Stocks Fall as Dollar Remains Under Pressure
July 24 2017 - 10:07AM
Dow Jones News
By Mike Bird and Kenan Machado
U.S. stocks slipped Monday as the weakness of the U.S. dollar
continued to affect global markets.
The Dow Jones Industrial Average declined 14 points, or less
than 0.1%, to 21566 shortly after the opening bell. The S&P 500
dropped less than 0.1%, and the Nasdaq Composite added less than
0.1%.
The Stoxx Europe 600 index fell 0.2%, weighed down by a 0.9%
fall in Britain's FTSE 100 and a 0.3% drop in Germany's DAX.
Fresh economic data for the eurozone on Monday suggested the
economy grew slightly more slowly than analysts had expected during
July. The IHS Markit flash purchasing managers index, a key
business survey, came in at 55.8. That is lower than the 56.2
analysts had expected, and a six-month low for the index. Any
figure above 50 indicates an economy is growing.
Shares of major European auto makers were among the hardest hit
on Monday, after the European Commission's confirmation that it is
assessing accusations of coordination efforts by rival companies to
manipulate diesel engines to reduce emissions.
Shares in Volkswagen, Daimler and BMW fell by 2.7%, 3.6% and
2.9%, respectively.
In foreign-exchange markets, the euro touched its highest
intraday level since January 2015 during the early Asian trading
session Monday, above $1.168. The dollar fell 0.3% to 110.799
against the Japanese yen.
On Friday, the WSJ Dollar Index reached its lowest close since
Sept. 30, down 6.9% since the beginning of the year. The index fell
an added 0.1% on Monday.
Concern about policy direction from the White House and Capitol
Hill since the failure to repeal the Affordable Care Act and
investigations into contacts with Russians before November's
election have helped fuel dollar selling.
Sentiment on the dollar will stay negative until there is a
string of upbeat U.S. economic data along with a hawkish Federal
Reserve and a dovish European Central Bank, said Kay Van-Petersen,
a macro strategist at Saxo Bank in Singapore. The Fed is scheduled
to meet this week.
A stronger euro has knock-on effects for the European economy
and can weigh on earnings expectations for export-oriented
firms.
"If the euro remains at or above current levels, it is likely
increasingly to have a bearing on the euro area economic outlook,
weighing somewhat on GDP growth via net trade," said Chris
Scicluna, head of economic research at Daiwa Capital Markets
Europe.
Oil prices edged up Monday after a decline on Friday as the
Organization of the Petroleum Exporting Countries continued to
grapple with the growing challenges to removing what it sees as a
global oversupply of oil from the market.
Saudi Arabian oil minister Khalid al-Falih said the country
would limit its oil exports to 6.6 million barrels a day, from
around 7.46 million barrels a day in 2016 and adding that he wanted
other countries to follow suit.
Despite a deal struck last year to take out almost 1.8 million
barrels of crude oil from the global market, prices remain
stubbornly low. West Texas Intermediate crude oil for delivery in
September ticked 0.9% higher to $46.18 a barrel Monday.
The Nikkei closed 0.6% lower on Monday. Among the biggest stock
decliners in Japan were export-reliant companies, as is often the
case when the yen strengthens, since that eats into such firms'
earnings.
Beyond Japan, most indexes moved little from Friday's closing
levels. Hong Kong's Hang Seng Index, however, rose 0.5% after its
nine-session winning streak ended Friday.
Write to Mike Bird at Mike.Bird@wsj.com and Kenan Machado at
kenan.machado@wsj.com
(END) Dow Jones Newswires
July 24, 2017 09:52 ET (13:52 GMT)
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