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Energy and resource stocks are taking a toll on Europe’s main stock indices in a muted start to trade in a week when sentiment is likely to remain in thrall to central banks.

Crude prices are softening, but are looking safely established around closely watched levels above the $40 a barrel mark. Brent crude is down 0.2 per cent on the session at $44.97, with Nymex WTI down 0.7 per cent at $43.42. Oil prices last week climbed more than 4 per cent, allaying fears of a severe sell-off after major producers failed to reach an agreement to freeze output, writes Michael Hunter.

Energy and materials stocks are among the biggest fallers after the market got its first chance to react to news of a major capital raising from French bellweather EDF. The Euro Stoxx 600 is up 0.1 per cent overall. The FTSE 100 in London is flat, as is the Xetra Dax 30 in Frankfurt and the CAC 40 in Paris.

The euro is up 0.1 per cent at $1.1243. Sterling is also up 0.1 per cent at $1.4409, in line with a wider trend for a modestly weaker dollar. The index tracking the US currency against a basket of global peers is down 0.2 per cent.

Traders are already looking ahead to the next round of monetary policy meetings led by the Federal Reserve on Wednesday, with the Bank of Japan following on Thursday.

While the consensus is that the Fed will hold fire, speculation has grown that the BoJ could take action this week. Some analysts are tipping an expansion of the Japanese central bank’s exchange-traded fund purchase programme, or further cuts to already negative interest rates. The BoJ also may downgrade its growth and inflation forecasts.

There was a lacklustre feel to the Asian session.

Japan’s broad Topix index was down a third of a percentage point and the Nikkei 225 was 0.6 per cent lower, while the yen was 0.5 per cent stronger at Y111.29 per US dollar, making it the region’s best-performing currency.

Hong Kong’s Hang Seng was off 0.6 per cent, while on the mainland China’s Shanghai Composite shed 0.8 per cent and the technology-focused Shenzhen Composite fell 0.9 per cent. Markets in Australia and New Zealand were closed for the Anzac Day public holiday.

Copyright The Financial Times Limited 2017. All rights reserved.
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