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Roller-Coaster Quarter Ends With Shares, Oil Under Pressure

World stocks fell for the first time in four days on Thursday as a roller-coaster quarter drew to a close after hammering the dollar.
Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh
Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh. REUTERS/Ajay VermaREUTERS
/ Source: Reuters

World stocks fell for the first time in four days on Thursday as a roller-coaster quarter drew to a close after hammering the dollar and the pound but boosting gold and bonds.

European markets opened with shares down 1 percent, the dollar hovering near a seven-week low versus the euro and oil almost back where it started after a wild V-shaped ride.

People walk through the lobby of the London Stock Exchange in London
People walk through the lobby of the London Stock Exchange. REUTERS/Suzanne Plunkett

Analysts were cautious to draw too many conclusions, but there was a sense the underlying currents of the past few months were still running strong.

Oil slipped to $39 a barrel on record U.S. stockpiles, China was put on a downgrade warning by S&P and new data showed euro zone inflation remains non-existent despite the European Central Bank's redoubling its stimulus efforts.

That's a large part of reason German government bonds are set for their best quarter since the height of the euro zone crisis in late 2011.

Bund yields were down another couple of ticks in early trading on Thursday. They have shed nearly 50 basis points since the start of the year, within touching distance of zero again.

This quarter "has all been about the three C's. Commodities, China and central banks," said Aberdeen Asset Management investment committee member Kevin Daly.

The currency market saw a resumptions of this week's latest sell-off in the dollar, after cautious comments on Tuesday from the head of the Federal Reserve about the global outlook.

The dollar index dropped for a fourth day as the euro inched up to $1.1325 , putting the index on track for its biggest monthly decline since April 2015 and largest quarterly drop in five years.

"Obviously, Tuesday was very interesting from Janet Yellen and it had the desired effect." said Charles Schwab managing director Kully Samra.

MSCI's broadest index of Asia-Pacific shares outside Japan closed up 0.4 percent overnight, at its highest since early December. It eked out a gain of 1 percent this quarter, which saw equities rocked earlier by global growth worries, and particularly for the Chinese economy.

Japan's Nikkei dropped 0.7 percent and saw an 11 percent loss for the quarter as the yen climbed against the dollar.

Shanghai shares have been an even bigger loser, dropping about 15 percent since the start of the year, notwithstanding a gradual rebound since mid-January.

The big winner of 2016 so far has been safe-haven gold. It ticked up to $1,232 an ounce in early European trading and has jumped 16 percent this quarter, its best run in nearly 30 years.

"It is difficult to get bearish on gold at this stage given that the Fed has made it quite clear that it is reluctant to raise rates," said INTL FCStone analyst Edward Meir.

"As a result, the dollar is not rallying on constructive macro releases, and we have to suspect that its weaker tone will limit any substantial declines in gold for the time being."