Global Stocks Fall After Oil Slides--2nd Update
May 26 2017 - 5:46AM
Dow Jones News
By Riva Gold and Lucy Craymer
Stocks in Europe and Asia moved lower Friday despite a record
finish on Wall Street as recent declines in oil prices pressured
shares of energy companies.
The Stoxx Europe 600 was down 0.5% in morning trading, led lower
by a fall in the oil and gas sector. Brent crude shed $2.50 on
Thursday, accelerating declines after European and Asian markets
closed amid disappointment that OPEC didn't take more aggressive
measures to cut production at a meeting in Vienna.
Although the Organization of the Petroleum Exporting Countries
agreed to extend production cuts through March 2018, "the market
had been speculating in deeper cuts and a longer commitment," said
Martin Enlund, analyst at Nordea.
Brent crude oil was up 0.2% at $51.57 a barrel midmorning
Friday, but remained on track to end the week 3.8% lower. Energy
companies account for roughly 6% of the S&P 500 and the Stoxx
Europe 600, according to FactSet.
Bank shares also fell across Europe as government bond yields
declined, with shares of Banco Santander off 1.7%, Deutsche Bank
off 2.3% and Lloyds Banking Group off 1.6%.
Futures pointed to a 0.1% opening decline for the S&P 500,
which on Thursday notched its 19th record closing high of the year,
surpassing the 18 records reached in 2016.
The S&P 500, Dow Jones Industrial Average and Nasdaq
Composite have risen for six straight sessions, supported by
stronger-than-expected first-quarter earnings, expectations for the
Fed to move only gradually and continued signs of a steady
economy.
"Better growth and inflation is translating into better
revenues: this kind of environment is good for stocks and bad for
bonds," said Jeff Knight, global head of investment solutions at
Columbia Threadneedle Investments, which manages $467 billion in
assets.
While the market is looking expensive and there may be better
opportunities overseas, low volatility and high investor confidence
suggest there might be a bit further for the market to climb, he
said. "We think we're heading toward a period of time when it might
be wise to de-risk, but we're not there yet."
In currencies, the British pound fell 0.5% against the dollar to
$1.2879. Jordan Rochester, currency strategist at Nomura, said the
move came as a poll showed a narrowing lead for the Conservative
Party in June elections.
The pound is likely to continue to be under pressure if polling
continues to indicate it's a tighter race, he said. "For the market
the worst outcome is if we have further uncertainty with the
chances of a hung parliament."
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, edged down 0.2%.
Earlier, Australian and Japanese stocks lagged behind other
Asian equities on Friday, amid pressure from oil's recent pullback
and losses in iron-ore and steel prices.
Australia's S&P/ASX 200 shed 0.7% amid broad weakness in
commodities-focused companies, while Japan's Nikkei was off 0.6% as
a stronger yen also weighed on Japanese stocks.
The dollar was last down 0.7% against the yen, as data showed
Japan's core consumer prices rose 0.3% from a year earlier.
South Korea's Kospi Composite Index climbed 0.5% to a new record
as index heavyweight Samsung advanced, while India's Sensex rose
0.9% to a record high.
Write to Riva Gold at riva.gold@wsj.com and Lucy Craymer at
Lucy.Craymer@wsj.com
(END) Dow Jones Newswires
May 26, 2017 05:31 ET (09:31 GMT)
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