Stocks stumble off all-time highs

London (Reuters): World stocks set a fresh record high before stalling in Europe on Thursday, as the longest winning streak for Japanese stocks since 1988 and the first close above 23,000 for Wall Street’s Dow index helped to offset nerves about Spain.

Traders were marking 30 years to the day since the 1987 Black Monday stock market crash but there couldn’t have been a greater contrast as equity markets continued to clock up milestone after milestone.

The Nikkei enjoyed its 13th straight daily rise, helping the MSCI index of global stock markets - now up 17.6% for the year - add to its long list of 2017 record highs.

It wasn’t all one-way traffic, though.

European shares took their biggest tumble in almost two months after a batch of third-quarter results brought some disappointments, notably from Anglo-Dutch consumer goods titan Unilever, French advertising group Publicis and Germany’s Kion.

They then took another lurch lower as oil hit the skids and signals emerged from Spain that Madrid was gearing up to invoke a never-before-used clause to re-impose central rule over the restive region of Catalonia.

That was enough to pull the euro briefly into negative territory though it later recovered to hit a 1-week high on the dollar.

Spanish stocks dropped as much as 1% as volatility gauges woke from their recent slumber while Madrid’s government bonds also sold off, but like the euro, they rebounded again.

A declaration of independence would see it lose its prized autonomy, while calling a regional election could mobilise Catalan voters who would prefer to stay part of Spain.

The other big currency market move came from the New Zealand dollar. It was sent skidding to its lowest since May after the left-leaning Labour Party won the support of the minor nationalist New Zealand First party to form a ruling coalition.

This ended weeks of political guessing games but fanned concerns that the Labour Party’s hardline policies on immigration and foreign ownership could hurt investor sentiment.

The Kiwi slid as much as 1.9% to $0.7017, which as well as the 4-1/2 month low was also the biggest%age decline since August 2015.

Wall Street was expected to restart around 0.5% in red. The Dow Jones closed above 23,000 for the first time on Wednesday, driven by a jump in IBM after it hinted at a return to revenue growth.

But the mood was dimmed on Thursday by a 1.7% pre-market slide in Apple on concerns about demand for its new iPhone models and as eBay tumbled 6.5% after it warned current-quarter profit could miss estimates.

Among the other headlines overnight, China’s economic growth cooled slightly to 6.8% in the third quarter from a year earlier, from the second quarter’s 6.9%.

A modest loss of momentum had been expected as the government reins in the heated property market and cracks down on riskier lending.

Other data showed that China’s industrial output rose a stronger-than-expected 6.6% in September, while retail sales also outperformed.

But property sales also fell for the first time in over two years. People’s Bank of China Governor Zhou Xiaochuan then spoke of the risks of a “Minsky moment” in the economy, referring to a sudden collapse in asset prices sparked by debt or currency pressures.

The Chinese yuan and stocks eased, with Shanghai falling 0.4%.

The dollar index against a basket of six major currencies weakened to 93.229.

The index ended a four-session winning run overnight on lacklustre US data and was struggling to regain traction as 10-year Treasury yields dipped 2 basis points as investors returned to the safety of bonds.

The dollar was down 0.4% at 112.470 yen after climbing 0.6% overnight. The euro shock off its Spanish wobble to nudge up 0.3% to $1.1827, while Britain’s pound slide again as Brexit-related uncertainty and weaker data weighed.

The term of current Fed Chair Janet Yellen’s expires in February and investors are keen to see whom U.S. President Donald Trump will pick as her replacement. The White House said Trump would announce his decision in the “coming days”.

Oil slips but holds most recent gains on expected OPEC cuts

London (Reuters): Oil prices slipped on Thursday but held onto most recent gains, supported by OPEC-led supply cuts, tension in the Middle East and lower US production.

Brent crude was down 65 cents at $57.50 a barrel by 1010 GMT, still around 30% above mid-year levels. US light crude was 70 cents lower at $51.34, almost 25% higher than its lows in June.

Analysts said some investors were taking profits after two weeks of gains but upward momentum remained strong.

“The oil market is tightening gradually,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

“OPEC is expected to roll over output restrictions for another nine months, supplies are at risk in the Middle East and U.S. inventories are falling.”

The U.S. Energy Information Administration said on Wednesday that US crude inventories fell by 5.7 million barrels in the week to Oct. 13, to 456.49 million barrels.

US output slumped by 11% from the previous week to 8.4 million barrels per day (bpd), its lowest since June 2014 as production was shut in by a hurricane.

Instability in the Middle East has increased risks to supply from key oil-producing areas.

“The ‘Fragile Five’ petrostates – Iran, Iraq, Libya, Nigeria and Venezuela – continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the United States has decertified the 2015 Iran nuclear deal,” US bank Citi said.

Iraqi Kurdistan’s oil exports more than halved to 225,000 bpd on Wednesday as the Iraqi military retook some of the biggest fields from Kurdistan’s Peshmerga forces.

“Geopolitical risk has returned to the oil market ... As a result, we have raised our ICE Brent forecast for 4Q17 from $45 per barrel to $52,” Dutch bank ING said on Thursday.

U.S. President Donald Trump last week refused to certify Iran’s compliance over a nuclear deal, leaving Congress 60 days to decide further action against Tehran.

During the previous round of sanctions against Iran, around one million bpd of oil was cut from markets.

Analysts say crude supply should keep tightening if the Organization of the Petroleum Exporting Countries and partners, including Russia, extend as expected a deal to curb production through next year.

“OPEC is desperate to bring the market into equilibrium,” said Shane Chanel at ASR Wealth Advisers.