World shares slipped on Friday as tricky Brexit negotiations and uncertainty over US stimulus talks capped riskier bets even though COVID-19 vaccines made progress, pushing sterling down and keeping the dollar weak, report agencies.
European equities fell, with the broad Euro STOXX 600 down 1.1 per cent and indexes in Paris and London losing 1.2 per cent and 1 per cent respectively.
The MSCI world equity index, which tracks shares in 50 countries, fell into the red.
US stocks were mixed on Thursday as near-term US fiscal stimulus appeared unlikely. Democrat House Speaker Nancy Pelosi suggested wrangling over a spending package and coronavirus aid could drag on through Christmas.
Brexit also vexed investors after British Prime Minister Boris Johnson said on Thursday there was “a strong possibility” Britain and the European Union would fail to strike a trade deal.
Britain and the EU have set a deadline of Sunday to find an agreement, before Britain’s exit from the bloc on Jan. 1. The odds of a disorderly Brexit rose to 61 per cent on Friday from 53 per cent a day before, according to the Smarkets exchange.
Sterling lost 0.5 per cent, and was set to end five straight weeks of gains as currency traders weighed an expected hit to the British economy should the sides fail to agree a deal.
“Investors are right to be worried,” said Olivier Marciot, a portfolio manager at Unigestion. “If there is no deal, there will be implications. There could be some sort of correction.”
Still, investors had bet on stronger economic growth next year as more countries prepare for vaccinations, helping MSCI’s ex-Japan Asia-Pacific index edge up 0.2 per cent and head for its sixth straight week of gains.
US authorities voted overwhelmingly to endorse emergency use of Pfizer’s coronavirus vaccine while doses of a COVID-19 vaccine made by China’s Sinovac Biotech SVA.O are rolling off a Brazilian production line.
Demand for recent US initial public offerings also suggested investors were generally upbeat on equities, even as job data pointed to weakness in the world’s biggest economy.
Shares of Airbnb Inc more than doubled in their stock market debut on Thursday, valuing the home rental firm at just over $100 billion in the biggest US initial public offering of 2020. DoorDash Inc stocks doubled in their first day of trading.
At the same time, the number of Americans filing claims for unemployment benefits grew more than expected last week as mounting COVID-19 infections led to more business restrictions.
The data “raises the prospect that the labour market progress seen in recent months is slowing significantly,” Deutsche Bank analysts wrote.
In the currency markets, the British pound traded at $1.3228, with its 1.5 per cent loss so far this week versus the dollar setting it on course for a first weekly loss since late October.
Emerging-market currencies were poised for a sixth week of gains, thanks in part to the dollar’s recent weakness. The dollar was up 0.2 per cent against a basket of six major currencies, near lows not seen since spring 2018.
The euro held not far from two-and-a-half-year highs of $1.2140 after the European Central Bank delivered a fresh stimulus package that was broadly in line with market expectations on Thursday.
Oil prices climbed further, with Brent hitting levels not seen since early March, as coronavirus vaccination rollouts fuelled hopes that crude demand would pick up in 2021.
Tokyo stocks opened marginally higher on Friday as few fresh cues for trade emerged after a mixed close on Wall Street.
The benchmark Nikkei 225 index was up 0.09 percent, or 24.56 points, at 26,780.80 in early trade, while the broader Topix edged up 0.23 percent, or 4.04 points, to 1,780.25.
“Japanese shares are seen moving in a narrow range following mixed performance in the US market,” said senior market analyst Toshiyuki Kanayama of Monex.
The Nikkei moved between negative and positive territories in the first
several minutes before dipping further — trading down 0.55 percent about an hour after the opening bell.
The market lacked a clear sense of direction as traders were caught between worries over rising Covid-19 infections in Japan and abroad, and optimism about vaccines allowing a return to normal economic activity, Mizuho Securities said.
Among major shares in Tokyo, shipping firms were down, with Nippon Yusen declining 1.13 percent to 2,367 yen, Mitsui O.S.K. Lines dropping 0.57 percent to 2,975 yen, and Kawasaki Kisen down 2.37 percent at 1,939 yen.
Toyota rallied for a second straight day, surging 3.84 percent to 7,767 yen after a report said it plans to launch vehicles carrying next-generation solid-state batteries in the early 2020s.