World stocks mostly slid yesterday as investors paused for breath following a global rally after US and Japanese central banks kept their easy-money policies in place.
In Europe, Frankfurt and Paris lost around half a per cent in value, while London was steady.
In London, the FTSE 100 down 0.03% at 6,909.43 points; Frankfurt — DAX 30 down 0.4% at 10,626.97 points and Paris — CAC 40 down 0.5% at 4,488.69 points at the close yesterday.
Investors also took their foot off the pedal in Asia yesterday after two days of strong gains, while the dollar recovered some ground on the yen after the Fed’s decision to hold interest rates sent it tumbling.
“The Fed-fuelled rally that catapulted shares out of the summer doldrums this week is showing some signs of fatigue,” noted analyst Jasper Lawler at trading firm CMC Markets.
“The immediate reaction across markets to the Fed’s decision to keep rates on hold again has been that of lower treasury yields, higher stock prices and a weaker dollar.
“This reflects an understanding that the Fed is not about to raise rates for at least three months.
It could easily be longer if US economic data remains sluggish.”
World equities and high-yielding currencies had soared since Wednesday when the Bank of Japan said it would target boosting inflation and the Fed also pressed on with policies that makes cash cheap.
Wall Street was slightly lower, but Twitter shares soared amid talk of a takeover bid for the company.
Data showing eurozone economic growth has slowed to its weakest pace since January 2015 added to negative sentiment.
IHS Markit said its preliminary September Composite Purchasing Managers Index (PMI) for the eurozone fell to 52.6 points from 52.9 points in August, although it still came in above the 50 points expansion point.
Economist Florian Hense at Berenberg Bank said the PMI figures indicate the eurozone economy likely expanded by 0.3% in the third quarter, the same rate at which it grew in the second quarter.
Revised official data also showed that the French economy contracted by 0.1% in the second quarter, although the PMI data came in at a 15-month high at 53.3 points after 51.9 in August.
Meanwhile IPO action livened up trading in Copenhagen as shares in Danish card payment services company Nets began trading.
Its shares rose by nearly 3% after the opening, but were 3.3% lower in closing trade.
The IPO valued the group at around 30bn kroner (€4.0bn, $4.5 bn).
Investors in Asia also took a breather Friday after two days of strong gains.
Tokyo’s stock market — which was closed Thursday for a holiday a day after surging 1.9% on Wednesday – receded yesterday as a stronger yen offsetting the euphoria of the BoJ’s easy money move.
At the close, Tokyo’s benchmark Nikkei 225 index was down 0.32%.
“While the Federal Reserve interest rate decision is attracting the most headline attention, the major market action this week has been in the Japanese yen where traders have once again rejected the efforts by the Bank of Japan (BoJ) to resume weakness in the Japanese yen,” said FXTM analyst Jameel Ahmad.