Stocks Fall, Dollar Sinks as Politics Take a Toll: Markets Wrap


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U.S. stocks sank Friday and the euro climbed to its highest level against the dollar since January 2015 as investors assessed an investigation into U.S. President Donald Trump that may stall his economic agenda. European shares fell as the common currency’s rally weighed on carmakers and other exporters. Oil slumped after reports that OPEC supply increased this month.

All major U.S. equity gauges ended lower, with energy shares leading decliners in the S&P 500 Index. Industrials also struggled as General Electric Co. dropped 3 percent on the company’s warning that its earnings for the year will likely be at near the bottom of its projected range. The Bloomberg Dollar Spot Index hit a 14-month low.

Politics remained at the forefront in the U.S., with reports that special counsel Robert Mueller is expanding his investigation to include Trump’s business dealings and the president telling the New York Times that any digging into his finances would cross a red line. White House Press Secretary Sean Spicer resigned Friday as Trump named financier Anthony Scaramucci communications director.

The euro gathered momentum following Thursday’s comments by European Central Bank President Mario Draghi that policy makers in the fall will discuss unwinding quantitative easing. Rising hawkishness from the ECB has helped the euro rally from lows last seen near the start of the millennium, with investors expecting tapering to start in the new year and pricing in a 10 basis point rate hike by September 2018.

Read More: Dollar Bears Steal Spotlight From Draghi as Trump Probe Broadens

“Draghi tried to talk the euro down, even going so far as to suggest that ECB’s quantitative easing could be increased and prolonged,” said Yann Quelenn, a market strategist at Swissquote Bank SA. “But the currency markets were not buying Draghi’s line, and neither are we. Available bonds are too scarce, and turn to a taper is too clear to disguise.”

Read our Markets Live blog here.

Here are the main moves in markets:

Stocks

  • The S&P 500 closed down less than 0.1 percent at 2,472.52. The Nasdaq Composite Index also dropped less 0.1 percent, the Dow Jones Industrial Average declined 0.2 percent and the Russell 2000 Index slid 0.5 percent.
  • The Stoxx Europe 600 fell 1 percent, with automobile, construction and bank shares down. The gauge is heading for its first weekly drop in three.

Currencies

Bonds

  • The yield on 10-year Treasuries fell two basis point to 2.24 percent.
  • Benchmark yields in Germany and France dropped two basis points.

Commodities

  • West Texas Intermediate crude dropped 2.4 percent to 45.68 a barrel.
  • Copper advanced 0.8 percent to $6,004 a ton, leading a rally in industrial metals.
  • Gold rose 0.8 percent to $1,254.37 an ounce and was poised for its first back-to-back weekly advance since June 2.

    Read more: http://www.bloomberg.com/news/articles/2017-07-20/dollar-remains-weak-as-u-s-politics-steals-show-markets-wrap


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    Tech shares keep sinking amid concerns sector is slowing


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    Nasdaq falls in early trading after sinking 1.8% on Friday, with analysts expecting continued uncertainty

    Shares in technology companies the driver behind recent record stock market gains kept falling on Monday as investors worried the sector was running out of steam.

    On Friday, the tech-heavy Nasdaq Composite Index, home to Alphabet, Apple, Amazon, Facebook, Microsoft and others, fell 1.8% and the slide continued on Monday, with the index down another 0.52% as market analysts anticipated more wobbles ahead of a crucial meeting of the Federal Reserve this week.

    Technology stocks have done far better than the rest of the market this year and they were trading close to all-time highs before Fridays drop. The S&P 500 technology index shed 2.7% on Friday for one of its worst days of the year.

    The climb has made fortunes for investors, and for tech entrepreneurs. Amazon founder Jeff Bezos has seen his net worth soar by almost $20bn (16bn) in the past five months to $85.2bn. Bezoss fortune is closing in on that of Bill Gates, the co-founder of Microsoft, whose net worth is $89.3bn, according to the Bloomberg Billionaires Index. Bezos could become the worlds richest man if the tech stocks continue to grow.

    Nasdaq chart

    Jack Ablin, chief investment officer at BMO Private Bank, said it was too early to say whether the last two days of trading would develop into something worse for the tech sector but added that there were worrying signs.

    The tech sector has been the stock markets best performer, and some people may be taking profits or rotating their investments into different sectors, he said. But there is also some concern about what the Fed will do.

    Stock markets have been bolstered by the huge amounts of money the Fed and other central banks have poured into bond markets in an attempt to keep interest rates at record lows. Low rates have made stock investments more attractive but the Fed has signaled that rates in the US are now on the rise, albeit from a low base.

    The Fed meets on Tuesday and Wednesday this week and its chairwoman, Janet Yellen, is expected to announce another rate rise at her press conference when the meeting concludes. Everyone fully expects a rate rise this time, said Ablin. What matters is what the Fed says about the rest of the year. Given their gains, tech is probably going to be the most sensitive sector to be affected by that. We will know more after Wednesday.

    Strong quarterly earnings have helped technology stocks fill a void left by financial and industrial stocks after a post-election rally faded. The S&P 500 technology index has risen 18.5% this year and is on track to register its best yearly performance since 2014.

    The real heavy lifting, or 40% of the move, that we saw was really on the back of a handful of technology stocks, said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets. So when you have a trade that is so crowded, that unwind becomes as dramatic as the one we saw on Friday.

    Investors saw an opportunity to book profits on Friday after Apple shares plunged amid reports that the company is using slower modems in forthcoming iPhones, compared with those used in rival phones.

    Apple share price

    Shares of the worlds most valuable publicly listed company were off 2.46% at $145.32 on Monday.

    Mizuho Securities also cut its rating on Apples stock to neutral from buy on Monday, citing it has outperformed this year and enthusiasm over the upcoming product cycle is fully captured at current levels.

    Fergus Shaw, fund manager at Cerno Capital, told Reuters: This is the nature of the tech sector. Valuations do from time to time become very stretched and they come back and anyone who has paid a very high valuation might experience some short-term pain.

    Read more: https://www.theguardian.com/business/2017/jun/12/tech-industry-stock-market-nasdaq


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    U.S. Stocks Sink Most Since May, Treasuries Slide: Markets Wrap


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    U.S. equities fell the most in six weeks and a measure of market volatility spiked higher as investors grew uneasy amid a global cyberattack and a fresh setback to the Republican agenda in Washington. Treasuries plunged as Janet Yellen signaled the economy is robust enough to withstand higher interest rates.

    The Nasdaq 100 Index fell more than 1.7 percent to its lowest level since May 19, as investors continue to punish some of the year’s highest flyers and Alphabet Inc. got hit with a record antitrust fine in Europe. Selling accelerated as the Federal Reserve chair said some financial assets had become “somewhat rich” and Senate Republicans delayed a vote on health-care reform in a fresh hit to the Trump administration’s policy agenda, fueling speculation tax cuts and regulatory rollbacks may also take longer than anticipated.

    “Market participants may view health care legislation as stalling a move on taxes that could include a repatriation tax holiday,” said Jeffrey Kleintop, Charles Schwab Corp.’s chief global strategist.

    Yellen’s comments that the Fed remains on track to tighten even as economic data continues to fall short of estimates sent Treasury 10-year yields to the highest in two weeks. Financial shares advanced, but not enough to save the S&P 500 Index from its worst drop in six weeks. The CBOE Volatility Index jumped 12 percent. Yellen couldn’t boost the dollar though, as the greenback retreated to the lowest level in 10 months versus the euro after Mario Draghi said inflation in the region wouldn’t remain low.

    Some investors worry the Fed is taking too rosy a view as it sets the path for increasing borrowing costs, especially after weakness in data Monday added to concerns about the strength of growth. The International Monetary Fund sounded a similar alarm earlier Tuesday, cutting its growth forecast for the U.S. in part because of policy uncertainty. The latest cyberattack to disrupt global business didn’t disrupt financial markets in any noticeable way, but added to the cautious mood.

    “Yellen is expressing confidence that banking is stronger, economic growth is relatively firm and there’s not going to be a crisis in our lifetime,” said Dennis Debusschere, Evercore ISI’s head of portfolio strategy and quant. “It’s sending a signal that they can continue on rising rates, despite the weaker inflation we’ve seen. That’s where the concern is in the market.”

    Read our Markets Live blog here.

    Here are some important upcoming events:

    • China’s PMI might have declined in June after unexpectedly remaining unchanged in May, reflecting government offers to cut overcapacity and leverage. That reading is due Friday.
    • Also due this week: Japanese inflation, factory output, unemployment, household consumption and housing starts; rate decisions in Colombia, the Czech Republic and Armenia.

    These are the main moves in markets:

    Stocks

    • The S&P 500 lost 0.8 percent to 2,419.38 at 4 p.m. in New York. That’s the lowest since May 31.
    • The Nasdaq 100 dropped 1.8 percent, the most since a 2.4 percent rout on June 9. The index is at its lowest level since May 19. Alphabet Inc. dropped 2.5 percent after being hit with a record EU fine.
    • The Stoxx Europe 600 Index dropped 0.8 percent, as declines in travel and leisure shares overshadowed the rally in miners.

    Currencies

    • The euro surged 1.4 percent to $1.1336.
    • The Bloomberg Dollar Spot Index fell 0.5 percent after gaining 0.1 percent in the previous session.
    • The British pound added 0.6 percent to $1.2799. 

    Commodities

    • West Texas Intermediate crude rose 2 percent to settle at $44.24 a barrel, for a fourth day of gains that is the longest run in a month. Oil fell into a bear market last week.
    • Gold futures increased 0.3 percent to $1,250.40 an ounce. The precious metal sank almost 1 percent on Monday.

    Bonds

    • The yield on 10-year Treasuries rose six basis points to 2.20 percent, after dropping less than one basis point on Monday.
    • European government bonds dropped across the board, with the yield on benchmark French bonds climbing 14 basis points and that of Germany gaining 13 basis points.

    Asia

    • The Chinese yuan jumped both onshore and overseas amid speculation of central bank intervention.
    • Hong Kong’s Hang Seng index fell 0.1 percent and the Shanghai Composite Index advanced 0.2 percent. A string of small-cap Hong Kong stocks suddenly plunged during the day, with traders pointing to links between some of the companies and a brokerage that’s under regulatory investigation.
    • Japan’s Topix climbed 0.4 percent to the highest closing level since August 2015.

      Read more: http://www.bloomberg.com/news/articles/2017-06-26/small-gains-seen-for-asian-stocks-as-yen-weakens-markets-wrap