Global equities edge lower as profits from big cos disappoint

NEW YORK, July 29, (Agencies): Stock markets fell worldwide on Friday as results from some big US companies disappointed and tobacco shares dropped.

Altria Group fell 9.5 percent and was the biggest drag on the S&P 500, while US-listed shares of British American Tobacco dropped 7 percent, after the US Food and Drug Administration said it aims to reduce nicotine levels in cigarettes while exploring measures to shift smokers towards e-cigarettes.

Amazon’s stock fell after the world’s largest online retailer reported late Thursday a jump in retail sales along with a profit slump. Results from Exxon Mobil and Starbucks also disappointed.

Despite Friday’s share reactions, second-quarter results have come in mostly better than expected, and stocks are trading near record highs.

The Dow Jones Industrial Average rose 33.76 points, or 0.15 percent, to close at 21,830.31, the S&P 500 lost 3.32 points, or 0.13 percent, to 2,472.1 and the Nasdaq Composite dropped 7.51 points, or 0.12 percent, to 6,374.68.

MSCI’s 47-country All World share index was down 0.2 percent, while the European STOXX 600 index was down 1 percent.

The US dollar was broadly lower as a combination of uninspiring US economic data and political uncertainty kept traders biased toward the euro and other world currencies.

The euro moved higher against the dollar, and was last up 0.7 percent at $1.1751. The Swiss franc fell for a fourth straight day and was set for its largest monthly drop in six years against the euro.

US Treasury yields fell. Other data showed that US labor costs increased less than expected in the second quarter. The Employment Cost Index, the broadest measure of labor costs, increased 0.5. percent in the April-June period.

The economy grew at an annual rate of 2.6 percent in the second quarter, revved up by a rise in consumer spending, the Commerce Department reported. Last quarter’s growth rate was more than double that of the year’s first quarter, which was revised down to 1.2 percent. The faster growth, though, was still a shade below the 2.7 percent that economists expected.

“Overall, the economy continues to move along, but it’s hard to see where the fuel is going to come from for further acceleration,” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments. He says the economy reminds him of what golfers call a “son-in-law” shot, one that’s not bad but not great.

“We’re not throwing new money into the stock market at this point,” Weiss said. Instead of US stocks, he prefers foreign markets where he says economies have more potential for improvement. Many other investors have shifted their money using a similar philosophy, and the falling value of the dollar against other currencies has helped boost foreign stocks’ returns.

Excitement about the US economy had been higher earlier in the year, when many investors expected the Republican takeover of Washington to lead to more pro-business policies. But inaction in the Capitol, capped by the Senate’s latest failed attempt to revamp the nation’s health care system, is raising doubts about whether tax reform or a big infrastructure plan will happen.

France’s CAC 40 lost 1.1 percent, the FTSE 100 in London fell 1 percent and Germany’s DAX dropped 0.4 percent.

The mood also soured in Europe, where shares in Renault tumbled on a weak outlook for the French carmaker despite surging sales and record profits in the first half of 2017.

In Frankfurt, BMW, Daimler and Volkswagen shares also fell. The three were this week hit with lawsuits over their alleged collusion to drive up the prices of their cars.

London’s benchmark FTSE 100 index was down one percent at the closing bell, weighed down by poor results from troubled telecoms and television firm BT Group.

“The FTSE sell-off has intensified into the close, with the blue chip benchmark hitting its lowest level in over two weeks,” noted Josh Mahoney at IG.

BT shares slid after the group posted a 42 percent slump in first-quarter profits, rocked by fresh fallout from an Italian accounting scandal.

Barclays shares fell as the bank reported a first-half net loss of £1.21 billion ($1.58 billion, 1.35 billion euros).

Asian markets tumbled Friday to end two days of gains as a US tech sell-off spread to the region, adding to concerns over a host of corporate results.

Hong Kong was drifting lower in afternoon trade and Seoul and Sydney both ended the day losing more than one percent.

Chinese internet giant Tencent and South Korean conglomerate Samsung Electronics were among the big tech losers in Asia.

Key figures around 0720 GMT Tokyo — Nikkei 225: Down 0.6 percent at 19,959.84 (close)

Hong Kong — Hang Seng: Down 0.5 percent at 26,994.57.57

Shanghai — Composite: Up 0.1 percent at 3,253.24 (close)

Euro/dollar: Up at $1.1703 from $1.1677

Pound/dollar: Up at $1.3075 from $1.3061

Dollar/yen: Down at 111.06 yen from 111.24 yen