● Stock markets mixed after Wall Street’s steady display
● Shanghai Composite hovers near 7-week low amid liquidity concerns
● Sterling holds above $1.24 as traders ponder Brexit implications
● Dollar index above 100 as euro softens on ECB report
● Cracks forming in eurozone inflation
Traders are keeping a wary eye on the action in China’s financial markets.
The mainland’s equity benchmark, the Shanghai Composite, fell for the fourth day in a row, at one point flirting with its lowest level in seven weeks before paring some losses to trade down 1.1 per cent.
The technology-focused Shenzhen Composite lost 1.8 per cent to its worst finish since February 21 and the caution spread to Hong Kong, where the Hang Seng index shed 0.2 per cent.
Analysts cited a number of factors behind the retreat. Property stocks were under pressure after a government think-tank urged the authorities to guard against speculative excesses in the real estate sector.
The concerns dovetailed with a midweek warning from Moody’s, which said the risks to China’s economy from any property downturn continue to grow given banks’ sensitivity to the sector.
In addition, worries are growing about financial market liquidity going into the end of the first quarter after the People’s Bank of China dismissed such concerns and drained funds from the system for the fifth day in a row.
After a choppy session on Wednesday when UK prime minister Theresa May formally triggered Brexit, the pound is notably calmer, easing just slightly to $1.2420 and 0.1 per cent firmer versus the euro at £0.8651.
Meanwhile, the buck is being underpinned by a flurry of comments from Federal Reserve officials, which on balance are seen delivering a less dovish than expected stance by the US central bank.
The comments from various Fed speakers does not seem to have had a lasting impact on government bonds.