Global equities wobble as Wall St cuts losses; oil off after US data

Dollar index up ahead of Fed minutes

NEW YORK, Oct 17, (Agencies): A gauge of stocks across the world pared losses on Wednesday as a rally in bank shares helped buoy Wall Street, but the outlook on earnings soured after a warning on the European auto sector and a revenue miss from IBM.

Crude futures fell for the first session in four after US government data showed a much largerthan-expected build in crude inventories. WTI touched its lowest price in a month.

The US dollar rose as the market awaited the minutes from the latest Federal Reserve meeting. Lower-thanexpected UK inflation data weighed on sterling, which gave up the previous day’s gains.

On Wall Street, IBM fell 6.2 percent, dragging blue-chips lower a day after the company missed revenue expectations. On Tuesday, the S&P 500 posted the biggest daily gain since late March.

Stocks extended losses when oil prices fell further, but a steady climb in financial sector stocks had the S&P 500 near break-even.

The Dow Jones Industrial Average fell 29.27 points, or 0.11 percent, to 25,769.15, the S&P 500 gained 2.61 points, or 0.09 percent, to 2,812.53 and the Nasdaq Composite dropped 3.59 points, or 0.05 percent, to 7,641.90.

European stocks hit a one-week high in early trade, but then were pulled lower by a 1.9 percent fall in an index of auto stocks. Goldman Sachs said slow demand in China could hit earnings in the sector.

The pan-European STOXX 600 lost 0.40 percent and MSCI’s gauge of stocks across the globe shed 0.01 percent.

Emerging market stocks rose 0.05 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.27 percent higher, while Japan’s Nikkei rose 1.29 percent.

US crude futures tumbled below $70 a barrel after data showed US stockpiles rose by 6.5 million barrels, almost triple what analysts had forecast, while exports dropped.

WTI fell 2.34 percent to $70.24 per barrel and Brent was last at $80.28, down 1.39 percent on the day.

The euro fell 0.39 percent to $1.1528 and Sterling was last trading at $1.314, down 0.33 percent on the day.

The Japanese yen weakened 0.03 percent versus the greenback at 112.31 per dollar. The dollar index rose 0.37 percent.

Minutes of the last Fed meeting, due Wednesday, should feed expectations of further tightening.

The US Treasury yields continued to trade range-bound after a massive run-up last week.

Benchmark 10-year notes last fell 4/32 in price to yield 3.1709 percent, from 3.156 percent late on Tuesday.

US

US stocks slipped in a choppy session on Wednesday, struggling to sustain a rally from the previous session, as IBM snapped a run of strong bluechips earnings and disappointing housing data dragged down Home Depot and homebuilders.

Helping temper losses was a rise in Netflix on strong subscriber numbers and a 1.33 percent gain in financial stocks ahead of the release of the minutes of the Federal Reserve’s September policy meeting at 2:00 p.m. ET (1800 GMT).

Investors have been fretting over the impact of tariffs, rising interest rates and wages on corporate profits and those concerns sparked a selloff last week.

The markets have lost steam after hitting record highs in the past month and a half, notwithstanding a one-off rally on Tuesday on strong earnings. Traders attribute the recent swings to normal volatility and some profit taking ahead of earnings.

IBM’s shares slid 6.4 percent after the company’s quarterly revenue fell more than expected.

Home Depot dropped 4.4 percent and Lowe’s Cos fell 3.5 percent after Credit Suisse downgraded the two home improvement retailers due, in part, to a dampening sentiment in the housing market - a weak spot in a robust economy.

Indeed, data on the day showed US homebuilding dropped more than expected in September, while rising borrowing costs knocked mortgage activity last week to its lowest since 2014. That sent the PHLX housing index sliding 1.90 percent.

At 12:49 pm EDT the Dow Jones Industrial Average was down 63.98 points, or 0.25 percent, at 25,734.44, the S&P 500 was down 2.53 points, or 0.09 percent, at 2,807.39 and the Nasdaq Composite was down 21.95 points, or 0.29 percent, at 7,623.54.

Among the brighter spots was Netflix, which rose 3.2 percent, though it had pared some early gains, after reporting blowout subscriber addition numbers. United Airlines shares climbed 5.7 percent after a solid third-quarter profit and again raising it 2018 outlook. That also lifted other airline stocks.

Declining issues outnumbered advancers for a 1.75-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.59-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 11 new lows, while the Nasdaq recorded nine new highs and 62 new lows.

Europe

US stocks followed European stocks down Wednesday on stubborn worries over global trade and high oil prices, with London the lone major riser after the EU offered to extend Britain’s Brexit transition period.

That sliver of light, and lower British inflation, helped the FTSE 100 index to creep around 0.2 percent higher mid-afternoon but London was struggling to hold the line after the Dow sank 0.4 percent shortly after the opening bell in New York, as tech, mining and insustrial stocks led fallers.

Frankfurt and Paris stocks lost similar ground, despite earlier gains in Asia.

Although an indication by diplomats that the European Union was willing to add a year to the post-Brexit transition helped London, Barclays chief European economist Antonio Garcia Pascual told AFP that two key factors were casting a shadow over the wider outlook: the potential prospect of $100 oil and the festering global trade war.

■ Key figures around 1345 GMT New York - Dow Jones: DOWN 0.5 percent at 25,632.58

London - FTSE 100: UP 0.2 percent at 7,077.58 points

Frankfurt - DAX 30: DOWN 0.5 percent at 11,720.70

Paris - CAC 40: DOWN 0.4 percent at 5,151.54

EURO STOXX 50: DOWN 0.1 percent at 3,256.05

Euro/dollar: DOWN at $1.1537 from $1.1574

Pound/dollar: DOWN at $1.3121 from $1.3181

Asia

Asian markets staged a muchneeded rally Wednesday as investors tracked Wall Street’s best performance in more than six months thanks to a healthy round of earnings reports.

Bargain-buyers took advantage of the strong readings from some of the world’s top firms to step back into the mix, with a dip in US Treasury yields and Washington’s announcement of trade talks with Japan, the EU and Britain helping sentiment.

And the gains filtered through to Asia, where Tokyo ended 1.3 percent higher thanks to a pick-up in the dollar against the yen, while Shanghai gained 0.6 percent.

Sydney, Seoul, Singapore, Wellington and Manila each put on more than one percent.

Hong Kong was closed for a public holiday.

On currency markets the dollar was down against most high-yield and emerging market economies as traders came out of their shells after recent selling.

■ Key figures around 0720 GMT Tokyo - Nikkei 225: UP 1.3 percent at 22,841.12 (close)

Shanghai - Composite: UP 0.6 percent at 2,561.61 (close)

Hong Kong - Hang Seng: Closed for a public holiday

Dollar/yen: UP at 112.30 from 112.26 yen

Oil

Oil prices fell on Wednesday after three days of gains as markets awaited key US inventory data expected to show a build in US crude stockpiles.

Brent crude was down 65 cents at $80.76 a barrel by 1325 GMT, after gaining $1.15 over the previous three sessions. The benchmark, which hit a two-week low last week as equity markets dropped, is trading around $5 below a four-year high of $86.74 reached on Oct 3. US light crude oil was 80 cents lower at $71.12.

Official oil inventory data from the US Energy Department’s Energy Information Administration was due to be published at 1430 GMT on Wednesday.

A Reuters survey of eight analysts estimated crude stocks rose by about 2.2 million barrels last week.

On Tuesday, the American Petroleum Institute reported that US crude inventories fell by 2.1 million barrels in the week to Oct 12 to 408.5 million, surprising the market.

Also underpinning sentiment was the scandal over the disappearance of prominent Saudi critic and journalist Jamal Khashoggi, who disappeared two weeks ago after entering the Saudi consulate in Istanbul.

US President Donald Trump gave Saudi Arabia the benefit of the doubt in the case even as US lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.

Saudi Arabia has said it will conduct an investigation into the disappearance, US Secretary of State Mike Pompeo said before departing the kingdom for Turkey.

Investors are concerned that Saudi Arabia could use oil supply to retaliate against its critics.

Gold

Gold rose on Wednesday, rebounding from a key support level with technical momentum proving more influential than a stronger dollar and rallying stock markets.

Spot gold was up 0.1 percent at $1,225.21 per ounce at 1217 GMT.

US gold futures were down 0.2 percent at $1,228.70 per ounce.

“Gold is moving technically and is giving a very good signal after it rebounded from $1,220 levels,” ActivTrades chief analyst Carlo Alberto De Casa said.

“We are now approaching another key resistance area around $1,230 and a break above the $1,230-$1,235 will confirm an appropriate inversion for gold and it would no longer be a rebound.”

The dollar firmed and global stocks gained as a rally on Wall Street boosted risk appetite.

Gold prices have moved above the 55-day moving average and a 6-month downtrend and dips lower will find initial support at $1,214, Commerzbank analysts wrote in a note.

Bullion was also testing resistance at the 100-day moving average of about $1,226, and a convincing break above that is seen as a bullish sign for investors who follow technical signals.