By Josie Cox
European shares fell Tuesday, capping a nine-session rally, with
the attention of investors shifting away from Greece and toward the
quarterly corporate-earnings season.
By midafternoon the Stoxx Europe 600 was down 0.5%. In the U.S.,
the S&P 500 slipped in early trade, with traders citing weak
earnings reports from International Business Machines Corp. and
United Technologies Corp.
As of Monday's close, Europe's benchmark index had enjoyed its
longest winning streak since April 2014, largely fueled by Greece
reaching an agreement on debt with its international creditors that
helped it to avoid a costly exit from the eurozone.
But some strategists have said that in order for the
stock-market rally to continue, earnings reports have to meet or
beat analyst expectations this season.
One of the best performing companies on the Stoxx Europe 600
Tuesday was Akzo Nobel NV. Shares in the Dutch paint and chemicals
maker rose after the group reported that net profit jumped 61% in
the second quarter, as restructuring efforts continued to bear
fruit.
"Akzo has improved its competitive position and the company is
well on track to exceed its 2015 targets," Citigroup analysts
Andrew Benson and Thomas Wigglesworth wrote in a note.
Overall, they said, the company's results reflect the current
tough environment but all the success of Akzo's restructuring
program.
At the other end of the index, shares in Tele2 AB slumped more
than 4% before recovering slightly. The Swedish telecom operator
reported that second-quarter net profit dropped, as a result of
investment costs and expenses associated with an efficiency
program.
Shares in Swiss drug giant Novartis also declined after the
company reported second-quarter profit fell 32% from the same
period last year, as a result of a lofty U.S. dollar and a weak
result from its eye-care treatment business.
Elsewhere commodity markets remained in sharp focus.
Gold and silver prices continued to trade close to their lowest
level in five years on Tuesday, amid rising expectations that the
U.S. Federal Reserve will raise interest rates later this year.
Gold dipped below $1,100 an ounce in early hours in Asia
Tuesday. It was recently trading at $1,103.80 per troy ounce.
U.S. oil prices dipped below $50 a barrel on Monday for the
first time since April, on continued concerns that global crude-oil
supplies are overwhelming demand.
September Brent crude, the global benchmark, had recovered
slightly by midafternoon to trade 0.5% higher at $56.95 a barrel on
the ICE Futures exchange.
On the New York Mercantile Exchange, light, sweet crude futures
for delivery in August was also 0.5% higher at $50.70 per
barrel.
Goldman Sachs economists said in a note that they now see the
Nymex contract hitting $45 per barrel in the third quarter of this
year, before stabilizing around $60 in 2016. They also underscored
their negative outlook on equities with exposure to the energy
sector, saying that they will likely continue to suffer in the
coming months.
In currency markets, the euro was 0.4% higher against the U.S.
dollar at $1.087.
European government bond prices were slightly higher.
The yield on 10-year German government bonds was at 0.73%. The
yield on 10-year Spanish bonds was at 2% and on Italian at 1.96%.
Yields fall as bond prices rise.
Write to Josie Cox at josie.cox@wsj.com
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