Apple’s dip takes shine off global stock rally; dollar extends gains

Oil prices rise as IEA sees higher demand

NEW YORK, Sept 13, (Agencies): Global equity markets edged lower on Wednesday, pulled lower over concerns about the launch of Apple’s new iPhone X, while the dollar rose after a report showed US producer prices rebounded in August, suggesting a strong economy.

The yield on European and US government debt rose, with the benchmark 10-year US Treasury hitting a 2-1/2 week high.

Oil prices rose after the International Energy Agency (IEA) said a global surplus was starting to shrink, even though US data showed another big increase in crude inventories due to the ongoing impact from Hurricane Harvey on the Houston energy hub.

European equities pared earlier losses to edge higher thanks to gains in oil and banking stocks, which offset weak chipmakers and a fall in miners.

Chipmakers that supply Apple were among the worst performers, with AMS down 3.9 percent and Dialog Semiconductor off 1.6 percent. ST Micro ended up 0.1 percent.

Chipmakers have been the best performing among Europe’s tech stocks this year, accounting for a large chunk of the sector’s outperformance. AMS shares have gained 165 percent yearto-date.

MSCI’s all-country world stock index shed 0.19 percent, but the pan European FTS Euro first 300 index rose 0.10 percent and the Euro STOXX 50 rose 0.3 percent.

Investors will need to gauge how strong demand will be for the iPhone X, as its price will start at $999, he said.

The dollar index, which tracks the currency against a basket of six major rivals, was up 0.56 percent at 92.396.

The index rose after the US Labor Department said its producer price index for final demand increased 0.2 percent in August after slipping 0.1 percent in July. The rebound was driven by a surge in the cost of gasoline.

The euro fell 0.59 percent to $1.1894 while the Japanese yen weakened 0.39 percent versus the greenback at 110.61 per dollar.

Oil prices jumped after the IEA report but then pared gains.

US crude rose 1.62 percent to $49.01 per barrel and Brent was last at $54.90, up 1.16 percent on the day.

US

US stocks were little changed on Wednesday as Apple-led losses in tech stocks were offset by gains in consumer discretionary and energy stocks, which helped the S&P 500 inch up to a record intra-day high.

Apple dropped 1.2 percent on concerns about the newly launched iPhone X’s hefty price tag and its later-thanexpected availability date of Nov 3. The stock was the top drag on all the three major indexes.

Indexes were also supported by President Donald Trump’s efforts to push ahead with his plan to cut tax rates. House Speaker Paul Ryan said an outline will be unveiled during the work week beginning Sept 25.

Wall Street is coming off a two-day rally that resulted in the three major indexes finishing at all-time highs on Tuesday and the S&P touching a record intra-day high.

The indexes have stayed near record levels this year despite periodic setbacks caused by turmoil in the White House, the timing of US interest rate hikes, doubts about Trump’s ability to push through his pro-business reforms, and lately, tensions over North Korea.

At 12:36 pm ET (16:36 GMT), the Dow Jones Industrial Average was up 7.91 points, or 0.04 percent, at 22,126.77 and the S&P 500 was down 0.82 points, or 0.03 percent, at 2,495.66. The Nasdaq Composite was down 3.11 points, or 0.05 percent, at 6,451.17.

A rise in oil prices after the International Energy Agency said a global surplus of crude was starting to shrink sent the S&P energy index up 0.9 percent.

Target rose 2.3 percent after the retailer said it would hire 100,000 workers for the holiday season, 43 percent more than last year.

McDonald’s gave the biggest boost to the Dow with a 0.9 percent rise, while Amazon’s 0.7 percent rise led the Nasdaq higher.

Nordstrom gained 6.3 percent, topping the consumer discretionary index after Reuters reported the founding family had selected private equity firm Leonard Green & Partners to help take it private.

Advancing issues outnumbered decliners on the NYSE by 1,480 to 1,288. On the Nasdaq, 1,551 issues rose and 1,247 fell.

Europe

European shares steadied on Wednesday as a global equity rally flagged, with Apple suppliers hit after the new iPhone release disappointed with a later than expected shipping date.

The pan-European STOXX 600 index ended flat, paring earlier losses thanks to gains in oil and banking stocks which offset the weak chipmakers and a fall in miners.

Chipmakers supplying to Apple were among the worst performers, with AMS down 3.9 percent, while Dialog Semiconductor slipped 1.6 percent, while STMicro ended up 0.1 percent.

Traders said their shares were under pressure because Apple’s new $999 iPhone X will ship later than expected, on Nov 3. The price tag could also dent demand for the device in markets such as China.

Chipmakers have been the best performing among Europe’s tech stocks this year, accounting for a large chunk of the sector’s outperformance. AMS shares have gained 165 percent yearto-date.

Richemont fell 1.2 percent despite reporting a sales beat for its first half thanks to a recovery in the Asian luxury market. UBS analysts said weaker retail growth may weigh on sentiment.

Peer Swatch also fell 3.9 percent, with some traders citing concerns that Apple’s new watch could also dent the watchmaker’s shares.

The merging eyewear and lens makers Luxottica and Essilor were also among the biggest fallers, both down more than 2 percent. EU antitrust regulators were set to tell the firms of concerns they have over the merger this week.

Covestro rose 3.7 percent after German drugs and pesticides group Bayer sold a 9.4 percent stake in the firm, in order to finance part of its acquisition of Monsanto.

Asia

Asian investors eased off the pedal Wednesday after recent gains but the dollar held up against the yen as North Korea kept itself in the mix by warning it would strengthen its nuclear programme in response to fresh UN sanctions.

While Tokyo was able to kick on thanks to a further weakening of the yen, most regional traders were unwilling to track the record close on Wall Street, and Apple-linked firms were mixed after the firm unveiled its new phone.

The latest gains have been fuelled by relief that Hurricane Irma did not hammer Florida as badly as feared and that the North Korea crisis had eased somewhat after its recent provocative nuclear and missile tests.

However, Pyongyang attracted renewed attention when it vowed Wednesday to accelerate its weapons drive after “evil” Security Council sanctions.

In equities trade Tokyo ended 0.5 percent higher as exporters benefited from the weaker yen. The greenback broke back above 110 yen Tuesday after last week’s sell-off saw it tumble to the 10-month lows around 107.30 yen.

Shanghai added 0.1 percent but Hong Kong slipped 0.3 percent, while Sydney eased slightly and Seoul and Singapore lost 0.2 percent each. Wellington and Taipei were also lower.

In Japan component-maker Nidec jumped 3.5 percent and Sharp gained 1.2 percent. Seoul-listed LG Innotek, which supplies 3D sensing modules, fell 1.8 percent while OLED material provider Innox Advanced Materials slipped 0.9 percent as investors were disappointed at delays in rolling out the iPhone X.

In Taipei, TSMC retreated 0.5 percent and Hon Hai gave up 1.3 percent.

Key figures around 08:20 GMT Tokyo — Nikkei 225: UP 0.5 percent at 19,865.82 (close)

Hong Kong — Hang Seng: DOWN 0.3 percent at 27,894.08 (close)

Shanghai — Composite: UP 0.1 percent at 3,384.15 (close)

Dollar/yen: DOWN at 110.12 from 110.18 yen

Oil

Oil prices rose on Wednesday after the International Energy Agency (IEA) said a global surplus of crude was starting to shrink due to robust global demand and an output drop from OPEC and other producers.

By 12:01 GMT, international benchmark Brent crude was up 47 cents, or 0.8 percent, at $54.74 a barrel.

US West Texas Intermediate (WTI) was up 47 cents, or 0.9 percent, at $48.70 a barrel.

“Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly,” the IEA, which coordinates energy policies in industrialised nations, said in its monthly report.

“Demand growth continues to be stronger than expected, particularly in Europe and the US,” the IEA said, raising its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd.

The assessment echoed a report by the Organization of the Petroleum Exporting Countries forecasting higher demand for its oil in 2018 and pointing to signs of a tighter global market.

The US Energy Information Administration (EIA) revised its 2017 and 2018 US oil output forecasts lower to reflect, in part, the effects of Hurricane Harvey.

Bjarne Schieldrop, chief commodities analyst at SEB, said the IEA had not extended its forecast for strong demand growth to 2018.

Gold

Gold dipped on Wednesday, erasing earlier slim gains as the dollar index moved into positive territory, though a retreat in global stocks after Tuesday’s record high kept the metal hemmed within a narrow range.

Spot gold was down 0.4 percent at $1,326.07 an ounce at 14:10 GMT, off an earlier peak of $1,334.65.

The metal’s move lower came as the dollar erased earlier losses to rise 0.4 percent versus a basket of currencies. A firmer dollar makes gold more expensive for holders of other currencies.

“This seems to be currency led,” Saxo Bank’s head of commodity research Ole Hansen said.

“I’m somewhat surprised that gold managed to find support ahead of $1,321.50, the 23.6 percent retracement of the July to September rally, but with (North Korean leader) Kim vowing to keep pushing his nuclear ambitions, the geo-risk is never far away.”