The pound dropped as British Prime Minister Theresa May found herself under renewed pressure just as Brexit talks enter a crucial phase. European stocks edged lower, tracking many Asian shares, while gold and other metals rose.
Sterling fell against all its main G-10 peers following a report that as many as 40 Conservative lawmakers have agreed to sign a letter of no confidence in May, eight short of the number required to trigger a leadership challenge. The currency’s weakness lent support to the FTSE 100 Index, but it was a mixed picture across the rest of Europe and the Stoxx 600 Index inched lower. Earlier, equities in Tokyo deepened a decline toward the close of the session amid a red day across Asia, though Chinese shares bucked the decline. Bitcoin slumped after the cancellation of a technology upgrade prompted some users to switch out of the cryptocurrency.
The threat to May’s leadership comes at a sensitive time for the U.K. leader. The opposition Labour Party accused her of lacking the support within her Conservative Party to deliver the Brexit transition period she’s proposed. In a week that also features a slew of Bank of England members speaking and updates on U.K. inflation, the labor market and retail sales, British assets could be in for a choppy ride.
But the U.K. data won’t be the only numbers on investors’ minds. U.S. inflation and growth numbers are also on the docket, and they could be key to the Federal Reserve’s determination to lift rates next month. Talks on tax legislation may also play into market thinking; pessimism over the likelihood of successful reforms helped drag global equities down from this month’s record high late last week. Measures of equity-market volatility have risen, albeit from low levels.
Terminal users can read more in our Markets Live blog.
Here are some key events investors are watching this week:
- President Donald Trump continues on the final leg of his tour around Asia.
- A raft of closely watched economic releases from China is due Tuesday, including industrial production, fixed-asset investment and retail sales.
- Japan’s third-quarter GDP is slated for Wednesday.
- Australia updates on employment later this week.
- Outgoing Fed chair Janet Yellen takes part in a panel at a European Central Bank event on Tuesday in Frankfurt along with peers from Europe, Japan and the U.K., and Chicago Fed boss Charles Evans will also be at the conference.
- U.S. CPI is due Wednesday. If CPI misses, odds of a December hike from the Fed could head toward 50 percent, according to Morgan Stanley.
These are the main moves in markets:
- Japan’s Topix fell 0.9 at the close. The Nikkei 225 slid 1.3 percent, the most since May.
- South Korea’s Kospi index lost 0.5 percent.
- The Hang Seng Index in Hong Kong climbed 0.2 percent. Country Garden Holdings Co. jumped as much as 11 percent and Sunny Optical Technology Group Co. climbed as much as 5 percent after their inclusion in the index. Razer Inc. was up 24 percent above its IPO price, less than a week after the initial public offering of China Literature Ltd. skyrocketed on its debut on the city’s bourse.
- The MSCI Asia Pacific Index lost 0.6 percent.
- The Japanese yen gained less than 0.05 percent to 113.50 per dollar.
- The Stoxx Europe 600 Index declined 0.1 percent as of 8:24 a.m. London time, hitting the lowest in almost three weeks with its fifth consecutive decline.
- The MSCI All-Country World Index decreased 0.2 percent to the lowest in almost two weeks.
- The U.K.’s FTSE 100 Index climbed 0.4 percent, the largest increase in more than a week.
- Germany’s DAX Index gained 0.3 percent, the biggest rise in more than a week.
- The MSCI Emerging Market Index sank 0.3 percent to the lowest in almost two weeks.
- Futures on the S&P 500 Index advanced 0.1 percent.
- The Bloomberg Dollar Spot Index climbed 0.2 percent.
- The euro declined 0.2 percent to $1.164, the biggest drop in more than a week.
- The British pound dipped 0.8 percent to $1.309, the weakest in more than a week on the largest dip in more than a week.
- The yield on 10-year Treasuries dipped two basis points to 2.38 percent, the largest dip in more than a week.
- Germany’s 10-year yield declined one basis point to 0.40 percent, the biggest fall in a week.
- Britain’s 10-year yield decreased two basis points to 1.324 percent.
- Gold gained 0.1 percent to $1,276.39 an ounce.
- West Texas Intermediate crude fell 0.1 percent to $56.69 a barrel, the lowest in more than a week.