Global stocks weaken; euro and pound rise on Brexit concession
Italian 10-year debt yield hits 4.5-year high
NEW YORK, Oct 20, (Agencies): Stocks dipped on Friday, dragging a global index into a fourth consecutive weekly loss, while the euro and sterling rallied against the dollar after a report said Britain is ready to drop a key Brexit demand.
Strong earnings boosted shares early on Wall Street but concerns over economic growth in China and Europe lingered, dragging indexes lower in afternoon trade.
“There a lot of cross-currents right now, with Italy, housing weakness, interest rates (rising) ...,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.
The pan-European STOXX 600 index lost 0.12 percent and MSCI’s gauge of stocks across the globe shed 0.08 percent.
The Dow Jones Industrial Average rose 64.89 points, or 0.26 percent, to 25,444.34, the S&P 500 lost 1 point, or 0.04 percent, to 2,767.78 and the Nasdaq Composite dropped 36.11 points, or 0.48 percent, to 7,449.03.
Emerging market stocks were flat. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.13 percent higher.
In currencies, the British pound and the euro rose after Bloomberg News reported that British Prime Minister Theresa May is ready to drop a key Brexit demand in order to make a deal for Britain to leave the European Union.
Earlier, EU negotiator Michel Barnier said a Brexit deal was 90 percent done although hurdles remained.
Sterling was last trading at $1.3068, up 0.39 percent on the day. The euro rose 0.56 percent to $1.1516. The dollar index fell 0.26 percent. The Mexican peso touched a fiveweek low versus the greenback after ratings agency Fitch revised Pemex’s credit rating outlook to negative citing uncertainty over the Mexican national oil company’s future business strategy.
Mexico’s currency lost 0.62 percent versus the US dollar at 19.26. It earlier touched 19.34 per dollar, the weakest in five weeks.
US
The US benchmark S&P 500 stock index edged lower on Friday as strong earnings from Procter & Gamble Co were offset by ongoing concerns about rising interest rates and tensions over trade policy denting economic growth.
Shares of Procter & Gamble jumped 8.8 percent after the consumer goods company reported a surprise rise in first-quarter sales. The climb in Procter & Gamble shares lifted the Dow and helped advance the S&P 500 consumer staples index 2.3 percent.
The consumer staples sector, which has underperformed the broader S&P 500 this year, was set for its biggest daily percentage gain since August 2015.
Yet recent jitters regarding global trade tensions and rising interest rates, which have weighed US stocks this week, persisted.
The S&P 500 index closed below its 200-day moving average, a key statistical indicator of long-term price trends. Defensive sectors - utilities and real estate in addition to consumer staples - led the S&P in percentage gains, signaling caution among investors.
So far, 61.9 percent of S&P 500 companies have reported revenue above analyst expectations, below the 73 percent average over the past four quarters, according to I/B/E/S data from Refinitiv.
The Dow Jones Industrial Average rose 64.89 points, or 0.26 percent, to 25,444.34, the S&P 500 lost 1 point, or 0.04 percent, to 2,767.78 and the Nasdaq Composite dropped 36.11 points, or 0.48 percent, to 7,449.03.
For the week, the S&P gained 0.02 percent, the Dow rose 0.4 percent and the Nasdaq fell 0.6 percent.
Europe
European stocks ended a choppy trading session broadly flat on Friday but managed to eke out a weekly gain despite mixed third-quarter earnings and while the budget row between Italy’s populist government and the European
Union heated up.
The pan-European STOXX 600 dipped 0.06 percent to end the week with a 0.7 percent gain.
Italy’s bank stocks index sustained heavy losses in morning trading and fell to 22-month lows as government bonds were sold off after Brussels sent Rome a letter demanding an explanation for its budget plans.
Italian banks gradually pared their losses and limited their daily retreat to 0.4 percent.
A crop of results, some with negative outlooks, suggesting growth slowing in China also cast a shadow on the session.
Shares in tyre maker Michelin tumbled 11.2 percent after it cut its sales outlook and downgraded its market growth forecasts, blaming slowing Chinese car demand and new emissions testing regulations.
Michelin’s German rival Continental fell 4.5 and the autos and parts sector as a whole sank 2.8 percent.
French conglomerate Bouygues fell 11.8 percent after cutting its profit outlook due to difficulties in its construction businesses, also reporting a shrinking margin due to problems with contracts and France’s rail strikes.
“This was particularly surprising two weeks after a bullish construction capital markets day,” Credit Suisse analysts
wrote.
Swedish builder Skanska fell 10.6 percent after saying it had booked charges of 1.3 billion crowns ($140 million) in the third quarter relating to construction projects in the United States.
Overall, the construction and materials sector fell 1.7 percent, its second day of declines after being hit on Thursday by a profit warning from Heidelbergcement.
Asia
Asian markets were mixed Friday, with Shanghai bouncing back from early losses to end the week with a rally following a rare joint intervention by some of China’s top financial officials.
Comments from Vice Premier Liu He and the heads of the central bank, securities commission and banking regulator, were made to shore up confidence in China’s equities and came as data showed growth in the world’s number two economy slowing to a nine-year low.
Global investors have been swiped by a series of problems in recent months including rising US interest rates, geopolitical After starting the day in negative territory, Shanghai ended Friday 2.6 percent higher, while Hong Kong also performed a u-turn to gain 0.4 percent.