European Stocks Drift Lower as Investors Hit Pause on Global Equity Rally

Currency markets in focus ahead of BoE rate decision
By Martin Baccardax ,

European stocks drifted lower while the single currency held to near two-and-a-half year highs against the U.S. dollar Thursday as investors pressed pause on a global equity rally that lifted the Dow Jones Industrial Average to its first 22,000 point close.

The Stoxx Europe 600 index, the broadest measure of regional share prices, was marked 0.16% lower in the opening 90 minutes of trading as investors sifted through a mixed slate of quarterly earnings and kept a keen eye on the euro, which traded at 118.38 against the greenback after rising to a January 2015 high if 1.1910 late Wednesday.

Germany's DAX was the leading decliner with a 0.3% slide after disappointing third quarter sales figures from Siemens AG dragged shares in one of of the performance index's most heavily-weighted shares to a 2017 low. That was offset, however, by record Q2 sales from luxury carmaker BMW AG (BMWYY) , which topped analysts' profit forecasts despite slowing U.S. demand.

Britain's FTSE 100, by contrast, edged modestly higher thanks in part to a near 10% surge in Next plc (NXGPY) shares after the British retailer notched a surprisingly solid second quarter and announced a special dividend. Index gains were capped by the strong pound, however, which hovered near an 11-month high of 1.3230 against the dollar ahead of Thursday's Bank of England rate decision and fresh growth and inflation forecasts.

Stocks in Asia were similarly muted in overnight trading, with the Nikkei 225 in Japan slipping 0.3% as tech share profit taking kept broader equity bulls in check. The region's biggest movers, however, were in South Korea, where the KOSPI notched its biggest decline since November after new President Moon Jae-in unveiled tax reform plans that include big new levies on both corporations and wealthy individuals. 

Global oil prices were also on the back foot, with U.S. crude futures marked 0.15% lower at $49.52 despite data from the Energy Information Administration Wednesday which showed gasoline supplies falling 2.5 million barrels in the week ending July 28 amid record U.S. demand.

Wall Street futures are pointing to a modestly weaker start to trading Thursday, with the Dow priced to fall around 17.5 points, or 0.08%, at the opening bell and the broader S&P 500 set to dip 0.18%. The tech stock weakness witnessed in Asia trading is likely to push the Nasdaq 0.17%, according to early futures prices. 

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