Roller-coaster Q1 winds up with USD under pressure; stocks flat

Oil ticks up; gold heads for biggest qtrly rise in nearly 30 yrs

NEW YORK, March 31, (Agencies): Equity markets worldwide fell for the first time in four days on Thursday, the final day of a roller-coaster first quarter that has hammered the dollar and the pound but has proven the best in decades for gold and bonds.

March was closing out on a subdued note after a volatile quarter that saw investors vacillate between calm and panic. Oil prices, the source of much concern throughout the quarter, were a touch higher as investors looked for clarity over a possible agreement by major oil-producing nations to reduce supply.

The dollar hovered near seven-week lows against the euro. It has fallen this week on reduced expectations for nearterm interest rate hikes from the US Federal Reserve, particularly after comments from Fed Chair Janet Yellen.

US oil futures rose 1.3 percent to $38.82 a barrel, rebounding somewhat after another report of record US stockpiles, while China was put on a downgrade warning by S&P.

This quarter “has all been about the three C’s. Commodities, China and central banks,” said Aberdeen Asset Management investment committee member Kevin Daly.

When oil hit $27 a barrel in mid-January there were “pretty dark” predictions for the global economy, Daly said, but the rebound in crude, China and ECB stimulus and the Federal Reserve cooling rate hike expectations had all bolstered confidence.

Wall Street was sleepy one day ahead of key monthly labor market data. In the span of three months, the S&P 500 erased a 11 percent fall - one of its worst-ever starts to a year - and is now set to end the quarter with modest gains.

The S&P 500 gained 0.11 percent, to 2,066.18, putting it up 1.1 percent for the quarter.

The euro pushed up to $1.1388 and the yen hovered at 112.34 to the greenback, leaving the six-currency dollar index on track for its biggest monthly fall since April 2015 and largest quarterly drop in five years.

European markets had a groggy morning with shares down 1 percent. Euro zone inflation data was muted, underscoring just why the European Central Bank is cranking up its stimulus efforts.

Sterling has also taken a pounding this year as concerns have grown about a potential British exit, or ‘Brexit’, from the European Union.

It barely budged on Thursday but has seen its biggest quarterly tumble in 6-1/2 years against the euro.

This year’s turbulent start pushed MSCI’s benchmark EM equity index down 14 percent by the time it bottomed on Jan. 21.

But fast forward 2-1/2 months and EM stocks are up 20 percent. Currencies from the Russian rouble to the Brazilian real have surged and struggling parts of Africa have some of the best-performing bonds in the world.

US

Wall Street was set to end a tumultuous first quarter on a quiet note with the three major indexes eking out small gains on Thursday, led by healthcare stocks.

Worries about the global economy caused a steep selloff in stocks at the start of the year, before a rebound in oil prices sparked a recovery.

Investors held off on making big bets on Thursday ahead of the critical US nonfarm payrolls report due on Friday. Crude oil rose slightly, hovering near $40 a barrel.

Data on Thursday showed US jobless claims rose unexpectedly last week but remained well below the 300,000 mark, denoting a healthy labor market.

At 12:37 p.m. ET (1637 GMT), the Dow Jones industrial average was up 20.72 points, or 0.12 percent, at 17,737.38, the S&P 500 was up 2.13 points, or 0.1 percent, at 2,066.08 and the Nasdaq Composite was up 19.42 points, or 0.4 percent, at 4,888.72.

Seven of the 10 major S&P sectors posted meager gains, with a 0.4 percent rise in the healthcare sector leading the way.

Investors’ nerves were soothed this week by US Federal Reserve Chair Janet Yellen’s comments that the central bank should be cautious with raising interest rates.

Shares of Best Buy were up 3.5 percent at $32.68 after Barclays initiated coverage of the stock with an “overweight” rating.

Advancing issues outnumbered decliners on the NYSE by 1,761 to 1,138. On the Nasdaq, 1,668 issues rose and 1,023 fell.

The S&P 500 index showed 31 new 52-week highs and one new low, while the Nasdaq recorded 40 new highs and 16 new lows.

Europe

European shares fell on Thursday after solid gains in the previous session, with French telecoms and Italian banks underperforming.

The pan-European FTS Euro first 300 index fell 1 percent. The index had risen 1.3 percent in the previous session after Fed Chair Janet Yellen’s call for caution in raising US interest rates buoyed global stock markets.

French telecom stocks were among the worst performers after Orange and Bouygues gave them themselves until Sunday to salvage a merger between France’s dominant telecom operator and Bouygues Telecom, citing a lack of progress ahead of a Thursday deadline.

Orange shares fell 1.3 percent, while Bouygues declined 3.6 percent. Rival French telecom stocks also lost ground, with Iliad dropping 2.7 percent, Numericable-SFR down 1.8 percent and Altice down 1.9 percent.

Shares in Italian banks also slumped sharply, as three sources told Reuters that guarantor UniCredit was considering whether to delay Banca Popolare di Vicenza’s 1.76 billion euro rights issue, currently slated for April, if market conditions did not improve.

The FTS Euro first has recovered from lows reached in February but is still down by almost 8 percent since the start of 2016. Concerns about a slowdown in China, the world’s second-biggest economy, have hit world stock markets and commodity prices.

Tour operator TUI rose 5 percent, helped by a rise in summer bookings after the company said it was on track to meet its annual target, while cruise operator Carnival was also higher after a betterthan-expected earnings update.

UK

UK shares retreated on Thursday as mining stocks were hit by a drop in metals prices, although investors cheered a rise in summer bookings for tour operator TUI Group.

BHP Billiton, Glencore, Rio Tinto, Anglo American, and Antofagasta fell 1.2 to 3.3 percent.

The FTSE 100 index was down 0.7 percent at 6,158.40 points by 0812 GMT, slightly outperforming the broader European market.

Life insurance company Old Mutual, InterContinental Hotels Group and Wolseley fell 1.2 to 3.4 percent after going ex-dividend, taking around 2.3 points off the FTSE 100 index.

However, a rise in summer bookings for tour operator TUI Group sent its shares up over 6 percent, after the company said it was on track to meet its annual target.

Shares in cruise company Carnival also gained 1.4 percent, and the UK travel and leisure sector advanced 0.4 percent to a twoand-a-half week high earlier in the session.

Among mid-caps, online retailer AO World jumped 7.4 percent after it said that gaining market share helped boost UK revenue and EBITDA ahead of its target.

Asia

Asian stock markets ended a volatile first quarter on a cautious note Thursday, as upbeat sentiment fuelled by the prospect of lower US borrowing costs was offset by profit-taking after recent gains.

Shanghai and Tokyo were the two worst performers among major global indexes over the past three months, despite a March rally.

Shanghai and Tokyo led world markets lower in the first three months of the year, weighed down by China’s economic woes and plunging oil prices. Japan’s Nikkei ended the quarter 12 percent down while Shanghai lost around 15 percent.

Most regional bourses ended the quarter in the red, although March saw some much-needed gains as central banks unveiled monetary easing measures.

On Thursday, Tokyo lost 0.7 percent, while Shanghai eked out a 0.1 percent gain.

Elsewhere Hong Kong finished 0.1 percent lower, while Singapore lost 1.3 percent and Seoul finished down 0.3 percent. However, Sydney closed 1.5 percent higher.

In Hong Kong, Chinese firm Dalian Wanda Commercial Properties soared 20 percent after its parent firm said it was considering buying all its shares back — just 16 months after listing.

Billionaire Wang Jianlin, who owns Dalian Wanda Group, is looking to buy the firm back for HK$48 a share, the price it listed, marking a 24 percent premium to its Wednesday close.

Analysts say he has likely become disillusioned with its performance.

The firm’s stock has tumbled since listing as China’s property market has been hammered by a slowdown in the world’s number two economy.

In currency trade, the dollar retreated against most emerging units as the prospect of low US interest rates boosts demand for higher-yielding assets.

The South Korean won added 0.7 percent and the Malaysian ringgit gained 0.5 percent, while the Taiwan and Singapore dollars were also up.

Tokyo - Nikkei 225: DOWN 0.7 percent at 16,758.67 (close)

Shanghai - Composite: UP 0.1 percent at 3,003.92 (close)

Hong Kong - Hang Seng: DOWN 0.1 percent at 20,776.70 (close)

Oil

Oil futures rebounded from early losses on Thursday but the recovery was muted as the market’s focus switched back to signs of growing oil stocks.

Brent and WTI crude were on track for their strongest March since 2002, despite US crude earlier in the day hitting a more than two-week low.

Brent crude futures were trading 50 cents higher at $39.76 a barrel at 1400 GMT.

The front-month contract for US crude futures was 35 cents higher at $38.67 a barrel, after dropping to $37.57, the lowest since March 16.

Still, high global stocks put the sustainability of the gains in question. Data on Wednesday showed US crude stocks reached yet another record high last week despite an 11-year high in seasonal refinery utilisation.

US crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25, the seventh week at record highs, data from the US government’s Energy Information Administration showed.

Crude prices have risen about 50 percent since mid-February on optimism over a proposal by several major oil-exporting countries to freeze production and signs of falling US output.

Gold

Gold rose 1 percent on Thursday as the dollar and stock markets retreated, keeping the metal on course for its biggest quarterly gain in nearly 30 years as expectations of US interest rate hikes receded.

The metal is highly exposed to rising rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar. Gold fell 10 percent last year ahead of the first US rate increase in nearly a decade in December.

Spot gold was up 1 percent at $1,236.16 an ounce at 1330 GMT, while US gold futures for April delivery were up $9.80 an ounce at $1,238.40.