Global mkts extend record run; dollar ‘steadies’ after Fed fail

Oil barely higher after recent rally

NEW YORK, July 27, (Agencies): Stocks on world markets rose to record highs on upbeat corporate earnings Thursday, while US Treasury yields and the dollar climbed, as investors assessed the Federal Reserve’s recent statement that it is closer to paring its balance sheet.

MSCI’s 47-country All World share index was at a record peak, while US stocks hit all-time highs as well. Asian stocks had jumped to their highest in almost a decade.

The US central bank said on Wednesday it expected to start winding down its massive holdings of bonds “relatively soon,” despite striking a cautious tone on low inflation.

The US dollar rallied against the euro and yen after solid US economic data, bouncing back from lows hit after the Fed statement.

The euro on Thursday fell 0.5 percent against the dollar, slipping back below $1.17.

The dollar rose 0.3 percent against the yen to 111.50 yen.

The dollar sank on Wednesday after the Fed’s policy statement suggested the Fed was in no hurry to raise interest rates again.

Oil prices edged higher after hitting eight-week highs Wednesday in the wake of a surprising slump in US inventories that encouraged hopes that a global crude glut would recede.

Brent crude futures were up 23 cents at $51.20 a barrel, while US crude was up 5 cents to $48.80.

US

Wall Street trimmed gains in early afternoon trading on Thursday as tech stocks, including heavyweights Apple and Google parent Alphabet , edged lower.

The three major indexes hit record highs earlier in the day, powered by a barrage of strong quarterly earnings, led by Facebook and Verizon.

Facebook jumped as much as 5.96 percent to a record high after the social network’s results topped Wall Street estimates.

Verizon surged 7.27 percent to a three-month high after the company reported quarterly subscriber additions that topped estimates. The stock put the S&P telecommunications index on track to post its biggest oneday percentage gain in more than eight years.

Still, the S&P technology sector remains the best performing sector as investors look for growth in an otherwise low-growth environment. The index was down 0.88 percent.

Online giant Amazon is due to report results after the bell, along with Intel.

Earnings of S&P 500 companies are now expected to have climbed 10.7 percent in the second quarter, up from an 8 percent rise estimated at the start of the month, according to Thomson Reuters I/B/E/S.

With equity markets at record levels, investors have been counting on strong earnings to justify the relatively expensive stock valuations.

At 12:55 pm ET (1655 GMT), the Dow Jones Industrial Average was up 40.46 points, or 0.19 percent, at 21,751.47, the S&P 500 was down 1.46 points, or 0.05 percent, at 2,476.37. The Nasdaq Composite was down 14.01 points, or 0.22 percent, at 6,408.74.

Five of the 11 major S&P sectors were higher, with the telecommunication index’s 4.50 percent rise leading the advancers.

However, losses in Amgen, Johnson and Johnson and Celgene led to a 0.32 percent drop in the healthcare sector.

Industrials were driven lower by a 3.95 percent fall in United Parcel Service, despite the package service company posting a better-than-expected quarterly profit.

Twitter fell as much as 14.07 percent, putting it on track for it’s biggest one-day fall since October, after the company’s quarterly results showed it failed to add users on a monthly basis in the second quarter, compared with the first quarter.

Declining issues outnumbered advancers on the NYSE by 1,466 to 1,323. On the Nasdaq, 1,742 issues fell and 1,038 advanced.

Europe

The biggest one-day drop in AstraZeneca shares following a drug study failure dominated stock trading in Europe on Thursday, outweighing a handful of well-received earnings results and sending indexes lower.

The British drugmaker fell 15.7 percent to its lowest level in almost five months after a closely watched advanced lung cancer trial failed, in what Morgan Stanley said was a “major setback” for the group.

Regional healthcare stocks fell 1.2 percent to their lowest in more than four months. Solid results from big firms including Swiss drugmaker Roche, beer maker AB InBev and Diageo were not enough to pull broad indexes up.

The pan-European STOXX 600 index fell 0.1 percent higher and euro zone bluechips edged down 0.2 percent, while Germany’s DAX dropped 0.8 percent as results from BASF and Deutsche Bank underwhelmed.

Swiss stocks hit the day’s high after the Swiss franc fell to its weakest against the euro since the currency cap was lifted in January 2015.

Diageo, up 6.4 percent, provided the biggest boost to the STOXX after the maker of Johnnie Walker whisky and Smirnoff vodka raised its profitability target and announced a share buyback programme.

Roche gained 1.2 percent after it raised its 2017 outlook while AB InBev, up 5.5 percent, reported an increase in second-quarter earnings.

Thursday saw the heaviest day of European earnings in the current season, and by the end of the week about half the market-cap of the STOXX 600 will have reported earnings.

As of the previous day’s close, a quarter of the companies on the MSCI Europe had issued results with nearly half of them beating profit expectations and 8 percent matching them. Results point to aggregate second-quarter earnings growth of 11 percent.

Deutsche Bank led banking stocks lower, falling 6.5 percent in its weakest day in five months after the bank lowered its 2017 revenue forecast due to a difficult second quarter.

Heavyweights BASF and Bayer dropped after lower than expected earnings, and a profit forecast cut, respectively, making the chemicals sector the worst-performing across Europe.

Elsewhere, French firms Elior Group and Imerys were among the worst performers on the STOXX 600 after AstraZeneca, following their respective results.

Nestle’s results also disappointed. Its shares fell 0.9 percent after the world’s largest food group trimmed its 2017 sales outlook, adding fuel to shareholder demands on CEO Mark Schneider to speed up a turnaround.

Despite a sharp drop in Siemens Gamesa shares, down 17.3 percent after missing expectations for its second-quarter earnings, Spain’s IBEX held onto gains as Telefonica rose after hiking its revenue target.

Asia

Major Asian markets gained Thursday but the dollar struggled after the previous day’s losses when the Federal Reserve’s tepid inflation outlook fuelled speculation it will hold off further US rate hikes this year.

Regional traders tracked fresh Wall Street records on optimism about corporate earnings as a host of big names disclosed results

Tokyo, Hong Kong and Sydney all rose while Seoul was boosted by Samsung Electronics forecast-beating, record-breaking profits that were fuelled by sales of its new Galaxy S8 smartphone and memory chips.

On equity markets Tokyo closed 0.2 percent higher, Hong Kong was up 0.7 percent, its 13th rise in 14 trading days.

Seoul ended the day 0.4 percent up, Shanghai added 0.1 percent and Sydney rose 0.2 percent.

Samsung — the world’s largest maker of mobile phones — said operating profit soared a forecast-beating 72.9 percent from the previous year to 14.07 trillion won ($12.6 billion). That puts in on course to beat Apple, which consensus forecasts say will report a $10.6 billion profit next week. However, the firm finished 0.1 percent off in Seoul.

Bloomberg News contributed to this report

Tokyo — Nikkei 225: Up 0.2 percent at 20,079.64 (close)

Hong Kong — Hang Seng: Up 0.7 percent at 27,131.17 (close)

Shanghai — Composite: Up 0.1 percent at 3,249.78 (close)

Dollar/yen: Up at 111.30 yen from 111.18 yen

Oil

Oil prices traded close to eightweek highs on Thursday, boosted by a steeper-than-expected slide in US crude inventories last week.

Brent crude futures dipped by 2 cents to $50.95 a barrel at 1346 GMT, after rising about 1.5 percent in the previous session.

US West Texas Intermediate futures slipped 1 cent at $48.74 a barrel.

Both contracts traded lower earlier in the session on a stronger dollar, but recovered most of the lost ground. A stronger US currency makes dollardenominated crude more expensive for investors holding other currencies.

On Wednesday, the US Energy Information Administration reported a 7.2 million barrel drop in US inventories in the week to July 21, much more than the 2.6 million barrels forecast.

Gold

Gold touched its highest price in six weeks on Thursday, lifted by short-covering and a weak dollar as investors bet that US interest rates could be kept low for longer.

The US Federal Reserve kept interest rates unchanged on Wednesday, but appeared less confident than it had about inflation picking up.

The resulting fall in the greenback is a boon for dollar-denominated gold since it makes the metal less expensive for investors paying in other currencies.

Spot gold was up 0.1 percent at $1,261.74 an ounce at 1420 GMT after peaking at $1,264.90, its highest since June 15. US gold futures for August delivery advanced 1 percent to $1,261.40 an ounce.