US stocks pause after five-day rally as investors await results

European shares gain but caution persists

NEW YORK, Jan 12, (RTRS): Wall Street ended little changed on Friday, taking a breather following a five-day winning streak, while the dollar rebounded against most currencies from earlier losses tied to expectations the US central bank is in no hurry to raise interest rates.

Earlier weakness in stocks and data showing a decline in US consumer prices in December stoked investor appetite for Treasuries, pushing their yields lower.

Stocks have rallied this week, helped by promises of patience from the Federal Reserve, the ECB mulling more cheap money, and progress in trade talks between Washington and Beijing.

US

Earlier Friday, US stocks retreated as investors booked profits and reset positions ahead of the earnings season.

The initial pause came in the wake of a strong start to 2019, which lifted the S&P 500 by more than 10 percent from a 20-month low it touched around Christmas.

With big US banks kicking off the fourth-quarter reporting season next week, investors will comb through earnings reports and projections for signs of a slowdown in economic growth.

The Dow Jones Industrial Average fell 5.97 points, or 0.02 percent, to 23,995.95, the S&P 500 lost 0.38 point, or 0.01 percent, to 2,596.26 and the Nasdaq Composite dropped 14.59 points, or 0.21 percent, to 6,971.48.

For the week, the Dow rose 2.4 percent, the S&P 500 added 2.54 percent and the Nasdaq gained 3.45 percent.

The pan-European STOXX 600 benchmark was up 0.09 percent, bringing its weekly gain to 1.7 percent.

MSCI’s all-country index, was flat at 473.26. It posted a weekly increase to 2.9 percent, which was its strongest such rise in six weeks.

Treasury yields fell on safe-haven buying spurred by stock losses and as data showed U.S. consumer prices fell for the first time in nine months in December.

Europe

European shares closed higher on Friday after hitting one-month highs as investor appetite for assets considered risky remained firm, despite caution over trade and ahead of earnings season.

The pan-European STOXX 600 ended 0.1 percent higher on its fourth straight day in the black -- its longest winning streak since November.

But Frankfurt, Paris and London all ended in negative territory as enthusiasm over China’s trade talks with the United States waned without hard evidence about what was agreed.

dropped 6.4 percent, the biggest faller on the CAC 40, while Continental and

Volkswagen were among the biggest DAX decliners.

Still in the first full trading week of 2019, the STOXX 600 gained 1.7 percent as investors regained their appetite for risk boosted by dovish comments from Federal Reserve chairman Jerome Powell.

Equity funds drew inflows of $6.2 billion, the biggest in 11 weeks, BAML said.

The FTSE 100 erased earlier gains as sterling bounced amid growing expectations that the government may delay its departure from the European Union beyond March 29.

Focus remained on Prime Minister Theresa May’s efforts to get her Brexit deal through parliament, with a crucial vote due on Tuesday. A drastic aboutturn in crude prices also weighed on heavyweight oil stocks.

In the healthcare sector, downgrades by Jefferies hit UDG Healthcare and Orion Oyj which were the worst individual performers with falls of 7.7 percent 7.4 percent respectively.

French utilities took a hit after Societe Generale downgraded ratings on Suez and Veolia Environnement , citing doubts about the global growth outlook.

The stocks were down 2.8 percent and 2.6 percent respectively.

UK

British blue-chip shares retreated on Friday, singed by a sterling rally on a newspaper report of cabinet ministers saying that Britain would have to delay its European Union exit.

The report in the Evening Standard pushed sterling up against the dollar and

euro, dragging the exporter-heavy FTSE 100 off earlier highs and down 0.4 percent. But the currency fell back after a spokeswoman for British Prime Minister Theresa May ruled out any delay.

Companies that earn mainly US dollars are hit by a stronger pound and were the among the biggest drags on the index. AstraZeneca fell 3.6 percent, while HSBC and GlaxoSmithKline also fell.

But weakness in oil majors BP and Shell on lower crude prices made the sector the biggest drag on the FTSE 100.

Mid-caps, which make half of their income at home, rose 0.6 percent to their highest in more than a month.

British homebuilders sensitive to Brexit news, extended early gains to trade up 2.1 percent as the sector index registered its biggest weekly gain in nearly three years, helped by Bank of America Merrill Lynch upgrading the UK house building sector to neutral.

Taylor Wimpey jumped 4.8 percent to top the FTSE 100 leader board, with Persimmon and Barratt Developments up 4.4 and 2.9 percent respectively.

Airline Flybe plummeted 77.1 percent to a record low of 3.8 pence after a heavily discounted 1 pence-per-share buyout offer from a consortium of Virgin Atlantic, Stobart and Cyrus.

Stobart jumped 7.2 percent after the news to top the mid-cap winners.

Retailers continued to upset the markets, with AIM-listed fast-fashion retailer Quiz tanking 32.5 percent to a record low after a revenue warning following disappointing Christmas sales.

Debenhams plunged 18.8 percent in high-volume trading. Investors had forced the department store group’s CEO

off the board and the chairman out of the company on Thursday after another plunge in sales.

UDG Healthcare slumped 7.7 percent to be the biggest mid-cap faller after Jefferies downgraded the stock and said the healthcare services provider’s preliminary expectation for the year “does not sound attractive”.

Asia

Shares in Hong Kong ended higher on Friday on signs of progress in SinoUS trade negotiations and as US Federal Reserve Chairman Jerome Powell reiterated that the Fed would be patient about interest rate hikes. At the close of trade, the Hang Seng index was 0.55 percent higher at 26,667.27 points. The Hang Seng China Enterprises index rose 0.58 percent to 10,454.95. The sub-index of the Hang Seng tracking energy shares rose 0.7 percent, while the IT sector rose 0.9 percent, the financial sector ended 0.55 percent higher and the property sector rose 1.27 percent. The top gainer on the Hang Seng was AAC Technologies Holdings Inc, which gained 5.11 percent, while the biggest loser was Sino Biopharmaceutical Ltd, which fell 3.88 percent. China’s main Shanghai Composite index closed up 0.74 percent at 2,553.83 points, while the blue-chip CSI300 index ended up 0.72 percent. Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.32 percent, while Japan’s Nikkei index closed up 0.97 percent. The top gainers among H-shares were Air China Ltd up 8.46 percent, followed by China Shenhua Energy Co Ltd , gaining 3.23 percent, and Postal Savings Bank of China Co Ltd, up by 3.14 percent.