A roundup of trading on major world markets:
NEW YORK – Energy shares have dragged Wall Street slightly lower, tracking a decline in oil prices, while earnings and guidance from companies including Perrigo and Xerox have also weighed on US stocks.
With the S&P 500 up in eight of the past 10 weeks and nearing the record high set almost a year ago, traders are struggling to find reasons to push it even higher as underwhelming earnings and the spectre of higher interest rates hover over markets.
Perrigo Co, down 18 per cent after it lowered its adjusted profit forecast for the full year, was among the largest drags on the S&P 500 on Monday.
Its Chief Executive and Chairman Joseph Papa resigned to take the reins at Valeant Pharma, whose US-traded shares have tumbled nearly 85 per cent from last August.
“This is hardly a big selloff but we are having trouble breaking through (to new highs on the S&P) because of a lack of consistently good earnings and economic data,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
“One of the few positives is a weaker dollar but it is hard to see a reason for that to continue; rates are being lowered around the world and expected to rise here (in the United States), there’s no clear path to a lower dollar.”
The Federal Reserve is expected to hold interest rates steady after a two-day meeting set to begin on Tuesday, but policymakers may be more upbeat on the economic outlook, leaving the path open for future rate hikes.
The Dow Jones industrial average fell 26.51 points, or 0.15 per cent, to 17,977.24, the S&P 500 lost 3.79 points, or 0.18 per cent, to 2,087.79 and the Nasdaq Composite dropped 10.44 points, or 0.21 per cent, to 4,895.79.
LONDON – European equities have sunk as falls for miners and oil firms pushed the FTSEurofirst 300 down for a third straight day ahead ahead of central bank meetings in the United States and Japan this week.
Signs that a three-month rally in stocks and commodities markets was cooling, a US Federal Reserve rate decision on Wednesday and a Bank of Japan policy update on Thursday meant there was little incentive for traders to be bold.
Talk has been that Japan could push deeper into negative interest rate territory, while there is intense interest on where the Fed currently stands on another rate hike.
“Central banks are still the name of the game,” said Nordea’s chief strategist for developed markets, Jan von Gerich.
“There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn’t really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market.”
Sterling had hit its highest in over a month after a UK media blitz from President Barack Obama calling for Britain to stay in the European Union saw bookmakers lengthen the odds on a Brexit vote in June.
“If one of our best friends is in an organisation that enhances their influence and enhances their power and enhances their economy, then I want them to stay in it,” Obama said.
The subdued start to the week for Europe’s markets, was further compounded by an unexpected dip in German business morale amid simmering global growth concerns.
The Munich-based Ifo economic institute said its business climate index, which surveys around 7,000 firms, edged down to 106.6 in April compared to a forecast of a rise to 107.0. That was still well above the survey’s long-term average, but also its fourth fall in five months.
“The mood in the German economy is good but not euphoric,” Ifo economist Klaus Wohlrabe said, citing concerns about weakening exports — traditionally Germany’s main growth driver — linked to a slowdown in the United States and China.
HONG KONG – Asia markets sank as Tokyo gave back 0.8 per cent of the 4.00 per cent it had made last week.
As well as signs the three-month rally in stocks and commodities markets is cooling, a US Federal Reserve rate decision on Wednesday and the Bank of Japan meeting on Thursday meant there was little incentive for traders to be bold.
Talk has been that Japan could push deeper into negative interest rate territory, while there is intense interest on where the Fed currently stands on another rate rise.
“Central banks are still the name of the game,” said Nordea’s chief strategist for developed markets, Jan von Gerich.
“There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn’t really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market.”
Chinese shares continued their recent poor run as the blue-chip CSI300 index and Shanghai Composite Index slipped 0.5 and 0.6 per cent respectively.
Japan’s Nikkei ended down 0.8 per cent as the yen pulled off its lows. MSCI’s benchmark 23-country emerging market index dropped roughly the same as it saw its second consecutive session of falls.
Japan’s central bank on Thursday is likely to cut its price forecasts and debate whether a strong yen, weak global demand and soft consumption have hurt inflation expectations enough to warrant another hit of stimulus.
WELLINGTON – The S&P/NZX 50 Index dropped 40 points, or 0.6 per cent, to 6,866.1 on Friday.
