PARIS: Global markets struggled to find clear direction on Thursday as their recent strong run sparked by Donald Trump’s election ran out of steam and investors digested a fresh batch of European corporate earnings reports and minutes from the US Federal Reserve.
In London and Frankfurt, stock prices were slightly lower, while the French blue-chip CAC40 index edged higher.
“Markets appear to be caught in limbo, with European equities mixed and US futures pointing to a similar open on Wall Street,” said Oanda analyst Craig Erlam.
Asian markets had ended the session lower as the recent Trump rally that has inflated global stocks since the beginning of the year finally appeared to have hit the buffers.
The day before, New York’s Dow index had racked up a ninth successive all-time high, but analysts said there was a sense that the advance may have gone too far.
The dollar picked up slightly but was unable fully to bounce back from Wednesday’s sell-off after minutes from the Federal Reserve’s latest board meeting showed policymakers expect a rate hike “fairly soon” but also see increases being gradual.
The minutes pointed to “heightened uncertainty” about possible US policies that could lift inflation, hastening the need for rate hikes.
But that was not enough for dealers who had hoped for firmer guidance.
“The minutes of the Federal Open Market Committee … were hardly a surprise but they did disappoint investors who had been hoping, perhaps unreasonably, that they would hint at a rate increase next month. They didn’t, so the dollar retreated,” said analysts at MoneyCorp. in a note.
In Europe, a flurry of different corporate earnings reports included British bank Barclays said it had returned to profit after slashing provisions set aside for legal and compensation costs linked to foreign exchange and insurance scandals.
Its shares gained two percent to £2.40 in a generally weaker market.
The heavily-indebted Spanish telecoms giant Telefonica said its net profit was hit by restructuring costs linked to a voluntary redundancy scheme. But investors were unfazed and the group’s shares added 2.2 percent.
And in France, carmaker PSA Peugeot Citroen said its profits nearly doubled and its takeover of Germany’s Opel would create a “European champion” in the auto industry.
World markets and the dollar have been on an upward trajectory since Trump’s November US election win betting his big-spending, tax-cutting plans will fire the US and global economy.
But Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said there appears to be some skepticism of the likely effectiveness of Trumponomics as well as worries from some hedge funds that any big news has been priced in.
He added that there were an increasing number of investors betting on a retreat.
In Tokyo the Nikkei index ended flat as the dollar dragged on exporters but having pared sharper morning losses.
News that Nissan chief executive Carlos Ghosn would resign his post weighed on the carmaker, sending it down 0.6 percent.
The man credited with reinventing the once nearly bankrupt Japanese firm said he would focus on overhauling rival Mitsubishi Motors, but will stay on as chairman, while co-CEO Hiroto Saikawa will take over.
Stock markets struggle as Trump rally hits buffers
Friday
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