Global Stocks Decline With Oil Prices
May 26 2017 - 9:23AM
Dow Jones News
By Riva Gold
U.S. stocks were poised to edge back from record highs Friday
after losses in energy companies dragged down bourses in Europe and
Asia.
Futures pointed to a 0.1% opening decline for the S&P 500 on
the final trading day before a long weekend, while the Stoxx Europe
600 fell 0.4%, led lower by the oil and gas sector.
Brent crude oil shed 0.8% to $51.07 a barrel, on track to end
the week 5% lower. Oil prices accelerated declines after European
and Asian markets closed Thursday amid disappointment that the
Organization of the Petroleum Exporting Countries didn't take more
aggressive measures to cut production at a meeting in Vienna.
Although OPEC members 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.
Energy companies account for roughly 6% of the S&P 500 and
the Stoxx Europe 600, according to FactSet.
Futures held steady after the U.S. Commerce Department said
economic growth in early 2017 was stronger than initially thought.
Gross domestic product expanded at an inflation- and seasonally
adjusted annual rate of 1.2% in the first quarter, up from last
month's estimated 0.7%. Economists surveyed by The Wall Street
Journal had expected a more modest upward revision to 0.8%
growth.
Major U.S. indexes remained on track to end the week over 1%
higher. On Thursday the S&P 500 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
Federal Reserve 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 WSJ Dollar Index edged down 0.1%, deepening
this month's losses. The dollar fell 0.7% against the yen, which
tends to benefit in times of market stress.
The British pound fell 0.8% to $1.2845 in a move analysts
attributed to a poll showing a narrowing lead for the Conservative
Party in June elections. Jordan Rochester, currency strategist at
Nomura, said the pound is likely to face pressure if polling
continues to indicate a tighter race.
"For the market the worst outcome is if we have further
uncertainty with the chances of a hung parliament," he said.
London's export-heavy FTSE 100 index rose 0.1% Friday as the
pound weakened, on track for a record high.
Earlier, Australian and Japanese stocks lagged behind other
Agdpsian 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. Both bourses ended
the week with gains.
South Korea's Kospi Composite Index and India's Sensex hit
record highs.
Lucy Craymer contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
May 26, 2017 09:08 ET (13:08 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Aug 2024 to Sep 2024
FTSE 100
Index Chart
From Sep 2023 to Sep 2024