LONDON — World stocks edged lower on Friday as uncertainty across major economies added to headwinds for investors, while a global outage hitting services from airlines, banks and financial services capped a turbulent week in markets.
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A tech sell-off sparked by deepening Sino-U.S. trade tensions, uncertainty over U.S. President Joe Biden’s fate in the presidential race, disappointing Chinese economic data and a lacklustre third plenum outcome has cast a shadow over the global mood. Tokyo’s recent bouts of yen intervention meanwhile have kept currency traders on edge.
European shares slipped, Asia shares fell following an overnight selloff on Wall Street, and U.S. stock futures pointed to a weaker open later in the day ESc1, YMc1.
Major U.S. airlines grounded flights on Friday citing communications issues, while other carriers, media companies, banks and telecoms firms around the world also reported system outages were disrupting their operations.
LSEG Group’s LSEG.LWorkspace news and data platform also suffered an outage on Friday that affected user access worldwide, causing disruption across financial markets.
“Investors are already on edge for this tech rotation and this global outage adds a further dose of uncertainty,” said Ben Laidler, head of equity strategy at Bradesco BBI.
Uncertainty high
European stocks .STOXX fell 0.5%, while London stocks .FTSE slipped 0.4%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 1.7% and was headed for its worst week in three months with a nearly 3% loss.
Technology stocks continued to struggle in Asia, with South Korea’s tech-heavy KOSPI index .KS11 and Taiwan stocks .TWII both falling 1% and 2.26%, respectively.
Michael Metcalfe, head of global macro strategy at State Street Global Markets, said politics, interest rate expectations and corporate earnings were having a strong impact on world markets.
“The changing probability of a potential Trump presidency and what that might mean for different markets, whether it be his view of the dollar or tech regulation, has clearly created some market rotations this week,” he said, referring to Republican presidential candidate Donald Trump.
On top of that investors are looking closely at the Federal Reserve’s response to improving inflation data and the U.S. earnings season which is now in full swing.
“Tech has been where all the earnings growth has been (in recent years) so those will be the crucial thing for risk sentiment overall,” said Metcalfe.
In China, investors were left disappointed over the lack of details provided on the implementation steps for achieving economic policy goals at the conclusion of its closely watched plenum on Thursday.
Chinese officials on Friday acknowledged that the sweeping list of economic goals contained “many complex contradictions”, pointing to a bumpy road ahead for policy implementation.
Chinese blue-chips .CSI300 rose 0.5%, though the CSI300 Real Estate index .CSI000952 slid about 2%, as an anaemic property sector continued to weigh on China’s growth outlook.
Rates view
The euro EUR=EBS was last down almost 0.2% at $1.0878, having dipped the previous session after the European Central Bank (ECB) kept rates on hold as expected but left the door open to a September cut as it downgraded its view of the euro zone’s economic prospects.
“The policy statement gives little away, offering no meaningful changes from June – continuing to stress a data-dependent approach to policy setting,” said Nick Rees, FX market analyst at MonFX.
“We still think that a September cut remains the base case.”
The dollar was meanwhile on the front foot, distancing itself from a four-month low hit earlier in the week against a basket of currencies =USD.
Sterling eased 0.2% to $1.2918 after data showed British retail sales volume fell by more than expected in June, while the dollar was broadly steady at around 157.29 yen JPY=EBS
In commodities, oil prices were little changed with Brent crude futures LCOc1 around $85.2 a barrel, while U.S. crude futures CLc1 flat around $82.78 per barrel. O/R
Gold XAU= eased 0.6%, retreating from a record high of $2,483.60 per ounce hit earlier this week on the prospect of lower global interest rates. GOL/
—Reporting by Rae Wee in Singapore and Marc Jones, Amanda Cooper and Dhara Ranasinghe; Editing by Andrew Cawthorne
