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Stocks lose momentum after (another) record Wall St close

European bourses are drifting back as momentum from another record close on Wall Street once again fails to fuel wider gains, while investors wait for the Bank of England’s monetary policy call at midday.

The Euro Stoxx 600 is down 0.2 per cent, with financials drifting lower and energy stocks offsetting overall losses after the previous session’s rally for crude prices.

The Xetra Dax 30 is down 0.3 per cent in Frankfurt, while London’s FTSE 100 is 0.1 per cent weaker.

Wall Street’s overnight peak for the S&P 500, its third consecutive record, came with energy stocks in the lead and technology stocks exerting drag, with Apple’s shares falling after its latest product launch.

Sterling is within reach of the 12-month high it hit this week — flat at $1.3209 — in the run-up to the Bank of England’s midday rate call. Interest rates are expected to stay on hold, although attention will focus on any signals about the outlook for the next rise from the monetary policy committee, which voted 7-2 to stand pat last time.

Jeremy Lawson, chief economist at Standard Life Asset Management, says:

The Bank of England is caught on the horns of a dilemma.

It wants to reduce market complacency that policy rates will remain in lockdown for the foreseeable future. The Monetary Policy Committee is worried about falling behind the curve and being forced into a more abrupt adjustment in policy further down the line. Most market participants and economists see bigger downside risks to growth than the BoE and don’t think the threat to raise rates is credible while uncertainty about Brexit is so high

The Swiss franc is a little weaker after its central bank also left rates on hold and made only minor changes to its rhetoric on the relative strength of the haven currency.

The dollar index, a measure of the greenback against a basket of peers, is, down 0.1 per cent. The US currency had risen 0.6 per cent at 92.46 in late trade in New York, its highest since September 5.

The renminbi extended its slide against the dollar after the People’s Bank of China set the daily fix — the midpoint around which the renminbi can trade 2 per cent in either direction against the dollar — at Rmb6.5465, 0.1 per cent softer than Wednesday and marking a third straight day of weakening. It had lowered the midpoint by 0.4 per cent on Tuesday, the biggest such move since January.

Gold, which reached a 12-month high at the end of last week amid rising geopolitical tension and several extreme weather events, continued to retreat on Thursday. The metal is down 0.1 per cent at $1,322 an ounce, its lowest since August 31.

Oil is paring gains from the previous session when it rose almost 2 per cent to its highest since April after a report from the International Energy Agency claimed the market had “started to rebalance.” Brent crude, the international benchmark, is down 0.3 per cent at $54.98 a barrel. West Texas Intermediate, the main US contract, is down 0.2 per cent at $49.21.

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