World stocks restrained as dollar edges higher

World stocks restrained as dollar edges higher

London (Reuters):  World stocks restrained as United States (US) dollar climbed up higher which affected the global market a bit on Friday.

A stronger dollar and slightly higher global borrowing costs kept world shares subdued on Friday and left gold limping toward its worst week since December.

Stocks in Europe struggled for traction despite a positive Asia session as investors continue to debate the outlook for global central bank policies. Bonds in the euro region’s core gained with Treasuries, while the dollar steadied after Thursday’s drop.

Europe’s main London, Frankfurt and Paris markets <0#.INDEXE> barely budged in early moves, keeping MSCI’s 47- country world index just in the black on the day but facing its third red week in the last four.

Modest gains for the dollar meant the euro was set to post its second biggest weekly loss in nearly four months [/FRX], as caution over the Italian election gave bond markets there their toughest week of 2018.

Polls point to a hung parliament in Italy, where no one party or coalition has an outright majority to form a government, and analysts expect a short-term volatility that could weigh on traditionally sensitive euro zone markets.

Italy’s 10-year bond yield was up 1 bps at 2.09 percent. It has risen about 10 basis points this week.

“Some long-forgotten patterns return to euro bond markets with Bunds rallying while Italy sells off,” said Commerzbank rates strategist Christoph Rieger.

He noted comments from European Commission President Jean-Claude Juncker this week, who was reported to have warned about Italian election risks.

Broader global cross-asset issues remained much the same as they have during a choppy few weeks. How far and fast U.S. interest rates can rise and what would it mean for global borrowing costs, risk appetite and business confidence.

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