Global Stocks Fall as U.S. Earnings Disappoint, Oil Slips -- 3rd Update
October 26 2016 - 8:21AM
Dow Jones News
By Mike Bird
European stocks were lower Wednesday, following Asian equity
markets downward after a string of disappointing earnings reports
from large U.S. companies, and a drop in oil prices.
The Stoxx Europe 600 index pulled back 0.8% in European midday
trading, led by a 1% drop in the U.K.'s FTSE 100 index and a 1%
decline in Germany's DAX.
In the U.S., S&P 500 futures were down 0.41% before the New
York open. Futures don't always reflect prices after the opening
bell.
West Texas Intermediate crude fell back below $50 a barrel, down
by 1.46% at $49.23. Brent crude prices fell by 1.69% to $49.95.
Energy companies led the fall in European stocks, with the oil and
gas sector of the Stoxx 600 down 1.61% following the drop in crude
prices.
Oil prices remain higher than they were at the end of September,
when oil-producing cartel the Organization of the Petroleum
Exporting Countries announced in Algiers a prospective deal to cut
output.
"The oil market generally has been characterized by the supply
side in recent years, and the Algiers meeting provided a bit of
rhetoric from OPEC saying they'd be more aware of prices," said
Nandini Ramakrishnan, global market strategist at J.P. Morgan Asset
Management. "Our longer-term view is that we should see a higher
oil price next year."
Consumer confidence data from Germany issued early Wednesday
showed slightly weaker sentiment than expected at 9.7, its lowest
reading since June and below the 10 that analysts had forecast.
"Despite a somewhat more downbeat outlook for personal finances,
consumers assessed that economic prospects had improved, with the
relevant indicator rising to the highest level in more than a
year," said Mantas Vanagas, economist at Daiwa Capital Markets
Europe.
Meanwhile, French consumer sentiment in October, recorded by
statistical agency INSEE, showed the joint-strongest confidence
level since 2007. The index rose to 98, but was still below 100,
the long-term average level since 1987.
Asian stocks closed broadly lower, with Hong Kong's Hang Seng
down 1%, and China's Shenzhen A-share index down 0.4%. Japanese
equities bucked the trend with the Nikkei 225 index closing up
slightly.
After falling by as much as 1.3% against the dollar intraday
Tuesday, sterling was mixed Wednesday around midday, up 0.18%
against the dollar at $1.219, but down 0.005% against the euro at
EUR1.117.
"With the terms and conditions of the U.K.'s future trade links
still unclear it is too early to rule out further downside risks in
sterling," said Geoffrey Yu, head of UBS Wealth Management's U.K.
investment office. Mr. Yu believes sterling could fall to as low as
$1.10 temporarily over the next year.
Bond yields in developed markets also picked up during the
European morning. U.K. 10-year gilt yields rose to 1.14%, from
1.11% on Tuesday. German 10-year yields rose to 0.57%, from around
0.22% on Tuesday.
Write to Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
October 26, 2016 08:06 ET (12:06 GMT)
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