Stocks mixed as techs rebound but trade fears hound markets

Oil falls on rising supply, trade worries

NEW YORK, Aug 1, (Agencies): World stocks were mixed on Wednesday, with fears of an imminent escalation in the tariff war between the US and China holding back gains, though robust results form technology giant Apple Inc boosted a key index on Wall Street.

Shares of Apple, which jumped 4.7 percent to a record high of $199.26 after predicting a surge in current-quarter sales, was the biggest advancer on all three major US stock indexes.

Still, market participants said Wednesday’s reversal after a recent selloff of tech shares might not be sustainable.

The Dow Jones Industrial Average fell 24.36 points, or 0.1 percent, to 25,390.83, the S&P 500 lost 0.8 points, or 0.03 percent, to 2,815.49 and the Nasdaq Composite added 23.50 points, or 0.31 percent, to 7,695.29.

MSCI’s gauge of stocks across the globe shed 0.12 percent, while the panEuropean FTSEurofirst 300 index lost 0.46 percent.

Concern over what a full-blown trade conflict would mean for China and the global economy weighed on Chinese shares, the offshore yuan and the Australian dollar.

Wednesday’s reaction remained fairly muted, however, as investors turned their attention to central bank decisions.

The Japanese yen strengthened 0.05 percent versus the greenback at 111.83 per dollar after Tuesday’s pledge by the Bank of Japan to keep rates extremely low for an extended period..

Oil prices fell on data showing an unexpected rise in US crude stockpiles. The slump in crude prices comes after their largest monthly decline in two years in July.

US crude fell 1.69 percent to $67.60 per barrel and Brent was last at $72.68, down 2.06 percent on the day.

US

The benchmark S&P 500 index dipped on Wednesday, ahead of the Federal Reserve’s decision on interest rates, but Apple’s robust earnings lifted the technology sector and the Nasdaq.

The US central bank is expected to keep interest rates unchanged in an announcement at 2 p.m. ET. But solid economic growth combined with rising inflation are likely to keep the Fed on track for another two hikes this year.

Apple’s shares rose 5.8 percent to hit a record $201.32, inching closer to become the world’s first trillion-dollar company after forecasting blowout current-quarter sales.

Its earnings provided some relief after results from marquee names such as Facebook and Netflix fanned worries about growth of the high-flying companies.

Facebook’s shares fell 0.2 percent and was the only member of the so-called FAANG group to be trading lower. Netflix, Amazon.com and Google-parent Alphabet were trading up marginally.

The technology sector rose 0.86 percent. Only three of the 11 major S&P sectors were higher.

The trade-sensitive industrial index fell 1.07 percent. Caterpillar slipped 3.2 percent and 3M declined 2 percent. Both stocks were the biggest drags on the Dow.

At 12:50 p.m. ET, the Dow Jones Industrial Average was down 61.64 points, or 0.24 percent, at 25,353.55, the S&P 500 was down 4.00 points, or 0.14 percent, at 2,812.29 and the Nasdaq Composite was up 17.83 points, or 0.23 percent, at 7,689.62.

Also weighing on the markets was a 1.66 percent fall in the energy group due to a clutch of weak earnings reports and a fall in crude oil prices.

Devon Energy dropped 5.2 percent, while Chesapeake Energy declined 7.7 percent after disappointing quarterly results.

Tesla fell 0.5 percent ahead of its results after the bell.

Declining issues outnumbered advancers for a 2.37-to-1 ratio on the NYSE and a 1.44-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52week highs and three new lows, while the Nasdaq recorded 50 new highs and 72 new lows.

Europe

European shares retreated slightly on Wednesday as a mixed batch of corporate earnings failed to offset concerns about the US-China trade conflict and subdued euro zone manufacturing growth.

Caution was also palpable ahead of the Federal Reserve’s decision, due on Wednesday after the European market close, with the US central bank expected to keep interest rates on hold before two hikes later this year.

The pan-European STOXX 600 ended the session down 0.5 percent while Germany’s DAX also declined 0.5 percent. France’s CAC 40 gave up early gains to close 0.2 percent lower.

Autos stocks were the biggest sectoral fallers, down 2.4 percent as shares in Schaeffler DE>, Volkswagen and Porsche fell as much as 5.1 percent.

Shares in Ferrari dropped 8.4 percent after the company’s CEO said that their financial targets to 2022 were “aspirational”.

The autos sector has been hit particularly hard by uncertainty over global trade and tariffs.

Basic materials were also on the back foot, down 1.6 percent as copper prices slid following reports that the United States may propose a higher, 25-percent tariff on $200 billion of Chinese imports.

Rio Tinto added pressure on the sector as disappointing results sent its stock down 3.4 percent despite news of an additional $1 billion share buyback.

British airline services company’s BBA Aviation was another big faller, dropping 11.4 percent after disappointing results.

On the upside, Air France-KLM rose more than 4 percent after secondquarter results beat estimates despite recent strikes.

France’s BNP Paribas reported forecast-beating second-quarter profits, though its shares gave up early gains to end 0.5 percent lower.

In the UK, Lloyds Banking shone, rising 1.7 percent after reporting a 23-percent jump in first half pre-tax profit.

Apple’s positive trading update was not enough to help tech stocks, with the sector losing 0.4 percent.

In other earnings-related moves, Belgium’s Telenet Group jumped 6.6 percent after announcing an extraordinary dividend and supportive first-half results.

Asia

Asian markets were mixed Wednesday, with Shanghai and Hong Kong sharply lower following reports the US was planning to more than double planned tariffs on China.

Shanghai tumbled 1.80 percent and Hong Kong lost 0.9 percent, while Sydney slipped 0.1 percent. Wellington shed 0.7 percent.

But Tokyo ended 0.9 percent higher on a weaker yen, while Singapore added 0.3 percent and Seoul gained 0.5 percent. Taipei, Manila, Jakarta and Bangkok were also up.

Suppliers to Apple performed well after the US giant announced betterthan-forecast profits. Foxconn climbed 1.7 percent in Taipei, Japan Display rallied 1.4 percent in Tokyo and Seoullisted LG Display was 1.9 percent higher.

On currency markets the yen extended Tuesday’s drop after the Bank of Japan tweaked monetary policy but held off on any major tightening measures, while revising down inflation expectations.

In early trade London was flat, Paris rose 0.3 percent and Frankfurt added 0.1 percent.

Tokyo - Nikkei 225: UP 0.9 percent at 22,746.70 (close)

Hong Kong - Hang Seng: DOWN 0.9 percent at 28,340.74 (close)

Shanghai - Composite: DOWN 1.8 percent at 2,824.53 (close)

Dollar/yen: UP at 112.18 yen from 111.81 yen at 2030 GMT

Oil

Oil extended losses on Wednesday to fall below $72 a barrel, pressured by an industry report that US stockpiles of crude rose unexpectedly and higher OPEC production, adding to indications of more ample supply.

Concern of an imminent escalation in the trade war between the United Sates and China pressured equities and boosted the US dollar, and also weighed on oil as slowing economies would curb demand.

On Tuesday, the American Petroleum Institute said crude inventories rose by 5.6 million barrels last week. Analysts had expected a decrease of 2.8 million. The US government’s supply report is due on Wednesday.

Brent crude, the global benchmark, dropped $1.31 to $72.90 a barrel by 1321 GMT, having fallen as low as $72.66. US crude was down $1.05 at $67.71.

Last month, Brent fell more than 6 percent and US crude slumped about 7 percent, the biggest monthly declines for both benchmarks since July 2016.

Oil also slipped on more ample supplies.

The Organization of the Petroleum Exporting Countries, plus Russia and other allies, decided in June to ease supply cuts that had been in place since 2017. OPEC production reached a 2018 high in July, a Reuters survey found on Monday.

Gold

Gold edged lower on Wednesday on a stronger dollar as the market waited for the result of a Federal Reserve meeting later in the day, expected to provide more signals on the direction of US monetary policy.

Spot gold fell 0.5 percent lower to $1,217.17 per ounce by 1503 GMT, close to a one-year low of $1,211.08 reached on July 19.

US gold futures were 0.6 percent lower at $1,225.90 an ounce.

The Fed is expected to keep rates unchanged, but solid economic growth combined with rising inflation is likely to keep it on track for another two hikes this year, sapping demand for non-interest-paying gold.

“People are waiting to understand what is going to happen with the Fed later but there are no signals of recovery at all for gold,” said ActivTrades chief analyst Carlo Alberto De Casa, who said bullion remained in a bearish trend.

“The most important thing that gold is that it’s looking at two rate increases this year which is adding pressure on gold, making the scenario weak for bullion.”

A key support area in the short term is around $1,211-$1,215 per ounce, De Casa said, with gold having failed to rise above $1,235.