Global Stocks Edge Higher Ahead of U.S. Markets Open
April 26 2018 - 7:30AM
Dow Jones News
By Mike Bird and Ese Erheriene
European stocks and U.S. equity futures ticked higher Thursday
after a bumper day for first-quarter earnings reports.
The Stoxx Europe 600 was up 0.4% in ahead of the U.S. open,
while S&P 500 futures were up 0.2%. That followed a selloff in
stocks in Hong Kong and China.
First-quarter U.S. earnings have been stronger than expected,
but the selloff in bond markets is preventing stocks from rising
much further in price, according to some analysts.
U.S. 10-year Treasury yields were at 3% shortly before U.S.
markets opened. Earlier this week the yield rose above 3% for the
first time since early 2014. Germany's 10-year bund yields dropped
slightly, from 0.63% to 0.61%.
"Of the 155 S&P 500 companies that have reported thus far,
81% have beaten expectations," said Fahad Kamal, senior markets
strategist Kleinwort Hambros. "Still, rising bond yields keep
animal spirits at bay."
Investors were looking ahead to the European Central Bank
meeting later Thursday for guidance on the path for monetary
policy, but most expected no concrete moves on interest rates or
the eurozone's bond-buying program.
"The [ECB] governing council may want to wait for more economic
data and the June economic projections before taking a clearer
stance on the direction of monetary policy going forward," said
analysts at ABN Amro in a research note Thursday morning.
In Europe, major banks rebounded from initial declines after
releasing earnings reports.
Deutsche Bank posted a 79% drop in net income during the first
quarter. Shares were up 0.1% in morning European trading,
rebounding from an initial drop. Likewise, Barclays PLC initially
fell 2% on a net loss of GBP764 million ($1.06 billion) in the
first quarter, before rising by 11%.
U.S. earnings announcements after the market closed Wednesday
were dominated by Facebook, which reported a 63% year-on-year
increase in net income during the first quarter, sending the stock
7% higher in after-hours trading.
In currency markets, the WSJ Dollar index was down 0.1%, but
remained close to its highest level since early January. The euro
was up 0.2% at $1.218.
Stocks in Asia were mixed, with Japan's Nikkei 225 closing up
0.47%, while indexes in China sold off.
China's Shenzhen A-Share Index ended the day down 2.2%, and Hong
Kong's Hang Seng fell 1%.
Late Wednesday, China's State Council unveiled additional
tax-relief policies intended to support high-tech companies,
startups and small firms.
Ivan Ip, a market strategist at UOB Kay Hian, said Thursday's
market movement showed investors weren't interpreting the
tax-relief policies as good news, and were instead concerned that
U.S.-China trade frictions might spread further into the tech
sector.
Chinese markets are poised to stay weak and volatile in the
short-term "without major policies to boost the economy in China,"
said Castor Pang, head of research at Core Pacific-Yamaichi
International.
Tech continued to underperform in Hong Kong. The sector has been
hit by trade concerns fueled by the U.S. ban on sales of American
products to major Chinese telecom-equipment firm ZTE.
Smartphone-component maker AAC Technologies is on pace for a
record 12th straight decline: It was recently down 3.5% to an
eight-month low. Lens maker Sunny Optical skidded 9.3%, returning
to levels last seen during early February's global stock slide.
Korea's Kospi was up 1.1% as heavyweight Samsung Electronics
rebounded. It rose 3.5% following the release of its complete
first-quarter results, reporting its fourth consecutive quarter of
record operating profits.
Additionally, data showed South Korea's first-quarter GDP rose
3.5% from a year earlier.
In oil markets, prices continued to trend higher. Brent crude
rose by another 0.8% to $74.60, close to its highest levels since
late 2014.
James Glynn contributed to this article.
Write to Mike Bird at Mike.Bird@wsj.com and Ese Erheriene at
ese.erheriene@wsj.com
(END) Dow Jones Newswires
April 26, 2018 07:15 ET (11:15 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.