Global stocks found little traction Friday, while the British pound inched up on the first anniversary of the U.K.'s vote to leave the European Union.
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Futures pointed to a 0.1% opening gain for the S&P 500, following a muted session in Asia. The Stoxx Europe 600 was down 0.1% in morning trading as oil prices remained a drag on the wider index.
Brent crude oil was last up 0.4% at $45.40 a barrel but on track to end the week over 4% lower and off roughly 10% from the start of the month. While a lower oil price should support consumers and oil importing countries, it has put pressure on ' shares of energy companies and equipment makers. It has also added to investors' doubts about the inflation picture and the ability of central banks to lift interest rates. Some analysts expect to see traces of the oil price drop showing up in eurozone and Japanese inflation figures next week.
Investors poured into so called "deflation" assets this week and took money out of inflation bets, according to analysis of EPFR Global data by Bank of America Merrill Lynch. Real-estate funds posted their first inflows in 11 weeks, while utilities funds had their best week in 51 weeks as both tend to benefit from softened inflation expectations. Treasury Inflation-Protected Securities, known as TIPS, suffered outflows. TIPS increase their payout to holders if inflation measures exceed certain thresholds.
In the U.K., London's export-heavy FTSE 100 was down 0.4% in morning trading Friday as the pound climbed 0.4% to $1.2728, recovering from losses earlier this week. Since the June 23 U.K. referendum, the index, which generates roughly two-thirds of its revenue overseas, has climbed by around 17%, while the pound has fallen roughly 15%.
More domestically-oriented U.K. shares have significantly underperformed the wider rally in global equity markets. Data from independent trade ideas network TIM Group suggests that while in June 2016, the long-short ratio for U.K. and other European shares was nearly identical, continental Europe has since rebounded significantly, while the outlook for U.K. stocks has remained daunting.
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In the U.K.: "There are starting to be signs Brexit is starting to have an impact on business confidence," said François Savary, chief investment officer at Geneva's Prime Partners.
That has had little impact on the eurozone, however. Shortly after the Brexit vote: "There was a fear it was opening the door to a more profound movement and the European project was under significant threat, " he said. But since then, French and Dutch elections have eased political fears around the Continent, and the eurozone economy has continued to improve.
Earlier, Shanghai stocks recovered to trade up 0.3% in a volatile session after increased regulatory scrutiny over the borrowings of China's most prolific overseas deal makers sent markets lower.
The moves could heighten apprehensions about volatility that bogged down Chinese markets for most of last year, just days after index compiler MSCI decided to include A-shares in its emerging markets indexes next year.
A dominance of retail traders that move in and out of the world's second-biggest stock market has meant that trades often happen on rumor and sentiment. On Friday, the Shanghai Composite Index dropped as much as 0.9% before recovering following news that regulators had ordered banks to check their loans to major Chinese conglomerates.
Japan's Nikkei Stock Average rose 0.1% despite a preliminary survey showing that the nation's manufacturing activity slowed in June. Air-bag maker Takata surged Friday after dropping 50% Thursday, as reports circulated that the company will seek bankruptcy protection on Monday to minimize payments to creditors.
In South Korea, shares climbed 0.4% after the country's president, Moon Jae-in, said he would lobby China to lift restrictions it imposed on his country's businesses following the installation in Korea of a U.S. missile defense system that Beijing opposes.
Australia's S&P ASX 200 was up 0.2% as gains from mining and energy stocks were mostly offset by selling in banking stocks, after one of the country's states proposed a tax on liabilities that would piggyback a recently-launched federal levy on the biggest lenders.