Shares fell on Friday after soft US corporate results pulled Wall Street back from record highs, and sterling slumped as the first snapshot of the UK economy since the vote last month to leave the European Union painted a bleak picture.
European stocks and MSCI’s leading global share index were both on course for their first consecutive daily losses in two weeks, while Japan’s Nikkei posted its biggest decline over the same period, Reuters reported.
British purchasing managers data showed manufacturing and services activity plunged in July, a fall consistent with a broader 0.4% economic contraction in the third quarter and raising the probability of recession.
The pound fell nearly two cents to $1.31 GBP, back to within a couple of cents of the 31-year low struck earlier this month following the June 23 EU referendum.
The weaker exchange rate lifted UK stocks up into positive territory and within sight of last week’s 11-month high. The FTSE 100 index, which derives most of its earnings from abroad, rose 0.4% to 6,727 points.
Europe’s FTSEuroFirst index of leading 300 shares trimmed earlier losses and was last down just 0.1%, while Germany’s DAX was flat on the day and France’s CAC 40 was up 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5%, having hit a nine-month high on Thursday.
Japan’s Nikkei closed down 1.1%, dragged down by the yen’s 1% rally on Thursday. The index is still up 0.8% in a week in which it touched an eight-week high thanks to an initially weaker yen and expectations of fiscal and monetary stimulus.
The yen relinquished earlier gains, and the dollar was last up around 0.3% at 106.15 yen.
The dollar index was up 0.15% at 97.145, closing in on the four-month peak of 97.323 struck on Wednesday as traders once again put money back on the Federal Reserve raising interest rates this year.
The euro was down slightly at $1.10. Benchmark 10-year US Treasury yields rose over a basis point but on course for a slight fall on the week, easing back after chalking up the biggest rise in over a year the previous week.
In commodities, crude futures bounced back from overnight falls after data pointed to record US stockpiles of gasoline and other oil products. Brent crude LCOc1 rose 0.5% to $46.44 a barrel and US crude CLc1 rose 0.3% to $44.91 a barrel. Both contracts are poised for a fall of more than 2% on the week.
