Stocks, sterling hold steady after London terror attack
london — Stocks and sterling held their ground on Thursday as markets took the latest European terror attack, this time in London, one of the world’s financial capitals, largely in their stride.
The FTSEurofirst 300 barely budged as London, Frankfurt and Paris started flat and the pound fared better than most as the dollar began to muscle higher again in the currency markets.
The history of these attacks, including those in France, Germany and Belgium last year as well those in London and Madrid more than 10 years ago, show little lasting impact on economic confidence or financial markets in isolation.
Having weakened as much as 0.4 per cent after news of the London attack which killed five, sterling held steady overnight and then climbed swiftly above $1.25 after more-resilient-than-expected UK retail sales data
The dollar was also creeping higher again with attention firmly on Donald Trump’s first significant US policy test, as he looks to gets a healthcare bill passed in US congress.
“What we are getting this week is a questioning of how much of the risk rally is predicated on future Trump policy,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets.
“There are concerns that this vote (on healthcare reform) will be a litmus test of how much fiscal expansion he can get through.” After losing 3.5 per cent in the past 10 days, the dollar was roughly steady at ¥111.19. It gained 0.1 per cent to $1.0786 per euro and up 0.15 per cent against the basket of currencies used to measure its broader strength. The euro and eurozone bond markets’ focus was also on what the European Central Bank hopes will be its last offering of cheap, three-year ‘TLTRO’ funding, once its main crisis fighting tool.
Overnight in Asia MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.2 per cent.
Japan’s Nikkei closed 0.2 per cent higher, as a weaker yen offset a political scandal over the relationship of Prime Minister Shinzo Abe and his wife with a Japanese nationalist education group that bought state-owned land. China’s CSI 300 rose early on hopes that index compiler MSCI may include A-shares in its indices, but those gains were lost as money began flowing out of the mainland market through link to the Hong Kong exchange. Wall Street futures were pointing to modest gains later too. On Wednesday the Nasdaq jumped 0.5 per cent and the S&P 500 closed 0.2 per cent higher, while the Dow Jones was flat, after all three touched their lowest levels in about five weeks earlier in the session. — Reuters