Eurozone stocks drifted lower yesterday as traders waited for a key meeting of central bankers at the end of the week, while heavy falls for mining shares weighed on the London market.
By the close, Europe’s main markets had all lost ground.
London’s benchmark FTSE 100 gave up 0.5% compared with Friday’s close while in the eurozone both Frankfurt and Paris gave up early minor gains as the DAX 30 lost 0.5% while the Paris CAC 40 fell 0.2%.
Wall Street opened slightly lower and was 0.2% in the red early afternoon despite cancer drugmaker Medivation soaring on the announcement of a takeover by pharma giant Pfizer with the main Dow Jones index at 18,508.74 points.
Medivation shares jumped nearly 20% after Pfizer offered $14bn, or $81.50 a share, for the company in a deal which will allow the New York-based Pfizer to market prostate cancer medication Xtandi.
Overall, investors were looking ahead to “a relatively quiet week with (Fed chief) Janet Yellen headlining on Friday with her speech” at the Jackson Hole gathering of central bankers, said Craig Erlam, senior market analyst at Oanda trading group.
“The Jackson Hole event has previously been a platform for the Fed to provide more clarity to the markets and warn about upcoming policy changes, something the market is currently in desperate need of.”
The dollar rose against the euro and yen after the Federal Reserve’s vice chairman said the US economy was picking up.
Stanley Fischer on Sunday said the world’s top economy was meeting all the Fed’s targets and that growth would improve, hinting that borrowing costs could rise this year.
“It has become clear in recent days that Fed officials are increasingly divided over the timing of when to move on rates next, and their constant briefings to the market aren’t helping in this regard, which probably explains why US markets have struggled for direction in the past few weeks,” said Michael Hewson, chief market analyst at CMC Markets UK.
Minutes of the Federal Reserve’s July meeting published last week showed that policymakers wanted to keep their “options open” for monetary policy as they assess the global economic outlook.
The board was divided on the near-term danger of inflation, with some seeing little threat but others worried there could be a sudden upward push on prices as the jobs market tightens.
In London yesterday meanwhile, the FTSE was weighed down by a drop in prices of dollar-denominated industrial and precious metals.
“It’s the FTSE’s commodity contingent that is holding the index back...
with a stronger dollar derived from hawkish Fed chat weighing on metals prices,” said Mike van Dulken, head of research at Accendo Markets.
Mid-afternoon, major silver and gold producer Fresnillo saw its share price close down 5.9% at 1,825 pence, while Randgold shed 4.0 as did miner Anglo American.
On the London Bullion Market, the price of gold dropped to around $1,335 an ounce from $1,346.4 on Friday.
Adding to British uncertainty is the fallout from the country’s decision to leave the European Union, which prompted Capital Economics to observe it was still “far too early” to determine if Brexit “Armageddon” had been avoided.
In London, the FTSE 100 down 0.5% at 6,828.54 points; Frankfurt — DAX 30 down 0.5% at 10,494.35 points and Paris — CAC 40 down 0.2% at 4,389.94 points at the close yesterday.


Related Story