Momentum from Wall Street’s record-breaking run fades

Thursday 08.10 BST

What you need to know

  • Momentum from further record close on Wall Street fades in Europe and Asia
  • Pound holds on to gains on hopes for Brexit deal between UK and EU
  • Australian dollar drops on data showing fall in Q2 capex
  • Australia telecoms surge on $11bn TPG tie-up

Hot topics

Momentum is ebbing from equity markets in Asian and Europe, as investors keep watch on talks on the future of the Nafta free trade area, assessing the implications for global growth.

The record-breaking run for Wall Street indices continued, helped by an upbeat revision to second-quarter growth data and hopes that the US and Canada will reach a trade agreement following the breakthrough US-Mexico deal.

But it is not enough to lift European stocks, which are down in opening trade.

The pound is holding steady at $1.3029, having jumped 1 per cent on Wednesday after Michel Barnier, the EU’s chief Brexit negotiator indicated he was close to offering the UK “a partnership with Britain such as has never been with any other third country”.

The euro, which weakened against the pound to under the £0.90 level after the first reports of Mr Barnier’s comments, remained below that level at £0.8978, down 0.1 per cent on the day.

The Australian dollar weakened 0.3 per cent to $0.7283 on new data showing capital expenditure in the country fell 2.5 per cent in the second quarter.

The New Zealand dollar also dropped 0.9 per cent to $0.6658 as sentiment wobbled, while the dollar index measuring the greenback against a basket of peers was flat at 94.57.

Sovereign bond markets were also quiet as yields, which move inversely to prices, on 10-year US Treasuries fell 1 basis point to 2.88 per cent.

Equities

European bourses are lower after a mixed showing in Asia. London’s FTSE 100 is down 0.5 per cent, underperforming in line with the pound’s strength. Frankfurt’s Xetra Dax 30 is down 0.3 per cent as is the Europe-wide Stoxx 600.

Sydney’s S&P/ASX 200 was up 0.2 per cent with a 3.6 per cent rise by telecoms stocks, led by gains of nearly 16 per cent for shares in TPG Telecom after it announced plans for an $11bn tie-up with Vodafone Hutchison Australia.

Hong Kong stocks were mostly down, however, with the benchmark Hang Seng index dropping 0.6 per cent with only the telecoms sector notching a modest gain of 0.2 per cent. In China the CSI 300 index of major Shanghai and Shenzhen-listed stocks fell 0.8 per cent with losses across the board.

In Tokyo the Topix index was almost flat as a fall of 0.6 per cent by the telecoms segment helped counter a rise of 0.7 per cent from the tech sector.

Commodities

Oil prices edged up still further on Thursday after data last week showed a larger-than-expected fall in US crude reserves. Brent, the international benchmark, rose 0.3 per cent to $77.33 a barrel, as did US marker West Texas Intermediate to $69.69.

Gold was down 0.2 per cent at $1,203.66 per ounce.

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