A roundup of trading on major world markets
NEW YORK – US stocks have fallen as a decline in oil prices added to pressure from consumer companies after gloomy quarterly reports from Nordstrom and J.C. Penney overshadowed upbeat April retail sales data.
The decline in the department stores’ shares marked the end of a week that highlighted the expanding clout of Amazon.com and the plight of brick-and mortar retailers struggling to keep up with the online seller.
US retail sales jumped 1.3 per cent in April, the largest gain since March 2015 and a bigger rise than economists expected.
But consumer stocks, which have already been under pressure after a string of feeble earnings reports, fell again after Nordstrom and J.C. Penney reported lower-than-expected sales.
First-quarter earnings reports are nearly all in and, on average, have not been quite as bad as expected across the S&P 500. But for June-quarter earnings, for every company that has given an upbeat pre-announcement, 2.3 others have sounded warnings, according to Thomson Reuters I/B/E/S.
“It’s hard to make a case that you’re going to have stellar equity market performance. In the context of low interest rates, equity valuations look about right,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania.
The Dow Jones industrial average dropped 1.05 per cent to end at 17,535.32 and the S&P 500 lost 0.85 per cent to 2,046.61.
The Nasdaq Composite dropped 0.41 per cent to 4,717.68.
LONDON – European shares rebounded from losses earlier in the session as strong US retail sales data buoyed markets, although satellite company Eutelsat plunged nearly 30 per cent after slashing its outlook.
The pan-European FTSEurofirst 300 index had spent much of the day in negative territory, but swung back up to close 0.6 per cent higher following the US figures.
US retail sales in April recorded their biggest increase in a year, suggesting that the world’s biggest economy was regaining momentum after growth almost stalled in the first quarter.
“The strong US data has lifted European markets, and we are fairly bullish in the medium term,” said MB Capital trader Rick Jones.
The euro dipped against the dollar as the U.S. currency rose on the retail sales data, but some fund managers remained wary of European equities.
“We’re quite cautious about the European market even though valuations are not expensive. Before taking big bets, investors need to know what will happen on the political front and where the euro will go,” said Matteo Ramenghi, Chief Investment Officer at UBS WM Italy.
The FTSE 100 gained 34.31 points, or 0.56 per cent, to 6,138.50, while Germany’s DAX rose 90.78, or 0.92 per cent, to 9,952.90.
HONG KONG – A poor performance on Wall Street on Thursday seeped into Asian and European markets, down around half a per cent across the board.
Doubts over growth in Europe, the financial stability of China and the US Federal Reserve’s ability to raise interest rates have dominated the past month and US retail sales and Chinese releases over the next 24 hours will be important new pieces of the picture.
“Optimism from earlier this year that policy stimulus in China would provide more support for economic growth in Asia appears to be fading,” said Lee Hardman, a currency analyst with Bank of Tokyo-Mitsubishi in London.
“In these circumstances, commodity-related and emerging market currencies are coming back under downward pressure against the dollar.”
Data at the end of the Chinese trading day showed banks extended just 555.6 billion yuan ($A116.83 billion) in net new yuan loans in April, well below analysts’ expectations and less than half the 1,370 billion yuan reported in March.
Asian shares fell after the rocky performance on Wall Street, MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.1 per cent, and on track for its third straight weekly decline.
The Nikkei closed down 1.4 per cent while the Hang Seng lost 196.17 points, or 0.99 per cent, to 19,719.29, and Shanghi fell 15.20 points, or 0.49 per cent, to 3,074.94.
Chinese industrial output, investment and retail sales data are all due on Saturday.
WELLINGTON – The S&P/NZX50 Index dipped 6.6 points, or 0.1 per cent, to 6,916.57.
