LONDON (Reuters) - Nice, Berlin, London and Stockholm - now Barcelona.
Spanish authorities are hunting a suspected Islamist militant who drove a van into a crowd, killing 13 people and injuring dozens. There have been two arrests linked to the attack - though the driver himself was seen escaping on foot - and police said they killed five would-be attackers in a town south of Barcelona who had been planning a separate strike using explosive belts.
As with the previous attacks, the usual questions are out there: what was the profile and back story of the driver? What did authorities know of the threat level beforehand? And what can cities do to prevent something as easy to perform as mowing down pedestrians with a truck, a method Islamic State has specifically recommended to its followers?
The disarray in the White House, with U.S. President Donald Trump’s economic agenda seen under threat, hammered U.S. stocks on Thursday and is the main driver on Friday. Shares sold off in Asia and European investors have followed suit. The dollar is down against the yen and yields on low-risk German debt are down.
The S&P 500 fell 1.5 percent for its biggest percentage fall in three months while the VIX gauge of implied volatility soared nearly 4 points in its third biggest rise of the year. All this less than a week after the VIX's second biggest rise of the year at the height of the standoff over the Korean peninsula.
This time the focus is on U.S. President Donald Trump’s travails and how it affects his economic agenda. Rumours, since denied, that National Economic Council chief Gary Cohn, in charge of tax reform, would resign appear to have been the trigger this time.
European shares have opened sharply lower, led down by banks. The STOXX 600 index is down 0.8 percent. The attack in Barcelona is also keeping investors on edge. Stocks exposed to travel and leisure have been the biggest fallers after previous similar attacks in Britain and France.
The European earnings season was drawing to a close, with 86 percent of second-quarter company reports through. Some 60 percent of these have beaten or met expectations, and earnings estimates were trending up though they were still negative after being revised down sharply in recent weeks, with brokers concerned about a stronger euro.
Analysts’ high expectations going into this earnings season after a strong first quarter could be part of the reason share price reaction has been muted even when companies have beaten estimates.
After a flurry of speculation that a Chinese buyer could snap up Fiat Chrysler lifted the Italian carmaker’s shares, Guangzhou Automobile’s denial could weigh on them in this session.
In other company news and potential stock movers: China’s Guangzhou Automobile says no plan to buy Fiat Chrysler; FDA expands use of AstraZeneca/Merck ovarian cancer drug. Glencore, Chevron enter Mexico’s recently opened fuel market; Dutch storage company Vopak sees FY profit falling on lower occupancy.
The dollar is down 0.3 percent at 109.24 yen and 0.1 percent versus the euro at $1.1739. The greenback is also down 0.1 percent versus a basket of other major currencies.
German 10-year government bond yields are down 2 basis points at 0.41 percent. Spanish equivalents are up a fraction at 1.44 percent.
Gold is all but flat at $1,288 an ounce. Oil prices are unchanged at $51.03 a barrel.
Doubts over Trump’s ability to push through his reform agenda and jitters over terrorist attacks in Barcelona feed investors’ risk aversion, putting emerging stocks and some currencies under pressure. MSCI’s EM stock index slips 0.4 percent on the day, but gains earlier in the week means the benchmark has chalked up 1.5 percent since Monday – the best weekly gains in a month.
Many currencies also weaken a touch against a steady dollar, with the Philippine peso plumping another 11-year low while Russia’s rouble and Mexico’s peso slip 0.1 percent. China’s yuan matches those losses as data shows new home price growth slowing for a second straight month, reinforcing expectations that property price growth may stagnate over the course over the year.
However, it’s not been a bad week for FX either with most currencies in line for solid gains, with South Africa’s rand in line for a 1.5 percent jump, the rouble for a more than 1 percent gain, and Turkey’s lira, the peso and the Korean won all in the black. Zigzagging throughout the week, emerging dollar debt has also seen yield spreads tighten, coming in by 5 bps to 306 bps since last Friday’s close. Data from Malaysia shows the economy expanded by a faster-than-expected 5.8 percent in the second quarter thanks to domestic demand and robust exports.
Editing by Matthew Mpoke Bigg