LONDON: World stocks drifted down from the week’s record highs on Thursday, while the crown gained as Sweden’s central bank became the first to raise interest rates from negative territory.
European equities were little changed in early trading.
Britain’s pound recovered from the 3 per cent loss it suffered as fear of a no-deal Brexit returned.
The pan-region STOXX 600 bobbed in and out of the red. Britain’s blue-chip index managed a 0.15 per cent rise before a Bank of England meeting.
Wall Street futures suggested the S&P 500 would barely budge, after rising to a fifth consecutive record high on Wednesday. Earlier, Asian shares had pulled back from a one-and-a-half year peak as trading wound down before the end of the year.
Japan’s Nikkei fell 0.3 per cent and China’s stocks slipped for the second session despite trade optimism.
Australian shares ended 0.3 per cent lower, led lower by mining stocks.
Investors were also watching proceedings in Washington, where the Democratic-led US House of Representatives voted to impeach US President Donald Trump for abuse of power and obstruction of Congress.
Market reaction was limited, since the Republican-controlled Senate is widely expected not to convict Trump and removed him from office.
In Sweden, the central bank raised its key rate to zero after five years in negative territory. Economists wondered whether Sweden’s hot-running economy would react badly and whether other sub-zero rate central banks in the Eurozone, Japan, Denmark, Switzerland and Hungary would follow suit.
The crown rose 0.2 per cent, a gain that had been widely flagged.
“At the end of the day, this market doesn’t look at macro and earnings, it just looks at monetary developments,” said Stephane Barbier de la Serre, macro strategist at Makor Capital Markets. “If the market thinks central banks (globally) are done with being dovish then we would see some volatility.” The British pound gained after suffering heavy losses on concern Britain could still crash out of the European Union without a trade deal in place when a transition period ends in December 2020.
Traders were also waiting for the Bank of England’s last policy meeting of the year. No change in policy is expected, but more policymakers might signal they could vote for an interest-rate cut next year.
Sterling rose 0.2 per cent to $1.3105 after falling more than 3 per cent. It had reached an 18-month high on December 13 after UK Prime Minister Boris Johnson’s Conservative Party won a majority in a general election.
Against the euro, it stood at 84.94 pence, close to its weakest since December 4. British inflation remained at a three-year low in November, data had showed on Wednesday.
Germany’s benchmark 10-year bond yield crept towards the six-month highs it touched last week, with bond traders focused on the day’s central bank meetings.
After Sweden’s move, Norway kept its rates at 1.5 per cent and reiterated it was likely to stay there for some time.
The Australian dollar jumped by 0.36 per cent to $0.6879 after better-than-expected labour-market data made interest rate cuts less likely.
The yen barely moved from 109.58 per dollar after the Bank of Japan kept its quantitative easing in place and issued a gloomier assessment on factory output.
In commodities, Brent crude dipped 0.1 per cent to $66.10 per barrel. US crude also dipped 0.01 per cent to $60.86 a barrel after US government data showed a decline in crude inventories.
Prices are likely to be supported by production cuts coming from the Organization of the Petroleum Exporting Countries and its allies, including Russia.