Markets enter lull awaiting interest rate decisions

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LONDON: World markets drifted into a lull on Friday, ahead of key US economic growth data, as investors also waited on next week’s vital central bank interest rate decisions.

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Frankfurt, London and Paris wobbled after a dour Asian session, as dealers eyed looming third-quarter US gross domestic product (GDP) data due at 1230 GMT.

London had risen Thursday on news that the British economy grew 0.5 percent in the three months after the nation’s shock June referendum in favour of exiting the European Union.

Investors are now bedding down before next week’s hectic schedule of monetary policy decisions from many of the world’s top central banks — and headline-grabbing data releases.

“It has been a relatively quiet week on the data front with little by the way of fundamental developments to drive the markets,” noted XTB analyst David Cheetham.

“UK growth in the third quarter exceeded expectations and we have the US equivalent out this afternoon in arguably the biggest data point of the week.”

Kicking off next week will be the eurozone’s third-quarter GDP on Monday.

Both the Bank of Japan and the Reserve Bank of Australia will deliver their latest interest rate calls Tuesday, followed by the US Federal Reserve on Wednesday and the Bank of England on Thursday.

The dollar extended gains heading into the weekend after breaking 105 yen Thursday on increasing expectations the Fed will lift interest rates by year’s end.

‘Calm before storm’

“The lull in action this week may very well prove to be a calm before the storm with next week’s economic calendar jam packed with major events,” added Cheetham.

“There are four major central bank decisions next week from Australia, Japan, the US and UK, the latest manufacturing numbers from China, US and the UK as well as employment figures out of the US, eurozone, New Zealand and Canada.

“Political risk could also be set to rise ahead with next week representing the last full trading week ahead of the US election and the ongoing Brexit saga remaining at the forefront of many traders’ minds,” he said.

On Friday, the biggest share price faller in London was Royal Bank of Scotland, which dropped two percent after revealing it sank into the red in the third quarter on litigation and restructuring costs.

British Airways owner IAG was the top gainer, flying more than five percent higher after third-quarter operating profit beat expectations.

In Paris, oil and gas group Total saw its stock drop more than one percent, despite better-than-expected quarterly earnings.

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