Global stocks drop as oil stokes world growth angst; yen climbs
The S&P 500 Index notched up its first back-to-back declines since the aftermath of the Brexit vote, while the Dow Jones Industrial Average’s losing streak hit seven days, its longest slump in a year.
Retailers tumbled as data showed US consumers tapped into savings to boost spending last month, while automakers plunged on concern the market may have peaked in 2015.
MSCI’s All-Country World Index fell the most since July 5 as oil extended losses below US$40 (RM162) a barrel. Gold futures rose for a sixth straight day as the yen hit a three-week high after Japanese government’s fiscal plans underwhelmed investors.
The four-week advance in global equities has faltered as crude’s 22 per cent rout since June rekindles anxiety over the global economy at the same time as European lenders come under scrutiny over the strength of their balance sheets.
While central banks and governments around the world are bolstering stimulus to shore up growth, Japan’s state support package, which boosts spending by ¥4.6 trillion (RM182.25 billion) fell short of expectations. US data yesterday also reinforced concern that the American consumer is losing power amid sluggish wage gains.
“We have an economy that has improved a little bit with sentiment around the market in general, but the question is what will drive growth from here,” said Kevin Caron, a Florham Park, New Jersey-based market strategist and portfolio manager who helps oversee US$180 billion at Stifel Nicolaus & Co.
“Valuations aren’t cheap, the economy is not growing rapidly and profits are at best stable, so the next driving factor is unknown right now.”
Stocks
The S&P 500 fell 0.6 per cent to 2,157.03 as of 4pm in New York, its lowest close since July 13. The index hasn’t moved more than 0.5 per cent on a closing basis in 12 sessions, a two-week period where it’s advanced 0.3 per cent after rallying 8.2 per cent in the previous three weeks, data compiled by Bloomberg show.
US economic data out yesterday provided a mixed picture, with incomes rising a less-than-projected 0.2 per cent in June, while the savings rate declined to a more than one-year low. Consumer purchases rose more than was anticipated.
Pfizer Inc. fell the most since November after leaving its full-year earnings forecast unchanged, even as quarterly profit and sales exceeded predictions. Retailers had the steepest drop in five weeks as Kohl’s Corp. and Macy’s Inc. slumped at least 7 per cent. July’s strongest performers—technology shares—fell as Apple Inc. lost 1.5 per cent.
The Stoxx Europe 600 Index lost 1.3 per cent for its steepest decline since July 6. Commerzbank AG tumbled 9.2 per cent, while UniCredit SA slid 7.2 per cent as Il Messaggero reported that the lender may consider a capital increase. The MSCI Asia Pacific Index dropped 0.4 per cent amid a 1.6 per cent decline in Japan’s Topix gauge.
Futures foreshadowed more declines for Asian shares, with contracts on the Nikkei 225 Stock Average falling at least 1.4 per cent in Osaka and Chicago. Futures on stock gauges in Australia and South Korea retreated at least 0.5 per cent. Trading was canceled in Hong Kong yesterday as a tropical storm hit the city.
Currencies
The yen jumped 1.5 per cent to 100.89 per dollar as Japan’s government announced a fiscal package that was about a quarter of the total spending amount flagged by Prime Minister Shinzo Abe last week. The currency touched its strongest level since July 11.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell for the fifth time in six days, sinking 0.6 per cent. The New Zealand and Australian dollars jumped 1 per cent, rising with the euro and the Swiss franc.
Odds on the Federal Reserve raising interest rates this year have dropped, and are hovering below 40 per cent after a weaker-than-expected report on US economic growth on Friday.
The pound advanced, strengthening 1.4 per cent to US$1.3357. The Bank of England delivers its second post-Brexit rate decision on Thursday, with some investors seeing the risk of policy makers disappointing the market, which is pricing in the near certainty of a rate reduction.
Bonds
Germany’s 10-year bonds fell for a second day and similar-maturity Treasuries retreated as a selloff in Japan’s government debt filtered across global sovereign securities.
Bill Gross, the 72-year-old bond-fund manager, reiterated his warning on government debt after yields from the US to Australia touched all-time lows in the past month. The danger of the unprecedented rally, as Gross sees it, is that any reversal will be painful for investors
Ten-year Treasury yields increased by three basis points, or 0.03 per centage point, to 1.56 per cent, after rising seven basis points on Monday.
Commodities
West Texas Intermediate crude erased a gain of more than 1 per cent to fall below US$40 a barrel for a second day. WTI for September delivery declined 1.4 per cent yesterday to settle at US$39.51 a barrel, its lowest price since April 7.
While American crude and gasoline inventories are forecast to have declined last week, they’ll likely remain around their highest seasonal level in at least two decades. Nigeria has also resumed payments to former militants as the government seeks to establish a cease-fire after attacks cut the country’s oil output to the least since 1989. Factions in Libya have reached a deal to re-open oil terminals
Gold futures due in December rose 1 per cent to US$1,372.60 an ounce, capping their longest run of gains since June. Zinc for delivery in three months rose 0.4 per cent to US$2,275 a metric ton in London, after touching US$2,299, the highest level since May last year. — Bloomberg
from Malay Mail Online | All http://ift.tt/2aLEZXo
Today updated news promoted by Mukah Pages
Post a Comment