NEW YORK, April 28 ― Shares eased from record peaks yesterday as optimism about a global economic recovery was dented by caution before a policy decision by the US Federal Reserve and earnings updates from a number of blue-chip companies.
MSCI's gauge of stocks across the globe shed 0.11 per cent.
The world index has risen 9 per cent so far this year, underpinned by expectations that rising Covid-19 vaccination rates will allow more economies to recover and give a big boost to company profits.
Earnings in Europe are expected to have risen 61 per cent in the first quarter, while US profits are seen up more than 31 per cent, according to the latest Refinitiv IBES estimates.
Many investors, however, stayed on the sidelines ahead of the Fed meeting which ends on Wednesday, when the US central bank is expected to confirm that it will maintain its easy monetary policy to bolster the economy.
One area of concern was India, which is struggling with surging coronavirus infections that have overwhelmed its healthcare system.
Markets were also awaiting results from US tech heavyweights Microsoft Corp and Alphabet Inc later yesterday. Companies that represent about 40 per cent of the S&P 500's market capitalization report from yesterday through tomorrow.
Some analysts say the recent rally has made stocks vulnerable to profit taking, given lofty valuations and high expectations going into the reporting season.
“We've been in a significant rally for quite some time,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “The laws of gravity tell you that at some point we're going to see a pullback.”
Major US indices were mixed.
The Dow Jones Industrial Average rose 3.36 points, or 0.01 per cent, to 33,984.93, the S&P 500 lost 0.9 points, or 0.02 per cent, to 4,186.72 and the Nasdaq Composite dropped 48.56 points, or 0.34 per cent, to 14,090.22.
In Europe, bank results got the attention. Strong earnings sent shares in Europe's biggest bank by assets, HSBC, up 4.2 per cent, while UBS fell 2.0 per cent after a surprise hit linked to the collapse of hedge fund Archegos.
The pan-European STOXX 600 index slipped 0.1 per cent.
Palladium prices hit a record, spurred by persistent supply worries, while gold held a narrow range as investors awaited policy signals from the Fed's meeting.
Palladium hit a record of US$2,962.50 (RM12,139.47) per ounce.
Spot gold dropped 0.3 per cent to US$1,775.57 an ounce.
US gold futures settled down 0.1 per cent at US$1,778.8 an ounce.
Oil rebounded as optimism ahead of a meeting of producer group Opec+ to discuss output policy offset concern that India's coronavirus crisis could dent a recovery in fuel demand.
US crude futures settled at US$62.94 per barrel, up US$1.03 or 1.66 per cent. Brent crude futures settled at US$66.42 per barrel, up 77 cents or 1.17 per cent.
The dollar hovered near multiweek lows versus other major currencies, but moves were narrow as traders avoided taking out big positions before a bond auction and the Fed meeting.
The dollar index rose 0.024 per cent.
“Nobody really believes that the Fed will change its forward guidance, but, just in case, investors appear to be loading up on US dollar as a hedge,” said OANDA analyst Jeffrey Halley.
Bond traders were closely watching an auction of US$62 billion of seven-year US Treasuries later yesterday.
Benchmark 10-year notes last fell 16/32 in price to yield 1.627 per cent, from 1.57 per cent late on Monday.
Bitcoin rose 1 per cent to US$54,636. The world's most popular cryptocurrency soared nearly 10 per cent on Monday, after five straight days of losses, on reports that JPMorgan Chase is planning to offer a managed Bitcoin fund.
Bitcoin had slumped almost a fifth from an all-time high hit this month. ― Reuters
