Global stocks little changed; US ‘durable’ data drags greenback

Oil turns lower after hitting $50 a barrel

NEW YORK, May 26, (Agencies): The US dollar fell on Thursday after US durable goods orders data showed weakness in business spending plans, while world stock indexes were little changed after two days of strong gains.

Oil prices were lower after earlier topping $50 a barrel for the first time in roughly seven months.

Orders for long-lasting US manufactured goods surged in April on strong demand for transportation equipment and a range of other products, but continued weakness in business spending plans suggested the manufacturing rout was far from over.

“The market is not really seeing any signs here of an improvement in business spending,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

The US dollar index, which measures the greenback against a basket of six major currencies, hit 94.938, its lowest level in eight days.

Investors are looking ahead to a speech by Federal Reserve Chair Janet Yellen on Friday for more clues on the US interest rate outlook.

Investor expectations for higher rates have grown since last week’s minutes from the central bank’s April meeting signaled a June increase was on the table. Comments from policymakers and upbeat US economic data in recent days have supported those views.

“The market will be looking for some direction from Yellen. If she’s more hawkish, you could see the market changing direction,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

On Wall Street, the Dow Jones industrial average was down 41.16 points, or 0.23 percent, at 17,810.35, the S&P 500 lost 2.84 points, or 0.14 percent, to 2,087.7 and the Nasdaq Composite dropped 1.13 points, or 0.02 percent, to 4,893.77.

MSCI’s all-country world stock index rose 0.2 percent, while the pan-European FTSEurofirst 300 index of leading regional stocks was flat.

Brent rose as high as $50.35 a barrel, its highest since early November, but was last down 20 cents at $49.54. US crude futures were last down 16 cents at $49.40, after touching $50.21, a peak since mid-October.

US Treasury prices rose, with shortand medium-dated yields retreating from 10-week highs, ahead of a $28 billion sale of seven-year notes, the final leg of this week’s $88 billion in longer-dated government debt supply.

The two-year yield was down nearly 3 basis points at 0.891 percent, while the five-year yield slipped over 2 basis points to 1.380 percent.

In the precious metals market, gold prices gained as the dollar fell. Spot gold rose 0.1 percent to $1,224.96 an ounce.

US

Wall Street was slightly lower on Thursday as material stocks fell and after oil struggled to stay above the psychologically important $50-per-barrel mark.

Oil has rallied in recent weeks as wildfires in Canada and unrest in Nigeria and Libya brought a faster-than-expected recovery to an oversupplied market.

“The global surplus still exists and there is still a possibility that oil prices could retrace further,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Data on Thursday showed that while orders for US durable goods surged in April, business spending plans continued to show weakness, suggesting the manufacturing rout was far from over.

Manufacturing, which accounts for 12 percent of the economy, is struggling with the lingering effects of the dollar’s past surge and sluggish overseas demand.

Despite persistent weakness in business spending, the steady stream of fairly upbeat reports could give the Federal Reserve ammunition to raise interest rates again next month.

Comments from policymakers and upbeat US economic data in recent days have supported those views.

A US rate hike may come “fairly soon” if data confirms the economy is continuing to grow and labor markets are still tightening, Federal Reserve Governor Jerome Powell said on Thursday.

At 12:38 p.m. ET (1638 GMT) the Dow Jones industrial average was down 32.39 points, or 0.18 percent, at 17,819.12, the S&P 500 index was down 1.35 points, or 0.06 percent, at 2,089.19 and the Nasdaq composite index was down 0.34 points, or 0.01 percent, at 4,894.55.

Seven of the 10 major S&P sectors were lower, with the materials index’s 0.93 percent fall leading the decliners. Dupont and Dow Chemical were both down about 0.40 percent.

Discount retailers Dollar General and Dollar Tree hit record highs after reporting better-than-expected quarterly profits.

Abercrombie & Fitch shares slumped 16 percent to $21.09 after posting its 13th straight quarter of sales decline, becoming another example of a depressed apparel market.

Europe

Global optimism lifted equity markets Thursday, fuelled by oil breaking through $50 for the first time this year, but Wall Street drifted lower on profit-taking.

Higher oil prices boosted the profits, revenues and share prices of energy companies and Asian stock markets were first to feel the benefit, with energy stocks in Europe and the US also attracting strong buying interest.

But gains were curtailed by profit-taking as oil retreated late in the European afternoon, and pending G7 developments and any hints on the next US rate move.

The markets were seeing “one of those quietly solid days where not a lot happens and investors are fine with that, consolidating the highs hit on Wednesday,” Spreadex analyst Connor Campbell told AFP.

In Europe, Frankfurt, London and Paris extended Wednesday’s gains that were won on the back of a financing deal for Greece, bright German data, easing Brexit concerns and firmer oil prices.

But Madrid was weighed down by a crash in Banco Popular shares, which lost more than a quarter of their value in a single session after the bank asked shareholders to stump up more cash to clear up its balance sheet.

Wall Street initially followed Europe higher, but then dipped as financial stocks turned negative after big gains over the last two sessions.

In London, mining giant Glencore topped the gainers board, rising nearly three percent.

“A slight backtracking of the US dollar has helped a rally across commodities and a positive read-across to UK mining shares,” said CMC Markets analyst Jasper Lawler.

There was also talk that the G7 meeting may take a stance on alleged Chinese steel dumping, which has been the bane of steel producers around the world. Arcelormetal shares surged over seven percent.

■ Key figures around 1540 GMT London - FTSE 100: UP 0.04 percent at 6,265.65 (close)

Frankfurt - DAX 30: UP 0.7 percent at 10,272.71 (close)

Paris - CAC 40: UP 0.7 percent at 4,512.64 (close)

EURO STOXX 50: UP 0.3 percent at 3,070.62

Asia

Energy stocks jumped in Asia Thursday after oil surged past $50 a barrel for the first time this year, providing a bright point as regional bourses generally took a breather.

Among major energy counters, engineering firm WorleyParsons soared 4.6 percent in Sydney and BHP Biliton was 2.7 percent higher, while in Hong Kong, CNOOC added more than two percent and Sinopec increased 1.3 percent.

Tokyo-listed Inpex also jumped 2.5 percent and JX Holdings advanced 1.4 percent.

Aside from energy stocks, markets across Asia put in a fairly lacklustre session, with Hong Kong up just 0.1 percent compared with a 2.7 percent surge Wednesday.

Seoul was down 0.2 percent, while Sydney and Shanghai both ticked up 0.3 percent by the close. Manila tumbled 1.2 percent.

Tokyo ended flat after adding more than one percent earlier in the day, but embattled airbag supplier Takata skyrocketed on a report that a US private equity firm wants to take control of the company.

Kohlberg Kravis Roberts (KKR) is looking to take over up to 60 percent of the company from the founding family, Japan’s leading business daily Nikkei reported, prompting Takata’s shares to surge 21.16 percent to 458 yen.

Markets are now eyeing Group of Seven summit talks, which kicked off Thursday in Japan, for further trading cues.

China, the world’s second-largest economy, is not present, but a row over its territorial assertiveness in the South China Sea will loom large in the discussions.

In early European trade, London gained 0.3 percent, Frankfurt added 0.5 percent and Paris added 0.4 percent.

■ Key figures around 0900 GMT Tokyo: Nikkei 225: UP 0.09 percent at 16,772.46 (close)

Shanghai - Composite: UP 0.3 percent at 2,822.44 (close)

Hong Kong - Hang Seng: UP 0.1 percent at 20,397.11 (close)

Oil

Oil prices climbed above $50 a barrel on Thursday for the first time in nearly seven months as a global supply glut that plagued the market for nearly two years showed signs of easing.

Oil prices have rallied in recent weeks after a string of outages, due mainly to wildfires in Canada and unrest in Nigeria and Libya, knocked out nearly 4 million barrels per day of production.

Above $50 a barrel, oil was seen by many market players as breaching a psychological barrier that could lead producers, particularly among US shale companies, to revive operations scrapped in recent years.

Global benchmark Brent crude oil was up 56 cents at $50.30 a barrel at 1220 GMT, having reached $50.71 the highest in nearly 7 months, after a larger-thanexpected draw in US crude oil inventories last week indicated buyers are starting to mop up spare supply.

US crude futures were up 48 cents at $50.04 a barrel, after touching $50.21, the highest since mid-October.

“Certainly ($50) is a psychological barrier. There is a momentum, people will try and push it up over that,” said Ric Spooner, chief market analyst at Sydney’s CMC Markets.

A source at oil producer Chevron said on Thursday its activities in Nigeria had been “grounded” by a militant attack, worsening a situation that had already restricted the supply of hundreds of thousands of barrels.

A meeting of the Organization of the Petroleum Exporting Countries (OPEC) on June 2 in Vienna to discuss the oil market added further support.

OPEC officials were more positive about oil market conditions at talks in Vienna ahead of next week’s gathering of oil ministers, two sources said on Thursday, in a sign the exporter group is unlikely to change output policy on June 2.

Gold

Gold rose on Thursday, moving away from a seven-week low hit in the previous session, as the dollar extended losses after the release of US economic data. Orders for long-lasting US manufactured goods surged in April on strong demand for transportation equipment and a range of other products, but continued weakness in business spending plans suggested the manufacturing rout is far from over.

Spot gold rose 0.1 percent to $1,224.96 an ounce by 1414 GMT. The metal had fallen to its lowest since April 6 at $1,217.25 on Wednesday. US gold was up 0.2 percent at $1,225.60.

“Gold has entered a phase of consolidation due to stronger views that the US Fed will raise rates this summer,” said Carlo Alberto de Casa, chief analyst at ActivTrades.