Global Stocks Lower as U.S. Dollar Weakens -- 2nd Update
July 18 2017 - 07:40AM
Dow Jones News
By Riva Gold and Kevin Kingsbury
-- Dollar falls to postelection low amid health care bill doubts
-- Stocks in Europe and Asia under pressure
-- Netflix, Goldman Sachs, Bank of America earnings in focus
Stocks in Europe and Asia were under pressure Tuesday while the
dollar fell to postelection lows after Senate Republicans gave up
their efforts to dismantle and replace much of the Affordable Care
Act.
The Stoxx Europe 600 was down 0.7% midday, following modest
declines across Asian markets, as a weaker greenback hindered
shares of exporters in those regions.
Futures pointed to a flat opening for the S&P 500 amid of a
flurry of corporate-earnings reports Tuesday, including results
from Goldman Sachs Group Inc. and Bank of America Corp. before the
opening bell.
Shares of Bank of America Bank of America were up 0.1% in
premarket trading after the lender beat expectations for quarterly
profit. Bank shares fell across the board Friday despite posting
better-than-expected earnings, and investors will closely watch for
any insights into the outlook for major lenders in the second half
of the year.
Shares of Netflix Inc. were up over 10% in premarket trading
meanwhile after the company blew through its subscriber-growth
estimate in the second quarter, kicking off reports from technology
sector, this year's best performer.
In Europe, shares in Swedish telecoms-equipment maker Ericsson
were down 12% after the company warned that earnings could weaken
further after swinging to a net loss in the second quarter.
Shares of Anglo-Australian mining house Rio Tinto fell 1.7%
after it scaled back its export guidance for iron-ore production.
Iron ore was the biggest driver of Rio Tinto's earnings last
year.
But for the most part, currency markets remained in focus. The
Wall Street Journal Dollar Index, which hit its lowest level since
October on Friday, was recently down 0.5%, while the euro topped
$1.15 for the first time since May 2016 and was last up 0.7% at
$1.1561.
Investors said the recent struggle to pass a health-care bill
added to doubts about the likely implementation of the other
policies backed by the Trump administration, weighing on the
dollar.
If Republicans can't pass a replacement health-care bill, "there
is little else [they] could do" with passing other legislation,
said Toshihiko Sakai, senior manager of forex and
financial-products trading at Mitsubishi UFJ Trust and Banking.
Fiscal policy is now going to be in the spotlight, said Luke
Tilley, chief economist at Wilmington Trust. "Once the health care
debate and legislation is done, I expect a sudden shift in focus to
prospective tax reform, which will have a larger impact on sector
performance and dispersion," said Mr. Tilley.
The British pound initially climbed against the dollar Tuesday,
pressuring the export-heavy FTSE 100 index, but was last down 0.2%
at $1.3026 after data showed an unexpected fall in U.K. consumer
inflation in June.
Earlier, consumer cyclicals, or companies whose output of
consumer goods tend to be tied to economic growth, led losses in
Asia-Pacific trading Tuesday, as weakness in the dollar weighed
hurt stocks in Australia and Japan.
The Australian dollar jumped 1.8% to its highest level against
the greenback in two years, getting an additional boost from the
release of minutes from this month's central-bank meeting. During
the gathering, Australian officials discussed the effects of a
neutral interest-rate policy. Australia's S&P/ASX 200 fell 1.2%
amid declines in big banks as well as health-care shares.
Weakness in the dollar--both Tuesday and from Friday after weak
U.S. economic data--filtered through Japanese stocks after Monday's
holiday. The Nikkei was down 0.6% Tuesday, while the dollar was
last down 0.4% against the yen at Yen112.1200.
Chinese stocks recovered slightly after Monday's slump. The
Shenzhen Composite was up 0.5%, while the Shanghai Composite added
0.4%.
Elsewhere in markets, gold edged up 0.3% to $1,237 an ounce.
Yields on 10-year Treasurys fell to 2.299% from 2.309% on Monday.
around their lowest this month. Yields move inversely to
prices.
Kenan Machado
, Kosaku Narioka and Robb M. Stewart contributed to this
article.
Write to Riva Gold at riva.gold@wsj.com and Kevin Kingsbury at
kevin.kingsbury@wsj.com
(END) Dow Jones Newswires
July 18, 2017 07:25 ET (11:25 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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