European stocks rebound as euro slips; crude slides on US stockpile

Euro falls to one-week low against dollar

NEW YORK, Aug 24, (Agencies): European stocks scored consecutive daily gains for the first time in three weeks on Wednesday, drawing support from a weak euro, but US and Canadian stocks drifted down as lower metal and oil prices weighed on the materials sector.

Emerging market stocks retreated 1 percent, led by political risk-driven losses in South Africa and Turkey, while broader sentiment was dented by a revival of US rate rise expectations.

Markets are largely waiting for clues about the timing of the next US interest rate in a speech from Federal Reserve Chair Janet Yellen on Friday at a meeting of global central bankers in Jackson Hole, Wyoming.

Futures markets assign a roughly onein-five chance it will be in September, and 50-50 odds by the end of the year.

On a light day for data, investors’ nerves may have been soothed by signs that the anticipated economic seizure in Britain — and beyond — from the shock vote in June to leave the European Union had not materialised.

“Brexit? What Brexit?” asked Holger Schmieding, chief economist at Berenberg Bank. “In the rest of the EU, the repercussions of the Brexit vote have been rather mild.”

The FTSEuroFirst index of the leading 300 European shares closed up 0.3 percent, having earlier fallen as much as 0.4 percent, and Germany’s DAX staged a similar rebound to trade up 0.5 percent before paring some gains.

Britain’s FTSE 100 ended 0.48 percent lower, underperforming European peers, hurt by weakness in mining giant Glencore.

Sterling rose to a three-week high as speculators further cut bets against the currency after data indicated the economy was holding up after the Brexit vote.

The euro fell to a fresh one-week low against the US dollar, last down 0.4 percent to $1.1257.

Materials were the biggest loser on the S&P 500 index, with the sector dropping 0.6 percent.

The Dow Jones industrial average fell 41.02 points, or 0.22 percent, to 18,506.28, the S&P 500 lost 4.56 points, or 0.21 percent, to 2,182.34 and the Nasdaq Composite dropped 9.16 points, or 0.17 percent, to 5,250.92.

Oil extended losses, with US West Texas Intermediate (WTI) crude falling 3.2 percent to $46.56 per barrel, after an unexpected large build up in US crude stockpiles renewed worries about oversupply.

Brent crude prices were down 2.22 percent at $48.85.

Slumping oil prices drove Canadian stocks lower. The Toronto Stock Exchange’s S&P/TSX composite index was down 0.41 percent.

US

Wall Street was lower on Wednesday, led by declines in technology and defensive stocks as investors weighed up the possibility of a rate hike in the coming months.

The market is awaiting Federal Reserve Chair Janet Yellen’s speech in Jackson Hole, Wyoming on Friday when she is expected to give a steer on the direction of monetary policy.

Recent hawkish comments from some Fed officials, including Vice Chairman Stanley Fischer, have raised expectations that Yellen might signal a hike in September.

Eight of the 10 major S&P 500 indexes were trading lower. The financial sector, which stands to benefit from higher rates, was flat.

The bigger decliners were utilities, consumer staples and telecom services, defensive sectors that have led Wall Street’s rally this year as expectations of a rate hike kept getting pushed out.

While Wall Street is trading near records levels, volumes have been below average in the past few sessions as the US earnings season winds down and traders avoid major bets until a clearer picture on monetary policy emerges.

“Caution is certainly warranted before Yellen’s speech. We know it’s going to move the market, we just don’t know which way,” said Matthew Tuttle, chief investment officer of Tuttle Tactical Management in Connecticut.

“The biggest risk right now is that she comes out and makes it look like September is squarely on the table.”

At 12:26 p.m. ET (1626 GMT), the Dow Jones Industrial Average was down 25.1 points, or 0.14 percent, at 18,522.2.

The S&P 500 was down 3.54 points, or 0.16 percent, at 2,183.36.

The Nasdaq Composite index was down 7.10 points, or 0.13 percent, at 5,252.98.

The technology index, which propelled the Nasdaq to an intraday record on Tuesday, was down 0.34 percent and the biggest drag among the 10 S&P sectors.

Express Inc plunged 24.7 percent after the apparel maker slashed its full-year earnings outlook.

Garmin was the top percentage loser on the S&P, falling 4 percent after Goldman Sachs downgraded the stock.

Declining issues outnumbered advancing ones on the NYSE by 1,810 to 1,046. On the Nasdaq, 1,376 issues rose and 1,332 fell.

The S&P 500 index showed 15 new 52-week highs and no new lows, while the Nasdaq recorded 79 new highs and 12 new lows.

Europe

European shares rose on Wednesday, helped by a buoyant banking sector, while a disappointing update from British miner Glencore dragged the mining sector lower.

The pan-European STOXX 600 index closed up 0.4 percent for its third straight session of gains.

Glencore declined 3 percent after reporting a fall in underlying profit and lowering its debt target.

“At certain levels (Glencore) may look pretty attractive for entry for a buy. However ...after the rally that it’s seen, this report doesn’t really warrant a leg higher in the share price,” Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.

Europe’s Basic Resources index fell 1.4 percent as copper prices hit twomonth lows.

Italian lender UniCredit soared 8 percent, making it the top STOXX gainer, helped for a second day by talk it might soon sell its stake in Polish unit Pekao Bank.

Europe’s STOXX 600 Bank was the biggest sectoral gainer, up 2 percent.

South Africa-exposed stocks including Investec and Old Mutual fell after South Africa’s finance minister was summonsed by police over an investigation into a surveillance unit in the tax service, sending the rand tumbling.

Among the top gainers, Swedish forest products group SCA hit a record high, soaring 7.5 percent after announcing plans to split into two listed firms.

British advertising firm WPP rose 1.9 percent after beating first-half net sales forecasts.

“We are encouraged by the positive trading performance and operational momentum revealed in this morning’s results. We remain bullish on WPP’s ability to capitalise on a solid mediumterm outlook for global advertising spend,” Roddy Davidson, analyst at Shore Capital Markets, said in a note.

Asia

Most Asian markets slipped Wednesday as traders trod water ahead of a key speech by Federal Reserve boss Janet Yellen this week, while oil suffered fresh losses on persistent glut worries.

On equity markets Tokyo ended 0.6 percent higher and Sydney edged up 0.1 percent, helped by a rally in flagship airline Qantas after the firm posted an 80 percent jump in annual net profit and announced a resumption of dividend payments for the first time in seven years.

But most other markets were lower. Hong Kong lost 0.8 percent and Shanghai ended 0.1 percent lower, while Seoul shed 0.3 percent. There were also losses in Wellington, Manila and Jakarta. Key figures at 0800 GMT Tokyo — Nikkei 225: UP 0.6 percent at 16,597.30 (close)

Shanghai — Composite: DOWN 0.1 percent at 3,085.88 (close)

Hong Kong — Hang Seng: DOWN 0.8 percent at 22,820.78 (close)

Oil

Oil prices slumped Wednesday as a surprise jump in US crude stockpiles added to lingering concerns over a global supply glut.

The US Department of Energy said commercial inventories of US crude grew by 2.5 million barrels last week, in contrast to analyst expectations for a drop of around 850,000.

Around 1600 GMT, US oil benchmark West Texas Intermediate for delivery in October was down $1.56 at $46.54 a barrel.

Brent North Sea crude for October delivery slid $1.14 to $48.82 a barrel compared with the close on Tuesday.

“News of an increase in US inventories has just reminded investors once again about the ongoing oversupply in the markets,” FXTM analyst Jameel Ahmad told AFP.

He added that recent downgrades to global economic growth have meanwhile raised “a few concerns over the possibility of reduced demand for the commodity”.

In a volatile trading week, oil prices had jumped Tuesday on a report that Iran could support an effort by OPEC and Russia to freeze production and firm prices.

Members of the Organization of Petroleum Exporting Countries led by Saudi Arabia are meeting next month with major non-cartel producer Russia on the sidelines of an energy conference in Algeria, where they are expected to discuss ways to stabilise the oversupplied crude market.

But key OPEC member Iran has yet to take any decision on whether to set a ceiling on output or even take part in the meeting, an oil ministry source told AFP on Wednesday.

“It is too early to talk of a decision from Iran concerning a freeze in the level of production,” said the source, speaking on condition of anonymity.

“When Iraq and Saudi Arabia are producing at record levels, it is difficult to see Iran being happy to produce well below their potential,” said IG Markets analyst Angus Nicholson.

Gold

Gold dipped on Wednesday as thedollar strengthened, but prices remained largely range bound ahead of a speech by Federal Reserve Chair Janet Yellen thisweekend which will be closely watched for further clues on US interest rate policy.

Yellen is scheduled to address a meeting of central bankersin Jackson Hole, Wyoming. Recent hawkish comments from policy makers have raised investors’ expectations that she might adopt a less cautious tone on rates.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yieldingbul-lion, while boosting the dollar, in which it is priced.

Strength in the dollar helped push gold a touch lower on Wednesday. The US unit crept up after falling the previous dayb ut was unable to break out of recent trading ranges.

Spot gold was at $1,336.76 an ounce at 1416 GMT, down0.8 percent, while US gold futures for Decemberdelivery were down $16.30 an ounce at $1,329.80.