Oil prices added to recent gains on Friday on fears any U.S. military attack on Iran would disrupt flows of crude from the Middle East, while a gauge of global stock markets edged back from seven-week highs following a run-up spurred by optimism over monetary policy.
Gold prices rose to near six-year highs. The U.S. dollar fell to a three-month low against a basket of currencies.
Central banks have dominated economic news this week, with the Federal Reserve signaling the potential for a U.S. interest rate cut later this year and the European Central Bank hinting at stimulus measures.
MSCI’s gauge of stocks across the globe shed 0.10 per cent, after a day earlier reaching its highest since May 1.
U.S.-China trade tensions were also in focus ahead of an expected meeting between the countries’ two leaders next week at a G20 meeting in Osaka, Japan.
U.S. stocks were supported by news that U.S. Vice President Mike Pence called off a planned China speech that had been initially cast as a sequel to a blistering broadside he delivered in October, a move aimed at averting increasing tensions with Beijing.
“Having an accommodative interest rate outlook is a positive for the markets, but now investors are looking for direction on trade,” said Christopher O’Keefe, portfolio manager at Logan Capital Management in Ardmore, Pennsylvania.
“For the market to meaningfully move forward from here you have to have some positive outcome on trade.”
On Wall Street, the Dow Jones Industrial Average fell 33.84 points, or 0.13 per cent, to 26,719.33, the S&P 500 lost 3.68 points, or 0.12 per cent, to 2,950.5 and the Nasdaq Composite dropped 19.63 points, or 0.24 per cent, to 8,031.71.
Canada’s main stock index fell slightly on Friday.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially down 49.40 points, or 0.3 per cent, at 16,525.43
Nine of the index’s 11 major sectors were lower.
The energy sector was down 0.18 per cent despite a further rise in oil prices.
The financials sector also dipped 0.3 per cent, while the materials stocks rose 0.6 per cent.
Health care stocks dropped 3.1 per cent as Canopy Growth Corp. fell 7.6 per cent following weaker-than-anticipated quarterly results.
The pan-European STOXX 600 index lost 0.36 per cent.
Trump said he had aborted a military strike on Iran because such a response to Tehran’s downing of an unmanned U.S. surveillance drone would have caused a disproportionate loss of life.
Spot gold added 0.8 per cent to $1,399.05 an ounce, surpassing the $1,400 level during the session.
“There is a perfect mix of ingredients for gold’s rush to the top - a weak macroeconomic environment, low bond yields, soft dollar and rising geopolitical tensions,” said Howie Lee, an economist at OCBC Bank.
Oil futures rallied on fears of disruption to flows in the Middle East, which provides more than a fifth of the world’s oil output.
U.S. crude settled up 0.6 per cent at $57.43 a barrel, and Brent settled at $65.20, up 1.2 per cent.
Government bond yields in the United States and Europe rose but remained near record or multi-year lows after the dovish statements from the central banks.
Benchmark 10-year U.S. Treasury notes last fell 17/32 in price to yield 2.0591 per cent, from 2.001 per cent late on Thursday.
The dollar index, which measures the greenback against a basket of currencies, fell 0.44 per cent, falling to a three-month low, with the euro up 0.66 per cent to $1.1366.
Reuters