In European Equity Markets the pan-European Stoxx 600 was 0.9% lower at the closing bell, with most sectors and major bourses in the red. Banking stocks shed 1.9%, dragged down by Italian lenders, while China-exposed basic resources and autos stocks led losses, with both sectors falling by more than 2.5%. Healthcare stocks bucked the trend, hovering just above the flatline. Italy’s FTSE MIB index was 2.5% lower by the end of Friday’s session, as investors veered away from Italian assets amid the rising instability.
In Currency Markets sterling skidded again on Friday, hitting its lowest in more than two years, after an unexpected second quarter contraction in the economy alarmed investors already fretting that Britain is headed for a no-deal Brexit. The pound, which has lost 3.7% of its value against the dollar since arch-Brexiteer Prime Minister Boris Johnson’s arrival in office in late July, sank to $1.2056, the weakest it has been since January 2017, and was last down by 0.5% at $1.2072. Against the euro, the pound slid to a new two-year low of 92.885 pence and was last down by 0.7% on the day.
In Commodities Markets oil prices rose by about 3% on Friday, supported by a drop in European inventories and expectations of more OPEC output cuts despite the IEA reporting demand growth at its lowest since the financial crisis of 2008. Brent crude futures gained $1.40, or 2.4%, to $58.78 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up $1.84, or 3.5%, to $54.38 a barrel. The IEA said global oil demand to May from January grew at its slowest since 2008, hurt by mounting signs of an economic slowdown and a ramping up of the U.S.-China trade war.
In US Equity Markets indices added to losses on Friday after President Donald Trump said he was not going to make a deal with China for now, exacerbating fears that the U.S.-China trade stand-off would aggravate the global economic slowdown. The S&P 500 was down 0.71%, at 2,917.26. The Nasdaq Composite 0.93%, at 7,964.02. Among stocks, Uber Technologies Inc fell 6.9% after the ride-hailing company reported a record $5.2 billion loss and revenue that fell short of Wall Street targets.
In Bond Markets a decline in Italian government bonds accelerated on Friday with yields on track for their biggest weekly rise this year as the government stood on the brink of collapse after League leader Matteo Salvini said his coalition with the 5-Star Movement was untenable and called for early elections. Shorter-dated Italian yields also rose sharply, with the two-year up 27 bps at 0.283%, and the five-year up 15 bps at 1.105%.