© Reuters. Passersby walk in front of an electric screen displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan March 21, 2024. REUTERS/Issei Kato
By Elizabeth Howcroft
LONDON (Reuters) – European stocks were mostly lower on Friday, edging down from recent all-time highs in a move attributed to profit-taking after a busy week of central bank moves, while UK stocks were boosted by the Bank of England being seen as more dovish.
A surprise rate cut from Switzerland’s central bank on Thursday helped push markets to new highs, as traders realised that major central banks around the world would not necessarily wait for U.S. Federal Reserve rate cuts before delivering their own.
Wall Street rallied overnight, with all three major indexes extending their streak of record highs. But sentiment turned more cautious on Friday.
At 1239 GMT, the MSCI World Equity Index was down 0.1% on the day, but up 1.9% on the week as a whole, on track for its biggest weekly gain so far this year.
In a busy week for markets, traders drew confidence not only from Switzerland’s rate cut on Thursday, but also from the Bank of England being more dovish than expected. The BoE said the economy is “moving in the right direction” for it to start cutting rates.
Europe’s was down 0.1%, after touching a new all-time high, while London’s was up 0.5%, helped by expectations that the Bank Of England would cut rates sooner than previously thought. BoE Governor Andrew Bailey saying in a Financial Times interview that the expectation of more interest rate cuts this year on a whole was not “unreasonable”.
MSCI’s Europe index was down 0.4% and 40 was also down 0.4%.
Wall Street futures were up, as traders waited for commentary from Fed Chair Jerome Powell later in the day.
The U.S. Federal Reserve said at its meeting on Wednesday that recent high inflation readings had not changed the underlying “story” of slowly easing price pressures.
“I think there might be some profit-taking at the end of the week, just because of the amount of data that we’ve seen and the fact that we have seen more positive surprises,” said Baylee Wakefield, multi-asset fund manager at Aviva (LON:).
Trading may also reduce in the lead-up to the Easter weekend, Wakefield added.
The was up 0.4% at 104.23, on track for its best week since the first week of the year.
“‘s basically going to have its best week since January and that is because markets are now accepting that other major central banks will reduce their policy rate faster than the Fed, especially because we’ve had further evidence from the strong economic data we’ve had out of the U.S. this week,” Aviva’s Wakefield said.
U.S. jobless claims unexpectedly fell, sales of previously owned homes increased by the most in a year in February and U.S. business activity held steady in March, data this week showed. A gauge of future economic activity in the U.S. turned positive in February for the time in two years.
The euro was down 0.3% at $1.0828. The probability of a European Central Bank rate cut before summer is increasing, Bundesbank President Joachim Nagel said.
The British pound was down 0.3% at $1.26175, having earlier hit a one-month low.
Euro zone government bond yields were set for a weekly decline. The benchmark German 10-year yield was down by 6 basis points at 2.334%.
China’s yuan dropped sharply during Asian trading, hitting a four-month low, in a move analysts attributed to rising expectations that there will be more monetary easing to prop up the country’s economy.
Oil prices were steady, with global benchmark hovering above $85 per barrel. The possibility of a ceasefire in Gaza had pushed prices lower earlier in the session. The stronger dollar and lower U.S. gasoline demand also weighed on prices.
was down 0.3% at $2,174.48 per ounce, having hit a record bid high of $2,222.39 on Thursday.
Investment flows into gold in the week to Wednesday reached their highest in almost a year, Bank of America (NYSE:) Global Research said.
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