Stock Rally Fizzles in Europe and Asia -- 2nd Update
August 23 2017 - 7:41AM
Dow Jones News
By Riva Gold and Ese Erheriene
-- Dow poised to edge lower after best day since April
-- Mexican peso under pressure after President Trump's comments
-- WPP pulls down media shares in Europe
A rally in global stocks stalled Wednesday after the Dow Jones
Industrial Average's biggest daily advance since April.
Some analysts attributed the caution to comments from U.S.
President Donald Trump on Tuesday threatening to shut down the
government to secure funding for a wall on the southwest border as
well as warnings on trade policy.
Futures suggested the Dow would open 43 points lower after Asian
shares reversed early gains to end little changed. The Stoxx Europe
600 edged down 0.3% midday, following its best session in over a
week.
"It seems inconceivable that the debt ceiling won't be moved as
it has been umpteen times, but the nearer the deadline comes it
will make people nervous," said Russ Mould, investment director at
AJ Bell.
The Mexican peso, among the year's best-performing currencies,
dropped 0.8% against the dollar after the comments on trade and a
border wall, while market havens including gold and the Japanese
yen drew modest support.
Still, many investors noted that recent jitters have come in
thin summer trading and U.S. stocks remain close to record highs.
The Dow added nearly 200 points on Tuesday as shares rebounded from
a recent bout of risk aversion.
"With valuations elevated here, the market is going to be more
vulnerable to short-term negative news and negative shocks," said
Katie Nixon, chief investment officer at Northern Trust Wealth
Management.
"But unless something really impacts the economy, it's unlikely
that the market impact will be long-lasting," she said, given the
current state of growth and corporate earnings.
In U.S. premarket trading, shares of Lowe's fell 5%, leading
declines in the S&P 500, after its second-quarter revenue
missed expectations.
In Europe, the media sector led declines as shares of WPP PLC,
the world's largest advertising company, fell 12% after it lowered
its forecast for the full year, reflecting a wider slowdown in
industries such as consumer goods and retail.
Analysts also pointed to nervousness ahead of a central banking
conclave in Jackson Hole, Wyo., beginning Thursday, where investors
are eyeing any clues about monetary policy in the U.S. and
eurozone.
"The most interesting questions come from the ECB right now
given the economies there have generally done better than
expected," said Mr. Mould.
The euro was up 0.2% at $1.1784 on Wednesday after purchasing
managers' surveys showed the eurozone economy maintained its solid
growth momentum in August.
Earlier, Japan's Nikkei Stock Average rose as much as 0.9% from
a four-month closing low but pared gains to 0.3% as the yen
strengthened against the dollar.
Australia's stock benchmark shed early gains as losses deepened
among shares of utilities companies. The S&P/ASX 200 was off
0.2%.
The Shanghai Composite Index was down 0.1%, ending a four-day
rally, with steel and precious-metals stocks the biggest decliners
amid a 5% pullback in iron-ore and steel-rebar futures. The
country's steel association late Tuesday said it saw limited room
for further price gains after a recent rally.
Trading in Hong Kong was halted as Typhoon Hato passed by the
city.
Ese Erheriene, Nick Kostov and
Yifan Xie
contributed to this article.
Write to Riva Gold at riva.gold@wsj.com and Ese Erheriene at
ese.erheriene@wsj.com
(END) Dow Jones Newswires
August 23, 2017 07:26 ET (11:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.