By Ankur Banerjee and Alun John
Market Trends
SINGAPORE/LONDON (Reuters) – European and global stocks experienced a decline on Friday, although they were poised for a weekly gain. The euro remained steady just below a five-month peak, as investors concluded a busy week without gaining significant clarity on major market issues.
Global Indices Movement
The MSCI all-country world share index was down 0.17%, while Europe’s STOXX 600 dropped by 0.7% in morning trading. Asian markets had also shown a similar decrease earlier in the day.
Wall Street Performance
Wall Street fell overnight, with S&P 500 futures down approximately 0.4% as the market prepared to open.
Investor Sentiment
Despite the drop, global shares are slightly up this week. The market sentiment has calmed somewhat compared to early March when fears about policy uncertainty in the United States, especially surrounding tariffs, threatened a recession in the world’s largest economy. While those concerns persist, central banks drew attention this week, as the U.S. Federal Reserve, the Bank of Japan, and the Bank of England opted to maintain steady interest rates.
Geopolitical Factors and Fiscal Policies
The main challenges for investors involve fiscal and geopolitical policy. Fed chair Jerome Powell highlighted the “unusually elevated” uncertainty facing the markets. Investors are now keenly watching the specifics regarding the Trump administration’s reciprocal tariffs set for April 2. Concurrently, increased geopolitical tensions, exemplified by Israeli airstrikes on Gaza and a significant explosion from a Ukrainian drone strike on a Russian military airfield, have prompted a movement towards safer assets. Additionally, a major fire at an electrical substation caused Heathrow Airport to close, while investors are reassessing Turkey’s situation following the apprehension of President Tayyip Erdogan’s chief political opponent.
Germany’s Financial Plans
A spending plan was approved by Germany’s Bundesrat on Friday, sparking investor interest in how and where the funds will be allocated. This change, along with fears of a U.S. recession, has led to significant shifts in the market dynamics this year. European and Asian stocks have outperformed the U.S., particularly the previously favored tech sector, while the euro has strengthened. Although these trends slowed this week, many analysts are optimistic about their continuity.
Currency Movements and Commodities
Recent currency shifts have seen the dollar weaken against most currencies, with the euro and Japanese yen being notable exceptions. The euro remained stable at $1.0856, reflecting an overall strengthening despite a slight decline this week. Similarly, the yen held at 148.85 per dollar but has gained 5% this year in anticipation of further rate hikes by the BOJ in 2025. In commodities, oil prices dipped although they are set for their strongest weekly performance since January. Brent crude futures fell 0.6% to $71.66 per barrel, while U.S. West Texas Intermediate crude decreased 0.35% to $67.83, both showing weekly gains. Gold, on the other hand, eased by 0.5% to $3,030 an ounce as investors took profits following its record high in the previous session.
(Editing by Kate Mayberry, Kim Coghill, William Maclean, and Alex Richardson)
