Global Stocks Move Lower on Oil-Price Decline
16 July 2018 - 10:05PM
Dow Jones News
By Ben St. Clair
-- Oil prices fall on supply concerns
-- Global stocks decline
-- Trade takes back seat in U.S.
Global stocks edged downward Monday, with weak Chinese economic
data and falling oil prices kicking off a week heavy in corporate
results.
The Stoxx Europe 600 fell 0.2% in morning trading, with
oil-and-gas companies among decliners. Brent crude futures, the
global benchmark, fell 2.2% amid concerns that Russia would
increase output beyond what it agreed to last month. Shares in BP
fell 1.6% and shares in Royal Dutch Shell were down 1.1%.
Banks outperformed in Europe as shares in Deutsche Bank were up
7.6% after the bank reported preliminary second-quarter results
beating expectations.
In the U.S., Bank of America reported second-quarter earnings
that beat expectations before U.S. markets opening Monday. The
second largest U.S. bank by assets posted quarterly profits of $6.8
billion, up from $5.1 billion a year ago. BlackRock also reported
higher-than-expected earnings.
Futures markets pointed to small opening gains for the S&P
500 and Dow Jones Industrial Average, both of which finished the
week up on Friday. Asian markets were mixed.
U.S. stocks appeared to have largely shrugged off trade
concerns. The S&P 500 and Dow Jones Industrial Average have
gone up all but one day since the U.S. and China imposed tariffs on
$34 billion of each other's goods starting on July 6. The S&P
500 is up 4.8% for the year.
"It is hard to pin something truly tangible to" recent stock
market gains since many explanations have been true for months,
said Simon Derrick chief currency strategist at BNY Mellon. "You
can try to create a narrative around it, but it hasn't always
worked out."
Investors appeared to be focused on strong U.S. economic data
and expectations of positive earnings growth as companies report in
the coming days.
But uncertainty has also driven markets, according to Mike Bell,
global markets strategist at J.P. Morgan Asset Management.
Even with an otherwise strong U.S. economy, "what makes sense
against this backdrop is to be slightly less overweight [in]
equities," Mr. Bell said.
Overall, outlook remains positive even with trade uncertainty,
Mr. Bell added.
Meanwhile, Asian stocks have reacted more to the trade disputes,
with major indexes down so far this year. Shanghai stocks have shed
nearly 15% since January, and economists estimate trade conflicts
could cut 0.2 to 0.5 percentage point off China's GDP in the coming
year.
On Monday, GDP data revealed a slowing Chinese economy in the
second quarter, weighed down by government initiatives to rein in
risky borrowing and lending. Growth edged down, in line with
expectations, to 6.7% from a year ago, compared with 6.8% in the
first quarter. The figures remain above the government's 6.5%
target, but key statistics pointed to a slowing economy.
Growth in total social financing in June, a catchall term for
lending by banks and other institutions, rose at its slowest pace
in at least 15 years, while fixed-asset investment growth was at a
two-decade low.
The Shanghai Composite Index was down 0.6% Monday, following its
largest one-week percentage gain since June 2016. Hong Kong's Hang
Seng was flat and South Korea's Kospi was down 0.4%. The Tokyo
market was closed for a public holiday.
The U.S. dollar inched down Monday, with the WSJ Dollar Index,
which measures the currency against a basket of 16 others, down
0.2%.
Elsewhere, yields on 10-year U.S. Treasurys rose to 2.832% after
closing the week at 2.831%. Yields rise as prices fall.
Chao Deng, Mike Bird, Akane Otani and Ben Eisen contributed to
this article.
(END) Dow Jones Newswires
July 16, 2018 07:50 ET (11:50 GMT)
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