World shares limp toward third week of gains
Bitcoin roars to new high
World shares fell on Friday and the dollar slipped against major and heavyweight emerging market currencies, as nagging uncertainty about a U.S. tax cuts package dovetailed with broad-based end-of-year caution.
It was a groggy end to what was still set to be a third week of gains for MSCI’s global stock index following more upbeat data and signs that central banks including the Federal Reserve have no plans to really jack up interest rates.
U.S. futures markets pointed to a modest rebound on Wall Street when it reopens after weakness on Thursday.
Japan's Nikkei had followed it lower overnight and Europe was firmly in the red, as a 15 per cent slump in fashion giant H&M and near 9 per cent drop Italian luxury goods firm Ferragamo spooked retailers.
Banks struggled too on a renewed dip in euro zone bond yields after Thursday’s message from the European Central Bank that it was sticking to its pledge to keep money pouring into the bloc’s economy for as long as needed.
“The theme is still one of gradual policy tightening,” said Societe Generale interest rates strategist Jason Simpson, who said the Bank of England had also sent a steady-as-you-go signal at its meeting the previous day.
“Today is also going to be the last one (this year) of any real flow ... so bond yields are just squeezing lower as any short positions are being covered.”
In the currency markets, the dollar was down at 112.19 against the yen and, despite having been at a one-month high earlier in the week, stuttering towards a 0.3 percent weekly drop against a basket of six rival currencies.
Ongoing wrangling in the U.S. Congress over a bill to cut taxes on Thursday dented confidence that the reforms would be pushed through in their current state. Two more Republican senators insisted on changes.
Florida’s Marco Rubio, a former presidential contender, told reporters on Capitol Hill that if the bill’s proposed refundability to taxpayers of the child tax credit was not expanded, “I‘m a no”.
“The more the tax bill gets watered down, the less pronounced the effect will be on the dollar.” said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
The New Zealand dollar was the biggest mover among major currencies, up 0.6 percent at a two-month high of $0.7029 NZD=D4 after the country's Finance Minister Grant Robertson said he was comfortable with the currency's general trend.
That paled in significance compared with Bitcoin, though, as the digital currency blasted to another all-time high of almost $18,000, up 9 percent on the day and now more than 1,700 percent this year.
Bitcoin has soared almost 80 percent so far in December alone, putting it on track for its best month in percentage terms since December 2013, though worries remain.
A study by Anglia Ruskin University, Trinity College Dublin and Dublin City University released on Friday said bitcoin could pose a threat to the financial stability of traditional currencies and markets.
“Our evidence finds that the price of Bitcoin has been artificially inflated by speculative investment, putting it in a bubble,” Larisa Yarovaya, one of the report’s authors, said.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.4 percent overnight, but clung on for a 0.8 percent gain for the week.
Japan's Nikkei stock index .N225 finished 0.6 percent down at its lowest in more than a week, with mobile firms extending a sell-off on concerns of increased competition after e-commerce group Rakuten said it aims to become the country's fourth wireless carrier. The index was down 1.1 percent for the week.
That was despite big Japanese manufacturers’ business confidence improving for a fifth straight quarter to hit an 11-year high according to the Bank of Japan’s closely-followed tankan survey showed.
“The Nikkei came off its lows in the afternoon, largely on futures-led buying,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust. “But regional sentiment is still fragile, which will limit its upside.”
In commodity markets, crude oil futures extended the previous day’s gains as a pipeline outage in Britain continued to support prices despite forecasts showing a global crude surplus in the beginning of next year. [O/R]
U.S. crude CLc1 added 0.3 percent, or 15 cents, to $57.19 a barrel, after gaining 0.8 percent overnight. Brent crude futures LCOc1 were barely budged at $63.45.
Industrial metal copper CMCU3, headed for a 3 percent weekly gain after two weeks of hefty falls, while gold edged away from a four-month low hit earlier in week as it nudged up to $1,257 an ounce.
Updated: December 15, 2017 06:08 PM