Global Stocks Pressured by France Terror Attack
Global stocks were under pressure Friday as a deadly terror attack in France hit investor sentiment that had been buoyed by a record close on Wall Street and better-than-expected Chinese economic data.
U.S. futures markets pointed to a 0.2% opening loss for the S&P 500 ahead of a flurry of economic data releases on Friday, including closely watched retail sales numbers. Changes in futures aren’t necessarily reflected in market moves after the opening bell.
The Stoxx Europe 600 was down 0.4% in morning trade, dragged down by travel and leisure shares, which fell after the attack. France’s CAC 40 was down 0.8% and other European markets were also flashing red following a more upbeat session in Asia.
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A truck driver barreled for more than a mile through Bastille Day revelers in Nice, killing more than 80 people, in a rampage that French President François Hollande said had “undeniable traits of terrorism.” The truck was loaded with weapons including explosives and the driver fired shots, officials said.
The carnage in Nice marks the latest in a string of attacks against France over the last 18 months. Authorities extended a national state of emergency by three months after the attack.
Friday’s market moves close out a week that saw the S&P 500 finishing at a high on four consecutive days, its longest stretch of records since November 2014. The Dow Jones Industrial Average hit its third record in a row on Thursday on the back of stronger-than-expected U.S. bank earnings and as investors bet on more central bank stimulus.
The Bank of England’s rates-setting committee decided on Thursday to keep its benchmark lending rate steady at 0.5%, surprising investors who had expected the bank to cut interest rates after the U.K. voted to leave the European Union last month.
A man looks at an electronic stock board of a securities firm in Tokyo. Asian shares were mostly higher after China reported steady economic growth in the second quarter.
A man looks at an electronic stock board of a securities firm in Tokyo. Asian shares were mostly higher after China reported steady economic growth in the second quarter.Photo: Associated Press
But the BOE also said most of its members expect a loosening of policy in August—a reassuring sign to investors who have been pinning their hopes on further central-bank stimulus in recent weeks.
Many investors expect other major central banks to also act to counter a potential drag on the global economy after the Brexit vote, with some predicting further stimulus from the European Central Bank and a further delay to the U.S. Federal Reserve’s plans to raise interest rates this year.
“The trajectory is clear: we’re expecting more accommodative central bank policy around the world,” said Iain Stealey, fund manager at J.P. Morgan Asset Management.
Equity markets tend to flourish on the promise of extra central bank stimulus, because cutting rates or buying bonds pushes down yields, prompting investors to look for returns elsewhere. The ECB is meeting next week and analysts expect Brexit to dominate the discussion. Even if the bank announces no extra measures the statement may give a dovish signal, market participants say.
Strong U.S. economic data has also been underpinning markets in recent days, analysts say. In the latest sign that the labor market may be stabilizing, the number of jobless claims held steady last week at a historically low level, data showed Thursday.
“The markets believe that the U.S. economy is good enough and the data so far has been holding up,” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley.
Investors on Friday will be looking to more U.S. economic data including retail sales, which are expected to have risen by 0.1% in June from the previous month. Data released later in the day also includes inflation numbers and industrial production.
The U.S. earnings season, which got under way this week, will see big banks such as Citigroup Inc. and Wells Fargo & Co. reporting on Friday. J.P. Morgan Chase & Co. kicked off bank earnings season with better-than-expected results on Thursday.
Mr. Sheets said he expects companies to beat earnings forecasts this quarter. “Expectations were already low so that’s a very low bar to clear,” he said.
Asian equity markets mostly gained on Friday, boosted by higher-than-expected Chinese economic growth numbers. The world’s second largest economy grew by 6.7% in the second quarter, unchanged from the first and higher than expected by analysts, as a flood of stimulus lent stability to the slowing economy.
Japan’s Nikkei Stock Average closed up 0.7%, while the yen fell 0.8% against the dollar at ¥106.
In commodities, Brent crude, the international oil price benchmark, traded down 0.9% down at $46.93 a barrel on Friday ahead of data on drilling activity expected later in the day. Gold was up 0.1% at 1,3331.4 an ounce.
Write to Georgi Kantchev at
georgi.kantchev@wsj.com