A gauge of global stocks gave up initial gains on Monday as investors questioned whether likely stimulus measures from the world’s central banks would be enough to deter slowing growth, while the pound hit a six-week high in choppy trading.
After two straight weeks of gains, stocks on Wall Street slipped, as advances in energy and financial shares were offset by a decline in tech names.
Earlier, data showed Japan’s economy grew at a slower pace than initially estimated in the second quarter as the U.S.-China trade war prompted a downward revision of business spending, intensifying calls for the central bank to deepen stimulus this month.
Still, barring a major announcement on trade developments between the United States and China, stock movements were likely to be muted ahead of the next policy announcement by the Federal Reserve on Sept. 18 as investors have begun to question whether central banks even have enough measures at their disposal to support economic growth.
The European Central Bank is expected to introduce new stimulus measures at its meeting on Thursday.
“To what extent is even a highly coordinated effort to reduce the cost of capital, how is that going to affect the global economy?” said Peter Kenny, Founder, Kenny’s Commentary LLC and Strategic Board Solutions LLC in New York.
“There is a degree of skepticism that this time around it will have the same sort of therapeutic effect on triggering appetite.”
Federal Reserve Board Chairman Jerome Powell said the central bank would continue to “act as appropriate” to sustain U.S. economic expansion.
Canada’s main stock index slipped slightly Monday, as a 2.3-per-cent increase in energy shares was offset by declines in the materials and technology sectors.
The Toronto Stock Exchange’s S&P/TSX composite index was unofficially down 40.24 points, or 0.24 per cent, at 16,492.62.
Eight of the index’s 11 major sectors were lower.
Material stocks lost 1.8 per cent, while tech stocks dropped 2.6 per cent.
Biggest loser among tech stocks were shares of Shopify Inc., which slid 5.9 per cent, followed by a 3.4-per-cent decline in those of BlackBerry Ltd.
In New York, the Dow Jones Industrial Average rose 38.05 points, or 0.14 per cent, to 26,835.51, the S&P 500 lost 0.28 points, or 0.01 per cent, to 2,978.43 and the Nasdaq Composite dropped 15.64 points, or 0.19 per cent, to 8,087.44.
European shares ended lower, as Britain’s export-heavy FTSE index tumbled due to a stronger pound, while selling in defensive sectors such as healthcare and utilities dented early gains in markets.
The pan-European STOXX 600 index lost 0.28 per cent and MSCI’s gauge of stocks across the globe shed 0.06 per cent.
Sterling hit a six-week high of $1.2382 as investors saw the likelihood of a “no-deal” Brexit lessening and data that indicated Britain’s economy picked up more than anticipated in July.
British Prime Minister Boris Johnson will try for a second time on Monday to call a snap parliamentary election, but is set to be thwarted once more by opposition lawmakers who want to ensure he cannot take Britain out of the European Union without a divorce agreement in place.
Sterling’s gains were briefly pared sharply as John Bercow, speaker in Britain’s House of Commons, announced he would stand down from the role.
Sterling was last trading at $1.2347, up 0.54 per cent on the day.
The U.S. dollar index fell 0.15 per cent, with the euro up 0.24 per cent to $1.1053.
Oil prices rose about 2 per cent on Monday after the new Saudi energy minister, Prince Abdulaziz bin Salman, confirmed expectations that he would stick with his country’s policy of limiting crude output to support prices.
Prince Abdulaziz, son of Saudi King Salman and a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), replaced Khalid al-Falih on Sunday.
“The weekend announcement of a change in leadership within the Saudi oil ministry was accompanied by strong suggestions that production restraint would continue until the market achieves a better balance,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Brent crude futures gained $1.05, or 1.7 per cent, to settle at $62.59 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose $1.33, or 2.4 per cent, to settle at $57.85 a barrel.
Prince Abdulaziz said the pillars of Saudi Arabia’s policy would not change and a global deal to cut oil production by 1.2 million barrels per day would survive.
He added that the so-called OPEC+ alliance between OPEC and non-member countries including Russia was staying for the long term.
Reuters