Stocks Drop as Investors Mull Growth; Yen Climbs: Markets Wrap: Bloomberg

  • Dollar holds decline after Trump threatens more China tariffs
  • Earnings season rolls on this week with Alphabet due Monday

European stocks fell and U.S. equity futures pointed to a weaker open as investors digested warnings from the world’s financial leaders about the impact of protectionism on growth. The yen rose and Japanese government bonds slid on speculation about the Bank of Japan’s stimulus.

Travel companies were among the biggest losers in the Stoxx Europe 600 Index after Ryanair posted a 20 percent decline in first-quarter profit, while Fiat fell helped foster a retreat in carmakers with a new CEO named on Saturday. Futures on the Dow, S&P 500 and Nasdaq were in the red as the finance chiefs from the Group of 20 nations on Sunday warned trade tensions threaten expansion as leading economies fall out of sync. Treasuries were steady with the dollar, which held its decline from Friday.

Japanese 10-year government bonds plunged, sending the yield up the most in almost two years, while the yen rose on reports of possible changes to the nation’s ultra-loose monetary policy, which spurred the central bank to offer to buy an unlimited amount of securities in a fixed-rate operation. European bonds were mixed.

The world’s finance chiefs said global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased. Also rattling investors, Trump took issue with the yuan’s six-week slide to the weakest level in more than year, raising concerns among investors that the U.S.-China trade war is now spilling over into currency markets. The ratcheting up of rhetoric is offsetting a mixed earnings season, which continues on Monday with Alphabet the main focus.

“The current U.S. administration has a clear preference for lower U.S. dollar rates and a weaker currency,” Australia & New Zealand Banking Group Ltd. strategists led by Daniel Been said in a note to clients Monday. “This will keep markets wary of further strength in the U.S. dollar; especially given the scale of the recent rally and the large long position already held by the market.”

Elsewhere, WTI oil was steady near $68 a barrel amid concern the escalating trade rows will undercut energy demand, undermining reassurances from Saudi Arabia that it won’t flood global crude markets. Emerging-market currencies edged higher.

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Here are some key events coming up this week:

  • Earnings season continues with the following tech companies among those reporting: Facebook, AT&T, Amazon.com, Twitter, Advanced Micro Devices, Qualcomm and Intel. They are joined by global financial giants Deutsche Bank, UBS, Nomura and Visa. Others include Halliburton, Michelin, Boeing, Lockheed, Nissan and Shell.
  • Pakistan holds national elections Wednesday.
  • European Central Bank’s policy decision Thursday.
  • U.S. gross domestic product probably increased by about 4 percent at an annualized rate in the second quarter, the most since 2014, economists forecast ahead of Friday’s data.

These are the main moves in markets:

Stocks

  • The Stoxx Europe 600 Index declined 0.3 percent as of 9:28 a.m. London time, the lowest in a week on the biggest drop in more than a week.
  • Futures on the S&P 500 Index decreased 0.1 percent to the lowest in a week.
  • The MSCI All-Country World Index declined less than 0.05 percent.
  • The MSCI Emerging Market Index advanced less than 0.05 percent.

Currencies

  • The Bloomberg Dollar Spot Index decreased 0.1 percent to the lowest in almost two weeks.
  • The euro gained 0.1 percent to $1.173, the strongest in almost two weeks.
  • The British pound climbed 0.1 percent to $1.315, the strongest in a week.
  • The Japanese yen increased 0.4 percent to 110.96 per dollar, the strongest in two weeks.

Bonds

  • The yield on 10-year Treasuries declined one basis point to 2.89 percent.
  • Japan’s 10-year yield increased five basis points to 0.086 percent, the highest in almost six months on the largest climb in more than 23 months.
  • Britain’s 10-year yield advanced one basis point to 1.232 percent.

Commodities

  • The Bloomberg Commodity Index declined less than 0.05 percent.
  • West Texas Intermediate crude fell less than 0.05 percent to $68.25 a barrel, the first retreat in a week.
  • LME copper increased 0.2 percent to $6,157.50 per metric ton, the highest in a week.
  • Gold climbed 0.1 percent to $1,231.08 an ounce, the highest in a week.

By July 23, 2018, 6:32 PM GMT+10

— With assistance by Katherine Greifeld, Mark Cranfield, Adam Haigh, and Andreea Papuc

Source: Bloomberg

 

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