GLOBAL MARKETS-Global stock rally stumbles on data, results; dollar slips

25-Apr-2014 Intellasia | Reuters | 6:00 AM Print This Post

The dollar fell and global equity markets edged lower on Wednesday in response to disappointing US housing data and weak corporate earnings that snapped market momentum after five days of gains across a worldwide stock index.

In Europe, rising worries over Ukraine also weighed, offsetting data that showed Germany continued to power the euro zone’s recovery.

Europe’s private sector started the second quarter on its strongest footing in nearly three years, according to a purchasing managers’ index for the euro zone, although new orders were mainly buoyed by price cuts.

But the pace of US growth slowed in April, even as factory activity continued to expand, and sales of new US single-family homes tumbled to their lowest level in eight months in March, dealing a setback to the housing market recovery.

Strong results from Boeing failed to inspire Wall Street investors to keep pushing equities higher. The S&P 500 on Tuesday had marked a sixth straight session of gains.

MSCI’s measure of global equity performance, the all-country world stock index, faltered after five straight days of gains, falling 0.21 percent. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.57 percent at 1,338.84.

The downturn ended the S&P 500′s six-day streak. The Dow Jones industrial average closed down 12.72 points, or 0.08 percent, to 16,501.65. The S&P 500 lost 4.16 points, or 0.22 percent, to 1,875.39 and the Nasdaq Composite dropped 34.491 points, or 0.83 percent, to 4,126.967.

Corporate earnings were mixed, though companies have largely been beating reduced forecasts.

“It’s easy to take less inspiring numbers and say this market is overvalued or pass them by,” said Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey. “So it really is more about investors’ own view of how high a multiple they are willing to pay,” he said.

Shares in Ericsson, the Swedish mobile telecom equipment maker, fell 6.1 percent, trimming the most points off the FTSEurofirst 300, after the company’s first-quarter sales and profit came in below analysts’ forecasts. The results were hit by weak trading in North America.

Boeing Co posted first-quarter revenue that beat expectations and lifted its core earnings forecast to reflect a tax settlement gain, sending its shares up 2.4 percent to $130.63.

But fellow Dow component AT&T Inc fell 3.8 percent to $34.92 a day after reporting results.

US Treasuries prices rose after the weak economic data spurred safe-haven bids and traders covered short positions against bonds following a recent sell-off.

“You cannot continue to attribute this weakness in the economy to the weather and that’s why people were a little surprised,” said Stanley Sun, interest rate strategist at Nomura Securities International in New York.

The benchmark 10-year US Treasury note rose 10/32 in price to yield 2.6896 percent.

The dollar slipped against the euro and yen. Its value against a basket of currencies fell to its lowest level in a week.

The euro rose 0.09 percent to $1.3816. Against the yen, the dollar fell 0.11 percent to 102.49 yen.

Brent oil fell after weekly data showed US crude inventories hit a record high, though prices found some support from the continuing crisis in Ukraine. US crude oil stocks jumped 3.5 million barrels to 397.6 million barrels last week, the US Energy Information Administration said.

Brent crude for June delivery reversed slight gains after the EIA data to settle down 16 cents at $109.11 a barrel.

US crude for June delivery settled down 31 cents at $101.44 a barrel.


Category: FinanceAsia

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