The pound climbs, European stocks advance, Wall Street slips

  • The week was actions-packed. Sterling took a tumble on Tuesday, falling to its lowest level in eight weeks, after politicians cleared the way for Article 50 to be trigger by the UK prime minister Theresa May by the end of this month (the Article 50 notification formally commences the process for Britain to leave the EU). The US Federal Reserve raised the target range for the federal funds rate to 0.75 per cent to 1 per cent on Wednesday. That was the third rate rise since the global financial crisis. Minneapolis Fed President argued in favour of keeping rates unchanged. Fed policymakers stuck with previous median projections that there would be a total of three rate increases in 2017. By contrast, the Bank of England left interest rates unchanged on Thursday, at a record low of 0.25 per cent, though one member of the UK Monetary Policy Committee voted for a rise in borrowing costs. Meanwhile, Mark Rutte’s centre-right VVD party won a parliamentary election in the Netherlands, beating off a challenge from Geert Wilders’ far-right populist PVV party.
  • The euro was 0.3 per cent weaker against the dollar at $1.0735. The greenback was down 0.6 per cent versus the yen at Ұ112.68. The UK pound was 0.3 per cent firmer against the dollar at $1.2391 and was up 0.5 per cent against the single currency at €1.1542, brushing off Brexit concerns. The dollar index, a measure of the US currency against a weighted basket of half a dozen peers, was little changed at 100.35.
  • The yield on the 10-year Dutch government bond was down 1 basis point at 0.68 per cent. Germany’s equivalent maturity debt shed 2 basis points to 0.43 per cent. Across the Atlantic, the yield on the 10-year US Treasury note fell 4 basis points to 2.50 per cent.
  • Oil prices steadied after hitting a three-month low last week amid concerns about a buildup in US crude inventories. Brent, the international crude benchmark, was 0.1 per cent higher at 51.81 dollars per barrel. West Texas Intermediate, the US oil marker, settled at 48.70 dollars a barrel, down 0.1 per cent.
  • Australia’s S&P/ASX 200 edged up 0.2 per cent. The Topix index in Tokyo slipped 0.4 per cent. Hong Kong’s Hang Seng closed 0.1 per cent higher. China’s shanghai Composite climbed 1 per cent.
  • It was a very good week for European stocks. The pan-European Stoxx 600 rose 0.2 per cent to 378.32, a 15-month high. The index was up 1.4 per cent for the week. The FTSE 100 in London added 0.1 per cent to close at a record high of 7,424.96. The UK’s main equity index rose 1.1 per cent this week. The AEX index in Amsterdam rose 0.3 per cent to 516.24, a 10-year high.
  • In New York, the S&P 500 equity index fell 0.1 per cent to 2.378.25, but posted a weekly rise of 0.2 per cent. The Dow Jones Industrial Average slipped 0.1 per cent to 20,914.62. The blue-chip index was up 0.1 per cent for the week. The tech-heavy Nasdaq Composite climbed 0.7 per cent for the week, closing at 5,901 on Friday.

WPJ

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