NEW YORK, Oct 18 — Global stocks mostly retreated yesterday as investors girded for a trove of earnings reports from US and European companies and a European Central Bank monetary policy meeting.
Caution was the rule with bourses falling in New York, Europe and most of Asia. Besides uncertainty about earnings and the ECB, analysts pointed to the drag from lower oil prices and edginess ahead of the US presidential election.
The burden of proof lies with the bulls to demonstrate that the market can in fact move higher with all the various economic and political headwinds that we are currently facing,” said Michael James, managing director of equity trading at Wedbush Securities.
ECB chief Mario Draghi will be under pressure this week to clarify the bank’s stimulus plans after investors were spooked by talk of an end to its massive bond-buying programme.
Europe’s main equities markets ended the day on the back foot, with Paris down 0.5 per cent and Frankfurt 0.7 per cent.
London’s FTSE 100 index fell 0.9 per cent and the pound remained under pressure amid reports of divisions between British finance minister Philip Hammond and other cabinet members over how the country should proceed with its exit from the EU, with some suggesting he may resign.
US stocks also pulled back, with the S&P 500 sliding 0.3 per cent despite another better-than-expected earnings result from a big bank, in this case, Bank of America.
Bank of America gained 0.3 per cent after it reported that third-quarter net profit rose 6.6 per cent to US$4.5 billion, easily topping analyst expectations. Last week, JPMorgan Chase, Citigroup and Wells Fargo all bested expectations.
Still, investor sentiment is skittish due to an “earnings recession” with the S&P 500 expected to notch its fifth straight quarter of declining operating profits, said Sam Stovall, chief investment strategist at S&P Global.
Intel, McDonald’s, General Electric and Microsoft will report later this week.
The low expectations open the possibility for a positive surprise. Netflix fell 1.7 per cent prior to its earnings release late yesterday, but surged nearly 20 per cent after-hours after the company reported strong subscriber growth.
“We will certainly have a better gauge of market sentiment a few days from now than we do right now,” said James.
In Tokyo, the Nikkei climbed 0.3 per cent, with major exporters were lifted by a rally in the dollar against the yen.
However, the dollar pulled back later in the day against the yen and euro.
Omer Esiner, analyst at Commonwealth Foreign Exchange, said foreign exchange traders viewed comments Friday from Fed Chair Janet Yellen highlighting the importance of running a “high-pressure economy” as suggesting interest rates in the US may “rise at a slower pace compared to previous Fed tightening cycles.”
Key figures around 2100 GMT
New York - DOW: DOWN 0.3 per cent at 18,086.40 (close)
New York - S&P 500: DOWN 0.3 per cent at 2,126.50 (close)
New York - Nasdaq: DOWN 0.3 per cent at 5,199.82 (close)
London - FTSE 100: DOWN 0.9 per cent at 6,947.55 points (close)
Frankfurt - DAX 30: DOWN 0.7 per cent at 10,503.57 (close)
Paris - CAC 40: DOWN 0.5 per cent at 4,450.23 (close)
EURO STOXX 50: DOWN 0.7 per cent at 3,008.72 (close)
Tokyo - Nikkei 225: UP 0.3 per cent at 16,900.12 (close)
Hong Kong - Hang Seng: DOWN 0.8 per cent at 23,037.54 (close)
Shanghai - Composite: DOWN 0.7 per cent at 3,041.17 (close)
Euro/dollar: UP at US$1.1001 from US$1.0974 Friday
Dollar/yen: DOWN at 103.88 yen from 104.16 yen
Pound/dollar: DOWN at US$1.2182 from US$1.2193
Euro/pound: UP at 90.31 pence from 90.01 pence
Oil - West Texas Intermediate: DOWN 41 cents at US$49.94 a barrel
Oil - Brent North Sea: DOWN 43 cents at US$51.52 a barrel — AFP