European investors cautious ahead of ECB, Dow slips
LONDON: Eurozone stocks held steady yesterday as investors waited for policy signals from the ECB, while losses in the mining sector and better-than-expected domestic growth figures held down London’s FTSE 100.
The Dow retreated modestly from a record early yesterday following a batch of mixed earnings reports and data showing a rise in durable goods orders for September. The earnings deluge continued apace with Boeing lifting its fullyear forecast, but announcing $329 million in additional costs on the KC-46 military refueling tanker contract. Shares fell 0.9 percent. Fellow Dow member Visa rose 1.6 percent after reporting that fourth-quarter net income rose 10.8 percent to $2.1 billion.
About 20 minutes into trading, the Dow Jones Industrial Average stood at 23,433.95, down less than 0.1 percent. The blue-chip index finished at a record on Tuesday.
The broad-based S&P 500 lost 0.2 percent to 2,564.94, while the tech-rich Nasdaq Composite Index shed 0.1 percent to 6,592.26. Strong aircraft and telecoms equipment sales boosted durable goods orders. Total orders rose by 2.2 percent compared to August, reaching $238.7 billion, nearly a full percentage point above a consensus forecast, according to the Commerce Department.
Chipotle Mexican Grill slumped 14.1 percent after reporting just a one percent increase in comparable restaurant sales in the third quarter, as it continues to struggle following a number of health safety woes.
Britain’s GDP grew 0.4 percent in the third quarter, slightly outperforming expectations. The pound, which has been under pressure over suggestions that a hike in interest rates may be delayed, spiked after the positive GDP results, rising against the dollar and the euro.
However the rise in the value of the pound put pressure on stocks, as many FTSE 100 firms have most of their earnings in dollars, and a rebound in the pound will crimp profits when converted into sterling. In afternoon trading the index had slid 0.4 percent. “Weakness in the mining sector has pushed the FTSE 100 into the red, and the spike in sterling due to the good UK GDP numbers accelerated the negative move,” said David Madden, market analyst at CMC Markets UK.
Losses in the mining sector were triggered in part by a sharp fall in copper prices overnight. Trading was tight in Europe ahead of the European Central Bank’s policy meeting today, at which it is expected to announce a big reduction in its bond-buying stimulus as the eurozone economy picks up. Frankfurt’s DAX 30 index dipped 0.05 percent while the CAC 40 in Paris added 0.1 percent. “According to some sources, the ECB could reduce the size of its monthly purchases program by half to 30 billion euros, the truth is nobody really knows what to expect,” said analyst Ipek Ozkardeskaya from LCG Insight. “Traders will likely lie in wait until they have more clarity on the ECB’s policy outlook.”
Nikkei record run ends
In Asia, a phenomenal run of 16 straight days of gains finally ended in Tokyo on Wednesday as a late bout of profittaking saw the Nikkei close in negative territory for the first time this month.
However, most other Asian markets rose following another record close on Wall Street on Tuesday, as a fresh round of strong corporate earnings reinforced confidence in the global economy. Hong Kong added 0.5 percent following two days of losses. Shanghai closed up 0.3 percent after China’s President Xi Jinping unveiled his top decision-making body. This contained no potential successor, raising speculation he intends to stay on past the end of his second five-year term as ruling party chief. —Agencies