCI Inc.’s decision to include domestic shares in its indexes, but regulatory surprises created upheaval. Shares slumped on news that the government had stepped up scrutiny of the nation’s most active overseas acquirers.

Then, China’s broadcasting regulator ordered Weibo and two other internet media firms to halt video and audio webcasting, accusing them of operating without a license and disseminating opinions potentially harmful to social stability. Weibo shares sank 6.1% in New York.

Here are some upcoming events investors are watching:

James Bullard, Loretta Mester and Jerome Powell cap a busy week for speeches from Fed policy makers. Bullard told the Wall Street Journal the rate trajectory the FOMC has laid out seems "unnecessarily aggressive" and the balance-sheet unwind should start sooner rather than later.

Friday’s session in the US will probably be one of the busiest of the year for equity traders as the annual Russell reshuffle is set to take effect. The FTSE Russell’s rebalancing of stock indices reliably boosts trading, though it rarely triggers big price swings in the market.

UK Prime Minister Theresa May will make a statement to the British parliament on Monday when details of her proposal to safeguard the residency rights of European citizen who currently live in the UK will be published by the government. 

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index slipped 0.1% as of 09:31. The MSCI Asia Pacific Index rose 0.2%. Japan’s Topix added less than 0.1%, while Australia’s S&P/ASX 200 Index gained 0.2%.

The Hang Seng China Enterprises Index of mainland firms trading in Hong Kong added 0.3%. The Hang Seng Index rose less than 0.1%, while the Shanghai Composite Index rose 0.3%. Futures on the S&P 500 Index rose 0.1%. The underlying gauge fell less than 0.1% on Thursday. Health-care shares in the index jumped 1.1%.

Commodities

West Texas Intermediate crude rose 0.1% to $42.79 a barrel. Oil rose 0.5% on Thursday, stabilising after falling into a bear market earlier in the week. Futures are down almost 5% for the week as investors remain focused on brimming supplies that work against OPEC-led efforts to reduce a glut. Gold rose 0.2% to $1 253.47 an ounce, for a third day of gains. 

Currencies

The Bloomberg Dollar Spot Index fell 0.1%. It’s still up 0.3% for the week, after rallying on Monday and on Tuesday on Fed rate-hike expectations. The pound rose 0.4% to $1.2731 on the one-year anniversary of the historic Brexit vote.

The currency is up 0.8% over the past three days but is still down for the week. The euro rose 0.2% to $1.1174. The yen rose less than 0.1% to 111.27 per dollar. 

Bonds

The yield on 10-year Treasuries rose one basis point to 2.16%. UK 10-year yields added three basis points to 1.05%. French and German yields were little changed.

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