European Stocks Steady as Pound Slides on Brexit: Markets Wrap

A more sober mood settled on markets Friday amid fresh U.S.-China tensions and little progress on a federal-spending deal in Washington. The dollar rose for the first day in five.

European stocks were mixed, with banks and travel shares posting declines. S&P 500 futures retreated after the index closed at a record high. A bipartisan U.S. stimulus deal “appears to be close at hand,” Senate Majority Leader Mitch McConnell said, but will probably require work over the weekend to get through Congress.

The dollar is benefiting from declines in other Group of 10 currencies. The pound and euro fell as both sides in Brexit talksplayed down expectations a deal will be reached, and Britain’s chief negotiator warned progress has been “blocked and time is running out.”

Elsewhere, sentiment in Asian took a hit after Reuters reported the U.S. is set toblacklist dozens of Chinese firms. The yen retreated as the Bank of Japan maintained its main policy settings and extended its virus program by six months, saying it will take more action without hesitation if required.

With the clock ticking to renew pandemic aid, leaders in Washington are under pressure to resolve their differences after months of deadlock amid signs of a faltering economic recovery. The country continues to set records for virus infections and deaths, with more jurisdictions tightening lockdowns in a renewed threat to the economy.

The stimulus package “ought to be a sufficient bridge,” Steven Wieting, global investment strategist at Citigroup Private Bank, said on Bloomberg TV. “That along with at this stage a preparedness for this Covid emergency and the fact that vaccines are ahead by mid-year, would certainly be sufficient to get us through this period of weakness.”

These are the main moves in markets:

Stocks

  • Futures on the S&P 500 Index decreased 0.1% as of 8:21 a.m. London time.
  • The Stoxx Europe 600 Index dipped 0.1%.
  • The MSCI Asia Pacific Index sank 0.5%.
  • The MSCI Emerging Market Index declined 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%.
  • The euro decreased 0.1% to $1.2253.
  • The British pound sank 0.4% to $1.3525.
  • The onshore yuan weakened 0.2% to 6.544 per dollar.
  • The Japanese yen weakened 0.4% to 103.56 per dollar.

Bonds

  • The yield on 10-year Treasuries fell one basis point to 0.93%.
  • The yield on two-year Treasuries declined less than one basis point to 0.12%.
  • Germany’s 10-year yield gained less than one basis point to -0.57%.
  • Japan’s 10-year yield decreased less than one basis point to 0.01%.
  • Britain’s 10-year yield sank two basis points to 0.271%.

Commodities

  • West Texas Intermediate crude was little changed at $48.34 a barrel.
  • Brent crude dipped 0.1% to $51.45 a barrel.
  • Gold weakened 0.4% to $1,878.01 an ounce.

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