European edges fifth week of gains as tech stocks buoy

European Stock Markets

Well-received results from Spanish banks and a recovery among tech stocks buoyed European shares in early trading on Friday, setting them up for their fifth week of gains in a row. 

The pan-European STOXX 600 index was up 0.1 percent by 0903 GMT and on track for its longest winning streak in terms of weekly gains since last September, while Germany's DAX .GDAXI rose 0.7 percent.

This week banks have been a key focus, with results from Spain’s BBVA (BBVA.MC) and Caixabank (CABK.MC) sending their shares 2 percent and 0.5 percent higher. Both lenders beat profit forecasts thanks to strength in their overseas markets.

However, Britain’s RBS (RBS.L) was a laggard, reversing early gains to trade 2 percent lower after a concerns over a pending fine from the U.S. Department of Justice eclipsed its first-quarter update.

RBS was among the biggest fallers on the European banking index .SX7P, which declined 0.5 percent.

Elsewhere industrials performed well as shares in St Gobain (SGOB.PA) popped 3 percent higher after the French construction materials group confirmed its 2018 financial outlook.

Satellite firm SES (SESFd.PA) was the biggest gainer, up more than 10 percent after beating first-quarter expectations on the back of strong growth in its networks division.

However, Electrolux (ELUXb.ST) fell the most on the STOXX, its shares down 11 percent on a surprise drop in first-quarter core operating profit and a warning on raw material costs.

The earnings season has taken the focus from broader issues such as global trade and geopolitics, which rattled markets in March, while concerns over rising bond yields have also been put on the back burner for now.

So far around a quarter of companies in the MSCI EMU index have given first quarter updates. Nearly 60 percent have either beat or met analyst expectations, according to Thomson Reuters I/B/E/S data. Earnings growth is clocking in at over 15 percent for the quarter, in dollar terms.

Tech stocks also helped fuel gains as the sector .SX8P continued to recover from recent negative sentiment, following well-received results from tech giant Facebook (FB.O), Amazon (AMZN.O), Microsoft (MSFT.O) and U.S. chipmakers.

Sterling stuck at two-week low as investors cautious over May rate hike

European Stock Markets

Sterling slipped to a two-week low against the dollar on Monday as investors questioned whether the Bank of England would raise interest rates in May following weaker-than-expected economic data and cautious comments from governor Mark Carney. 

The pound has been one of the best performing major currencies in 2018 and last week surged to its highest level since the Brexit referendum in June 2016.

But weaker-than-expected wage growth and inflation, and comments by Carney that the data was “mixed” hit the currency hard, sending it down almost 1.7 percent for the week as investors rushed to price in the possibility the BoE could delay raising rates until later in the year.

Analysts on Monday said they would watch gross domestic product figures due later in the week for signs of how the economy was holding up and whether it pointed to a BoE ready to hike rates.

But he cautioned that politics could impact sterling this week if a cross-party and non-binding technical vote on Brexit on Thursday threatened Prime Minister Theresa May’s leadership.

The pound traded flat at $1.3997, after earlier hitting a 2-1/2 week low of $1.3984, as broad dollar strength kept the pound under pressure.

Against the euro, the pound recovered and rose 0.3 percent to 87.515 pence.

A seasonal rise in capital inflows into Britain from foreign companies paying UK shareholders dividends has boosted sterling during April in recent years.

Economists, almost all of whom had predicted the BoE would act in May before Carney’s Thursday interview, believe the central bank’s vote on rates next month will now be very close.

Berenberg economists said that because of an acceleration in nominal wages and above-trend real GDP growth they expected four 25 basis point hikes over the next two years, with two increases each in 2018 and 2019.

Market watch

SPI futures down 15 points or 0.3% to 5833

AUD flat at 76.70 US cents

On Wall St: Dow -0.8%, S&P 500 -0.9%, Nasdaq -1.3%

In New York, BHP -0.1% Rio +0.1%

In Europe: Stoxx 50 +0.2%, FTSE +0.5%, CAC +0.4%, DAX -0.2%

Spot gold -0.7% to $US1336.36 an ounce

Brent crude +0.4% to $US74.06 a barrel

US oil -0.4% to $US68.06 a barrel

Iron ore -2% to $US67.09 a tonne

Dalian iron ore -0.6% to 464 yuan

LME aluminium -0.6% to $US2469 a tonne.

LME copper -0.1% to $US6992 a tonne

10-year bond yield: US 2.96%, Germany 0.59%, Australia 2.80%

Euro climbs to session highs against dollar after upbeat German data

European Stock Markets

A round of strong German regional inflation readings that bolstered expectations for a rebound in the country’s consumer price growth has sent the euro climbing to session highs in mid-morning action in Europe

 The common currency was recently up 0.37 per cent at $1.1883 just after a batch of inflation data. It has since eased back to $1.1867.

A series of reports by Germany’s Federal Statistics Office showed that the year on year pace of price growth in four states picked up steam in November. That has sharpened expectations for a pick up in the overall inflation rate in Germany, the eurozone’s biggest economy, after a disappointment in October.

The euro has climbed 2 per cent on the buck this month, bringing its gains this year to 12.8 per cent, according to FactSet data. Investors have grown increasingly bullish on the shared currency thanks to the improvement in the bloc’s economy. In fact, bullish bets by US derivatives traders — seen as a proxy for the $5tn a day global currencies market — have come within 4 per cent of three-year highs, according to an analysis by Société Général

The weakness of the dollar this year has come as a surprise to many Wall Street investment houses, which came into the year expecting Federal Reserve rate rises would provide the world’s reserve currency with a tailwind.

 But political upheaval in Washington, coupled with persistently tepid inflation readings in the US, has kept pressure on bond yields.

The spread between 10-year Treasuries and German Bunds of the same maturity, an important factor for currencies traders, has actually fallen from 2.19 percentage points at the start of 2017 to 1.97 percentage points today.

Europe's retailers chase sales boost with Black Friday offers

European Stock Markets

Retailers across Europe chased shoppers on “Black Friday” in a test of consumer confidence, particularly in Britain where the spending spree imported from the U.S. has become most popular.

After suffering their biggest decline in sales volumes for four-and-a-half years in October, British retailers are pinning their hopes on discounts to get shoppers, who are being squeezed by inflation and low wage rises, spending again.

In the UK the annual promotional event, which has historically focused on electrical goods, has been mainly online since 2014 when it was marred by chaos and scuffles in stores.

Research firm GlobalData forecasts UK spending during theBlack Friday period - defined as Monday Nov. 20 to Monday Nov.27 - will grow by 3.8 percent year on year to 10.1 billion pounds. But whether retailers make money from the event, which was imported to Britain from the United States by online retailer Amazon in 2010, is unclear. 

Supporters argue carefully planned, targeted promotions with global suppliers allow them to achieve a sales boost, while still maintaining profit margins.

But critics say the discounts suck forward Christmas sales that retailers would otherwise have made at full price and can dampen business in subsequent weeks.

Like last year, retailers including Amazon, Dixons Carphone and market leader Tesco are stretching promotions over one to two weeks, hoping to smooth out demand and reduce pressure on supply and distribution networks. 

Black Friday, the day after the U.S. Thanksgiving holiday, was so named because spending would surge and retailers would traditionally begin to turn a profit for the year, moving from the red into the black.

In Germany sales promotions on Black Friday and Cyber Monday are expected to add around 1.7 billion euros to retailers’ revenues, about on par with 2016, a survey by trade body HDE found.

It said 16 percent of German consumers took advantage of Black Friday discounts last year, spending an average of just over 170 euros each.

About 8 million France-based consumers are expected to shop from Friday to Monday, translating into expected revenue of around 945 million euros, according to a study conducted by Kantar TNS for U.S e-commerce firm eBay.

Black Friday has also been growing in Italy. This year all major retail chains are advertising discounts. Signature Italian department store La Rinascente is open until midnight on Friday and is advertising discounts of up to 50 percent.

But Spaniards, who traditionally exchange presents on Epiphany (Jan. 6), nearly two weeks after Christmas Day, have been slow to pick up on the phenomenon. Just 22 percent of Spaniards intend to make a purchase on Black Friday or Cyber Monday this year, according to a survey carried out by Metroscopia.

U.K. Consumers Drive Economic Growth as Business Spending Slows

European Stock Markets

Consumers drove the British economy in the third quarter as spending on cars rebounded but Brexit appears to be inflicting a toll on business investment.

Household spending rose 0.6 percent, the fastest pace in a year, the Office for National Statistics said on Thursday. But business investment slowed and net trade acted as a drag on growth. Overall GDP rose an unrevised 0.4 percent, up from 0.3 percent in the previous three months.

The report comes a day after Chancellor of the Exchequer Philip Hammond announced a downgrade to the economic outlook as a result of a sluggish productivity and Brexit headwinds.

The Office for Budget Responsibility predicted the economy will grow 1.5 percent this year instead of the 2 percent envisaged in March and predicted growth will stay well below 2 percent through 2022.

The ONS said consumer spending was aided by renewed purchases of cars after changes to vehicle excise duty led people to bring forward spending to the first quarter.

Services, the largest part of the economy, rose an unrevised 0.4 percent with professional activities, including employment agencies, providing the biggest contribution.

Business investment rose 0.2 percent, the worst performance since the end of 2016, and net trade knocked 0.5 percentage points off growth as exports fell and imports rose.

While consumer spending rebounded from growth of just 0.2 percent in the second quarter, recent reports have highlighted the risk of a slowdown ahead of the crucial Christmas shopping period as the squeeze on incomes from inflation continues.

Figures last week showed retail sales fell in October from a year earlier, the first decline in more than four years.

On the output side, industrial production grew 1.1 percent in the third quarter but construction fell for a second straight quarter, declining 0.9 percent. Overall GDP rose an unrevised 1.5 percent from a year earlier, matching the weakest pace since early 2013.

European markets mixed as global positive momentum eases; UK budget in focus

European Stock Markets

The pan-European Stoxx 660 was 0.03 percent higher in mid-morning deals with financial sectors moving in opposite directions.

Utilities were the best performers in mid-morning trade with RWE up by 2.6 percent. The stock has benefited from the collapse of coalition talks in Germany, as analysts are now expected a looser energy policy.

Travel and leisure stocks were among the worst performers on earnings. Thomas Cook was down 14 percent after announcing full year results that showed an 8 percent increase in earnings. However, margins fell in the 2017 fiscal year due to a more competitive environment.

Looking across the European benchmark, the food travel company SSP rose 6 percent after posting a 27 percent increase in underlying profits. At the other end, media group Schibsted fell 8 percent after announcing a new share issue.

U.K. enterprise software company Sage Group was up by 2.7 percent on Wednesday morning after it announced a 10 percent increase in organic operating profit to 475 million pounds ($630 million),

Shares of Dutch firm Akzo Nobel were up by 1.3 percent after Japanese firm Nippon Paint made an all cash offer Tuesday to buy Axalta, Reuters reported, putting an end to Axalta's merger talks with Akzo Nobel.

In commodity markets, oil prices were also higher on expectations of a production cut next week at an OPEC meeting. Brent rose 0.7 percent trading at $63.05 and WTI was up by 1.6 percent at $57.74 a barrel at about 9.50 a.m. London time.

Meanwhile, U.K. Finance Minister Philip Hammond will present the government's latest budget at 12:30 p.m. London time. The budget is the first since the general election and it is expected to include lower economic growth expectations than the one presented a year ago. Hammond is also expected to announce measures to boost housing.

Later, there will be flash consumer confidence numbers in the euro zone out at 3.00 p.m. London time.

European markets mixed as Draghi speaks; Carillion shares tank 59%

Retail stocks were the worst performers in early deals. European Central Bank President Mario Draghi says the bank needs to be patient. Germany drags on with coalition talks as disagreements over climate, migration and finances remain between the three parties.

The pan-European Stoxx 600 was 0.04 percent higher with sectors moving in different directions. Retail stocks were the worst performers in early deals, down by 0.6 percent, after several rating updates. In particular, H&M fell nearly 3 percent after a rating downgrade by SEB to a "sell" from a "hold". And Inditex dropped 2.2 percent after Berenberg cut the stock to "sell" from "hold". Analysts have raised concerns over the increasing competition from online shopping.

On the other hand, financial services were among the best performers, boosted by rating upgrades. The dutch investment firm Exor rose about 2 percent after a target price increase, becoming one of the best-performing stocks across the European benchmark.

Looking at individual stocks, Sky hit the top of the Stoxx 600, up by 3.3 percent. The stock was boosted by the news that Comcast, parent company of CNBC, and Verizon have said they are interested in buying certain parts of Twenty-First Century Fox.

Shares of construction and support services provider Carillion sank by 59 percent after it issued its third profit warning of the year.

Meanwhile, shares of Elior fell more than 15 percent after a profit warning. The stock was at the bottom of the benchmark.

In other corporate news, Nationwide Building Society posted a 10 percent drop in profits in the first half of its financial year.

In Italy, Alitalia said Thursday that it has met with members of Lufthansa. According to Reuters, Alitalia said that media reports over a deal with Lufthansa were "groundless."
Draghi says the ECB needs to be patient

In terms of data, there will be euro zone current account numbers out at 9:00 a.m. London time.

Market players were also digesting remarks by European Central Bank President Mario Draghi. He told an audience in Frankfurt that the ECB needs to patient when normalizing monetary policy. This is because despite the improved economic growth in the 19-member area, inflation remains subdued.

European shares weighed down by disappointing updates, downgrades

European Stock Markets

European shares steadied on Friday with disappointing company updates and broker downgrades weighing on the broader market, while pay-TV firm Sky rose on speculation of takeover interest.  

Elior (ELIOR.PA) fell 18 percent after Europe’s third-largest catering group cut its profit guidance, while media group Vivendi (VIV.PA) fell at the open after its third quarter results fell short of analyst expectations.

Their declines and weakness among industrial stocks weighed on the STOXX 600 index, which was flat at 385 points by 0824 GMT following a strong rebound in the previous session. Shares in H&M (HMb.ST) and Inditex (ITX.MC) fell more than 2 percent following broker downgrades.

The pan-European benchmark index is down around 0.9 percent so far this week, set for its second weekly loss in a row, as investors have been locking in profits following a strong year.

Outside the STOXX, Carillion (CLLN.L) wiped out more than half of its stock market value after the UK builder said it would breach its financial covenant and warned on profits for the third time this year.

Among the gainers, Sky (SKYB.L) rose 2.7 percent after reports that Comcast (CMCSA.O) and Verizon (VZ.N) had both expressed interest in acquiring a significant part of Rupert Murdoch’s Twenty-First Century Fox’s (FOXA.O) assets.

Recovery rally for European stocks as cyclicals make a comeback

European Stock Markets

European shares enjoyed a recovery on Thursday, snapping their longest losing streak since October 2016 as the cyclicals sectors which had driven a market-wide sell-off made a comeback. 

The pan-European STOXX 600 index climbed 0.4 percent, with the cyclicals-heavy DAX .GDAXI up 0.5 percent while Britain's FTSE 100 .FTSE and Italy's top stock index .FTMIB lagged, trading flat.

Financial services, basic resources and technology sectors were among the best-performing, driving the market higher while recovering oil prices also helped support energy stocks.

Investors continued to digest a raft of earnings updates, with all the top movers reacting to results.

French telecoms firm Bouygues (BOUY.PA) led gains, up 3.8 percent after raising its profitability goal for the year, buoyed by a robust 37 percent jump in nine-month operating profits.

London-listed private equity firm 3i Group (III.L) also rose, by 4.2 percent, after results, while shares in postal group Royal Mail (RMG.L) climbed after letter revenues fell less than expected.

Facilities and catering firm Sodexo (EXHO.PA) however fell 4.9 percent as traders expressed disappointment over its margin guidance and annual revenues coming in slightly below consensus forecasts.

The company on Wednesday said it was buying U.S. company Centerplate for $675 million, putting more pressure on its results to impress and justify the expenditure.

Troubled British engineer GKN (GKN.L) sank 5.2 percent, the top faller after it announced a further write-off and ditching CEO designate Kevin Cummings.

Overall the MSCI EMU index of euro zone companies is tracking earnings growth of 10.7 percent in dollar terms for the third quarter, with basic materials, financials and technology the main drivers of earnings beats. The broader MSCI Europe index is delivering 10 percent earnings growth.

Tesco wins UK regulator's provisional approval for Booker takeover

European Stock Markets

Tesco (TSCO.L) won provisional approval for its 3.7 billion pound ($4.9 billion) takeover of wholesaler Booker (BOK.L) from the UK competition regulator on Tuesday, moving Britain’s biggest retailer closer to securing a new avenue of growth. 

The Competition and Markets Authority (CMA) said it had conducted an in-depth review and provisionally concluded that Tesco’s purchase of Booker does not raise competition concerns.

The provisional unconditional clearance will come as a major relief to Tesco. Most analysts had expected that Tesco would have to agree store disposals to gain clearance.

Both Tesco and Booker, the country’s biggest grocery wholesaler, welcomed the CMA announcement. Tesco said it expected to complete the deal, which also requires shareholder approvals, in early 2018.

Shares in Tesco and Booker were up 4.8 percent and 5.1 percent respectively at 0905 GMT.

Bernstein analysts said they expect some uncertainty to remain, with the focus shifting to whether investors will approve the deal.

Their analysis indicates that Tesco will achieve the required 50 percent shareholder approval and that the focus will be on Booker, where the threshold is 75 percent.

“With a higher shareholder hurdle and the Tesco share price below the level when the bid was made (about 2 pounds), Booker shareholders may argue for a higher share price,” the broker’s analysts said.

For each Booker share, Tesco is offering 0.861 new Tesco shares and 42.6 pence in cash.

The CMA said it found that Tesco as a retailer and Booker as a wholesaler supplying caterers and independent retailers Premier, Londis, Budgens and Family Shopper do not compete head-to-head in most of their activities.

In particular, it found that Tesco does not supply the catering sector that accounts for more than 30 percent of Booker’s sales.

The proposed deal is Tesco Chief Executive Dave Lewis’s boldest move yet. He believes it will provide a new source of growth by giving the group access to the fast-growing “out of home” food market, given Booker’s role as a distributor to the catering industry.

Some Tesco shareholders have criticized the bid, saying Tesco is overpaying and that it will distract from the company’s turnaround plan.

Rival wholesale groups have also called for the takeover to be blocked.

Euro Economy Is Heading Towards a Golden Period

European Stock Markets

The 19-nation euro-zone bloc is already enjoying the strongest growth in a decade and now economists at Credit Suisse Group AG and Oxford Economics are declaring that it’s heading toward a golden period of low-inflationary expansion.

The turnaround is striking for a region that plunged from the global financial crisis into its own sovereign debt turmoil, record unemployment and near-deflation that threatened the very survival of the currency union. While still to make up most of the ground lost in the dark years, and with productivity still weak, the upturn at least holds out the hope that some scars will start to heal.

The improvement has plenty of room to run, says Angel Talavera, an economist at Oxford Economics in London. The European Commission last week raised its 2017 growth forecast to 2.2 percent from a 1.7 percent estimate in May.

In a report on Monday, the International Monetary Fund said growth across the European region -- which includes the euro area as well as developing economies in central and eastern Europe -- is having a positive spillover effect on the rest of the world. It also said those brighter prospects accounted for the bulk of the upward revision to its global outlook in October.
 

European Central Bank policy maker Benoit Coeure last week went as far as to say that in terms of balance and robustness, the economy is in the best shape since the euro’s birth in 1999 although he called on governments to implement more reforms to support it.Support for the single currency -- although on the rise -- has yet to reach its 2007 high and euroskeptic political parties have gained ground. The anti-euro AfD party became the third largest in the German lower house after elections in September. The populist Five Star Movement in Italy is strengthening before next year’s general election.

 

To insulate the economy, the ECB announced in October that it will continue to buy public and private-sector debt for most of next year and won’t raise interest rates for a long time thereafter, guaranteeing an expansionary monetary policy.
With few signs yet of accelerating price growth, Nordea Bank said last Wednesday that it doesn’t expect any rate increases until December 2019, after Draghi has finished his term.

Capacity utilization is close to historic cyclical highs, which bodes well for investment and jobs. Rising employment in turn should bolster private consumption, while exports are set to benefit from robust global trade.
 

Even fiscal policy might contribute. Germany, the region’s proponent of austerity, is looking at tax cuts for Chancellor Angela Merkel’s fourth term in office. Goldman Sachs Group Inc. economists estimate that the area-wide budget position will ease next year.
There’s good cause to think euro-area growth can gather further strength in 2018 said economists at Credit Suisse, who last week raised their forecast to show a 2.5 percent expansion next year.

Spain-Catalonia relief edges world stocks to fresh high

Spanish stocks and bonds rallied and the euro hit a two-week high on Wednesday as European markets took relief from Catalonia stopping short of declaring immediate independence from Madrid. 

Catalonia’s leader Carles Puigdemont had balked on Tuesday at making a formal declaration of independence, saying the plan would be put on hold and that he instead wanted talks with Spain’s government over the region’s future. 

The move disappointed many pro-independence supporters but pleased financial markets with hopes the gesture would mark a de-escalation of Spain’s worst political crisis since an attempted military coup in 1981. 

MSCI's 47-country world stocks index .MIWD00000PUS briefly hit a fresh record high in opening European trading as a 1.5 percent jump in Spain's IBEX .IBEX added to a 10-year high set by Asian shares overnight. 

The biggest surge came from Spanish banks which rallied as much as 4 percent .IBEXIB, while the country’s government bond yields - which gauge political tension levels - saw their second biggest fall in a month.

The euro climbed to a two-week high of $1.18345 against a broadly weaker dollar which was down for a fourth day running in its worst run since July.

U.S. President Donald Trump’s public feud with Tennessee Senator Bob Corker, an influential fellow Republican, has raised concern that his push for a tax-code overhaul could be harmed. 

At the same time, the Federal Reserve will publish the minutes from its last minute later with a third U.S. rate hike of the year now looking nailed on for December.

Europe’s Spain gains bolstered what was already a confident market mood after the International Monetary Fund pushed up its forecast for global growth on Tuesday

Asian shares then climbed to their highest in a decade as Japan's Nikkei .N225 reached its strongest since 1996 despite more losses for scandal-hit Kobe Steel (5406.T) and as South Korean stocks .KOPSI made a new all-time top.

"Safe-haven" euro could complicate ECB plan to roll back stimulus

The euro’s rise above $1.20 this week has prompted talk that it is becoming a safe haven for investors, posing a problem for the European Central Bank as it plans to roll back its huge economic stimulus in the coming months.

Many remain sceptical that a currency which has undergone ordeals such as the Greek debt crisis in recent years can join the Swiss franc CHF= as a place to store money in times of market stress. 

Nevertheless, the euro EUR=EBS has remained strong against the dollar in the past two weeks despite concerns about a standoff between the United States and North Korea which have sent spasms of selling through global stock markets. 

Add in a series of high-level departures from the U.S. administration and President Donald Trump’s failure so far to get his plans for corporate tax cuts and big infrastructure spending through Congress, and some investors are reassessing their attitude towards the single currency. 

“Disappointment about U.S. reflation and disarray in the White House have enhanced the relative attraction of the euro to the extent that a discussion around its safe-haven credentials has opened up,” said Jane Foley, senior FX strategist at Rabobank in London. 

In recent years, investors’ appetite for risk and the euro’s value have largely moved in tandem. Particularly during flare-ups in the euro zone debt crisis in 2011 and 2013, a selloff in equities or emerging market debt would drag the euro lower. 

But now the euro seems to be gathering momentum. If the currency sheds its role as a proxy for risk appetite, ECB policymakers who meet next week will have to factor in its economic impact. 

In particular they will be wary of a strong euro hurting exporters and undermining their efforts to push low inflation back up to the ECB’s target, just as they are preparing to start winding down a 2 trillion euro ($2.4 trillion) plus bond-purchase programme. 

The euro is still far from an undisputed safe haven, with memories of the debt crisis fresh and policymakers struggling to push wage growth higher. However, its near 14 percent rise versus the dollar this year has led investors to note its structural strengths.

Euro, bond yields rise on buoyant business surveys

The European single currency and euro zone government bond yields rose on Wednesday after a survey showed the bloc's manufacturing businesses had their best month of growth in six-and-a-half years.

U.S. stocks looked set to open lower, with Wall Street futures down 0.3 percent. 

Forecast-beating surveys in the euro zone's two biggest economies, France and Germany , helped pull the euro up against the dollar EUR=EBS, which had wobbled against the yen overnight on comments from U.S. President Donald Trump. 

The pan-European STOXX 600 however, was dragged down by unloved media stocks. WPP shed more than 10 percent after the world's largest advertising group cut its sales forecast.

"At a broad level what PMIs are telling you is that the momentum of the euro zone recovery continues and the strength of the euro is not containing it," said Investec economist Philip Shaw. 

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan inched up to a two-week high, before pulling back. 

Australian stocks fell 0.2 percent on the day and South Korea's KOSPI ended 0.1 percent higher.

Japan's Nikkei bucked the trend and rose 0.3 percent, taking its cues from Wall Street's technology-led rally on Tuesday. 

The dollar wobbled against the yen after Trump told a rally he would be willing to risk a government shut-down to secure funding for a wall on the U.S. border with Mexico. 

Financial markets have been buffeted in recent weeks by heightened tensions on the Korean peninsula, turmoil in the White House, and growing doubts about Trump's ability to fulfil his economic agenda. 

A gathering of global central bankers this week in Jackson Hole, Wyoming, has prompted investors to rebalance their currency positions, leading them to reduce some of their short dollar bets.

Euro zone core inflation unexpectedly picks up in July

A key measure of euro zone inflation accelerated to a four-year high this month and euro zone unemployment fell to its lowest since 2009 in June, data showed on Monday, in two encouraging signs for the European Central Bank as it considers reducing its monetary stimulus.

The ECB is due to decide by the autumn whether and how to extend its 2.3 trillion euros (2.05 trillion pounds) quantitative easing programme into 2018 and President Mario Draghi has cited sluggish core inflation and wage growth as reasons to be cautious. 

Likely giving heart to ECB policymakers, core inflation, which excludes volatile food and energy prices, accelerated to 1.3 percent from 1.2 percent in June, Eurostat's flash estimate showed. 

It was its highest level since August 2013 and confounded market expectations for a slowdown.

The European Union's statistics office estimated that headline growth in consumer prices in the euro zone was stable at 1.3 percent year-on-year in July, still far from the ECB's objective of just under 2 percent. 

In a separate release, Eurostat said unemployment in the 19-country currency bloc dropped to its lowest level since 2009 at 9.1 percent, confirming a robust recovery in the currency bloc. 

The jobless rate also went down in Italy and Spain, the two eurozone countries with the highest rates, excluding Greece for which fresh data were not available. 

In Italy unemployment dropped to 11.1 percent in June from 11.3 percent in May, meaning that nearly 60,000 were added to the Italian workforce. In Spain, the rate fell to 17.1 percent from 17.3 percent. 

One of the ECB's dilemmas is that a steady decline in unemployment is not translating into higher wages, a key driver of inflation. 

In Germany, the largest economy of the bloc, unemployment fell to 3.8 percent in June from 3.9 percent the previous month, raising expectations of bigger wage rises that could strengthen growth in the euro zone a whole.

Asia shares drop on Fed minutes, oil edges up after big drop

Most Asian stock markets fell on Thursday after minutes from the Federal Reserve's last meeting showed a lack of consensus on the future pace of U.S. interest rate increases, while oil prices inched higher following a steep decline a day earlier.

European markets were set for a steady open, with financial spreadbetters expecting Britain's FTSE 100 to be unchanged, Germany's DAX to open up 0.2 percent and France's CAC 40 to start the day 0.1 percent higher.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent. Japan's Nikkei slipped 0.5 percent as a stronger yen depressed the outlook for export earnings. South Korea's KOSPI and Australian shares both lost 0.1 percent.

China's bluechip CSI 300 index fell 0.5 percent and Hong Kong's Hang Seng slid 0.3 percent.
Trading in Asia has been buffeted this week by tensions on the Korean peninsula after North Korea fired a missile, which U.S. officials concluded was an intercontinental ballistic missile, into Japanese waters.

The United States said on Wednesday it was ready to use force if needed to stop North Korea's nuclear missile programme but said it preferred global diplomatic action against Pyongyang.

The Nasdaq closed up 0.7 percent on Wednesday as technology shares recovered. But the Dow Jones Industrial Average was flat and the S&P 500 gained just 0.15 percent.

Fed policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to minutes released on Wednesday of the central bank's June 13-14 policy meeting.

Several officials also wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August, but others preferred to wait until later in the year.

U.S. 10-year Treasury yields dipped to 2.3232 percent, but remained near a seven-week high touched on Wednesday.

The dollar retreated 0.3 percent to 112.92 yen on Thursday. The dollar index, which tracks the currency against a basket of trade-weighted peers, was little changed at 96.259.

Dollar despairs on hawkish central banks, Asia stocks join global slump

The dollar extended its losses on Friday as major central banks signalled that the era of cheap money was coming to an end in a boon to sterling, the euro and the Canadian dollar, while Asian shares were hit by dismal performances of European and U.S. markets.

European markets were set to open a little lower, with financial spreadbetter LCG expecting Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHI to all start the day down 0.1 percent. All three lost between 0.5 percent and 1.9 percent on Thursday.

But global stock market indexes are set for more gains by the end of this year, driven by an economic revival in Europe and bright prospects for much of Asia, a Reuters poll of around 300 financial professionals showed.

The dollar index .DXY fell 0.1 percent to 95.549, poised for a 1.8 percent slide this week, having fallen in all sessions but one. It is down 1.4 percent for the month, and 4.8 percent for the quarter.

The Korean won weakened against the dollar after the country reported industrial production rose by 0.2 percent in May from a month earlier, missing expectations for growth of 1.5 percent. That followed a 2.2 percent decline in April

The dollar was up 0.1 percent at 1,142.5 won KRW=KFTC.

The dollar fell 0.25 percent to 111.95 yen, after losing 0.2 percent on Thursday. It was heading for a 1.2 percent gain for the month, but is down 4.2 percent this year.

Bank of England Governor Mark Carney surprised many on Wednesday by conceding a rate hike was likely to be needed as the economy came closer to running at full capacity.

Sterling GBP=D3 was 0.1 percent higher on Friday at $1.3017, adding to Thursday's 0.6 percent gain.
Two top policymakers at the Bank of Canada also suggested they might tighten monetary policy there as early as July.

The dollar slipped 0.15 percent to C$1.2984 CAD=, extending Thursday's 0.26 percent loss.
Despite comments by sources that European Central Bank President Mario Draghi had intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, the euro on Friday revisited the 13-month high of $1.1445 hit on Thursday.

The euro EUR=EBS remained close to that level and was at $1.1439 on Friday, retaining most of Thursday's 0.6 percent gain.

Healthcare and Biotech Lead – Markets Still Work to Pivot

It’s no secret we’ve been pounding the table on healthcare and biotech being among the markets’ leaders on a go-forward basis, and so far both sectors haven’t disappointed. As a matter of fact, it’s been biotech and healthcare that’s kept the markets propped up this week. Although both sectors won’t necessarily go up in a straight line, we do continue to believe investors and traders should now start focusing more on the space.

With that, we’ll be putting out some new ideas once we’re convinced the major indices are going higher. However, based on what we continue to see, the markets are still technically in a position to go either way.

We’ve been referencing 6,255, 6,193 and then just yesterday 6,100 on the NASDAQ Composite as key trigger points. Meaning, a strong close above 6,255 would suggest a bullish trigger, but any sort of developing weakness, and a strong close below 6,193 again – or more importantly a close below 6,100 – could trigger a near-term tailspin to the downside.

It still remains to be seen, but you can see in the daily chart of the NASDAQ below the index couldn’t muster enough strength yesterday to close above that key level mentioned above. That’s no coincidence considering there’s a big tug of war taking place around that level right now – one that’s likely to determine the markets’ near-term direction.

In other words, savvy technical traders know the 6,255 level is key in terms of testing these markets to the downside, or potentially triggering another bullish trade to the upside.

At this point, nobody in their right mind could actually say these markets are headed higher or lower over the next several days. However, we do continue to believe the markets could possibly be in a position to rollover if that 6,255 level can’t be convincingly breached.

We all saw what happened two weeks ago today, so it’s important we don’t blindly jump the gun right now to either side of the trade. But, if there is a better risk/reward opportunity right now for traders, that would be an index short around current levels with a SSL just behind that 6,255 level on the NASDAQ Composite. Just make sure you don’t get caught up in the intra-day moves, but rather use an actual close above 6.255 as your SSL trigger.

It’s not that it’s a high percentage trade that makes the risk/reward attractive, it’s more about the potential downside risk vs. what one could gain in the event these markets do end up moving lower soon.

European shares get tech support, Hexagon soars on M&A talk

Recovering technology stocks gave European shares another leg up on Wednesday, while deal chatter sent Sweden's Hexagon soaring to a record high. 

The pan-European STOXX 600 benchmark and its euro zone counterpart rose 0.4 percent, in line with blue-chips with broad investor focus on the U.S. Fed rate decision later in the day in which the bank is widely expected to raise rates.

In the U.K., the FTSE 100 was little changed while midcaps rose 0.6 percent.

Hexagon stole the limelight, jumping more than 16 percent to a new record high after a Wall Street Journal report that the Swedish measurement firm was in talks for a potential sale to undisclosed buyers.

Technology stocks were the best-performing for the second session running, up 1.3 percent and clawing back after a nosedive fuelled by jitters over valuations, particularly in the U.S. Chipmakers Infineon, Dialog Semiconductor and ASML all gained 1.2 to 1.5 percent.

British housebuilder Bellway gained ground after its trading update showed robust demand for homes did not slow ahead of a national election on June 8. The builder's upbeat tone also lifted peers Barratt Development and Taylor Wimpey.

And Italian banks maintained their strength with Banco BPM was again among top Italian gainers after saying it would repurchase retail bonds from smaller Italian lenders for 123 million euros.

Meanwhile Euronext fell to the bottom of the European index after BNP Paribas and Societe Generale sold shares in the firm for 45 euros per share.

Euro zone industrial production data later in the day will give investors a steer on the underlying health of the economy, while British wage growth and unemployment figures could add to evidence of a squeeze on Britons' paychecks.