BOSTON, Aug 1 — Strong earnings from US technology firms drove Wall Street higher but shares in Europe slid yesterday on doubts about the economic recovery from the coronavirus pandemic, while the dollar rose but still posted its worst month in a decade.
Oil prices gained, benefiting from news that US output cuts in May were the largest on record, while gold hovered near its all-time peak, helped by dollar weakness and dire economic numbers from far and wide that sparked a rush to safety.
The dollar has been weakening amid expectations the US Federal Reserve will be forced to maintain its ultra-loose monetary policy for years, a policy seen as debasing the currency.
Energy stocks fell sharply after Chevron Corp reported an US$8.3 billion (RM35.1 billion) loss on asset writedowns and ExxonMobil Corp recorded a second consecutive quarterly loss.
Apple Inc shares surged to a record closing high of US$425, a gain of 10.5 per cent on the day, after blowout quarterly results on Thursday and a four-for-one stock split announcement. The surge led the iPhone maker to overtake Saudi Aramco as the world’s most valuable publicly listed company.
Gains by Amazon.com and Facebook Inc also helped lift Wall Street indices out of early losses following impressive quarterly results.
“The rally at the end of the day was built on this insatiable demand for these growth companies that have been reporting earnings off the charts. It’s fear of being left behind,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
MSCI’s world equity index, which tracks shares in 49 nations, was unchanged at 551.89, weighed down by European stocks, which posted their first monthly decline since a market sell-off in March on growing recovery doubts.
On Wall Street, the Dow Jones Industrial Average rose 114.67 points, or 0.44 per cent, to end at 26,428.32, the S&P 500 gained 24.9 points, or 0.77 per cent, to 3,271.12 and the Nasdaq Composite added 157.46 points, or 1.49 per cent, to 10,745.28.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.446 point, or 0.48 per cent, to 93.467.
The euro reached its highest in more than two years, and posted its best month since September 2010, raising concerns that its relative strength could crimp European exporters.
US government negotiations over another coronavirus relief bill were not yet on a path toward a deal, US House of Representatives Speaker Nancy Pelosi said yesterday. She spoke just before the expiration of a federal unemployment benefit that has been an essential lifeline for millions of Americans.
US benchmark 10-year Treasury notes slid 0.8 basis point to yield 0.5331 per cent.
Global funds recommended cutting equity holdings in July to the lowest in four years and suggested keeping bond allocations unchanged from June, a Reuters poll showed.
The pan-European STOXX 600 index gave up early gains to close down 0.9 per cent, pressured by a weak open on Wall Street.
The euro zone’s economy recorded its deepest contraction on record in the second quarter, preliminary estimates showed yesterday, while the bloc’s inflation unexpectedly ticked up in July.
Those figures overshadowed positive manufacturing data from China and Japan.
MSCI’s broadest index of Asian shares outside Japan fell 0.3 per cent. Japan’s Nikkei dropped 2.82 per cent as a stronger yen weighed on exporters.
China’s blue-chip CSI300 index closed up 0.84 per cent, its biggest monthly gain since February 2019, rising 12.8 per cent.
Crude oil recovered from an overnight slump. US crude futures rose 35 cents to settle at US$40.27 a barrel, while Brent futures settled up 37 cents at US$43.31 a barrel.
Gold rose, with prices up 10 per cent for the month. Spot gold added 0.7 per cent to US$1,972.83 an ounce. US gold futures gained 1.54 per cent to US$1,972.30 an ounce, just short of record highs set earlier in the week as bullion marched toward the US$2,000 milestone.
Silver climbed 3.2 per cent to US$24.3 per ounce, its largest monthly gain on records going back to 1982, supported by investment and industrial demand.
(Reporting by Lawrence Delevingne in Boston and Ritvik Carvalho in London; Editing by Dan Grebler and Herb Lash)
Fitch revises US outlook to ‘negative’ from ‘stable’; affirms AAA rating (Adds details on outlook revision)
July 31 (Reuters) — Ratings agency Fitch yesterday revised its outlook on the United States to “negative” from “stable”, citing deterioration in the country’s public finances and the absence of a credible fiscal consolidation plan.
High fiscal deficits and debt that were already rising before the coronavirus crisis have started to erode the traditional credit strengths of the United States, the agency said, while affirming its “AAA” rating.
“There is a growing risk that US policymakers will not consolidate public finances sufficiently to stabilise public debt after the pandemic shock has passed,” Fitch said in a statement.
The United States had the highest government debt of any AAA-rated sovereign heading into the coronavirus crisis, the agency said, adding that it expects general government debt to exceed 130 per cent of gross domestic product by 2021. — Reuters
