Breaking News
0

Asia stocks fall on likely smaller Fed rate cut, pricier oil

Stock MarketsJul 22, 2019 07:48AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The German share price index DAX graph at the stock exchange in Frankfurt

By Karin Strohecker

LONDON (Reuters) - European stocks lingered on Monday, hamstrung by dialled-down expectations for a larger U.S. rate cut this month, while escalating tensions in the Middle East boosted oil prices and rising fears for a no-deal Brexit haunted the pound.

MSCI's broad index of world stocks (MIWD00000PUS) slipped 0.1%, pulling further away from the near-year-and-a-half high reached earlier in June after falls in much of Asia. (MIAPJ0000PUS)

Europe's regional STOXX 600 index (STOXX) was treading water, Germany's DAX (GDAXI) and France's CAC (FCHI) rose 0.2% and Britain's FTSE (FTSE) jumped 0.4%.

Energy stocks booked the largest gains in Europe after crude oil prices jumped around $1 per barrel, on concern that Iran's seizure of a British tanker last week may lead to disruptions in the Middle East. [O/R]

Meanwhile, investors were shunning real estate stocks (SX86P) that would benefit from lower interest rates and defensive sectors such as utilities (SX6P) and telecoms (SXKP) ahead of a big week for earnings.

"Sentiment about company earnings potential appears to be mixed at best, with some evidence that we might be seeing a bit of a pickup in economic data, after a slow first half of the year," said Michael Hewson at CMC Markets.

"The pickup in U.S. economic data last week, as well as contradictory commentary from Fed officials, appears to be muddying the waters for investors about the possible reaction function of the U.S. Federal Reserve at the end of this month and whether we can expect to see a 25 basis point or 50 basis point rate cut."

Momentum looked better for Wall Street. U.S. futures (ESc1) (NQc1) pointed to a 0.3% to 0.5% higher open.

Global stocks rose towards the end of last week after dovish comments by New York Fed President John Williams (NYSE:WMB) boosted expectations the world's top central bank would lower rates by 50 basis points at its July 30-31 meeting.

They gave back those gains and Wall Street shares fell after the New York Fed walked back Williams' comments by saying his speech was not about upcoming policy action.

Hopes for a larger cut were curtailed even more after the Wall Street Journal reported the Fed was likely to cut rates by 25 bps this month, and may trim further in the future given global growth and trade uncertainties.

The dollar inched higher and U.S. Treasury yields held steady on the greater likelihood of a shallower rate cut. The dollar index (DXY) gained to 97.193 against a basket of six major currencies after rising 0.4% on Friday.

The euro (EUR=) was little changed at $1.1219 after shedding 0.5% on Friday. The dollar edged up 0.16% to 107.86 yen . The benchmark 10-year Treasury yield (US10YT=RR) lingered at 2.0429%. Still, the pressure on equity markets limited the rise in safe-haven Treasury yields.

"Market direction will be driven increasingly by macro economic data; central bank policy responses are in the prices already and earnings are unable to lift the equity markets so the dynamics will be economic data and the concerns about geo-political risks and trade," said Larry Hatheway, head of GAM Investment Solutions & Chief Economist in Zurich.

"The market will struggle to find direction until autumn and we may have another pullback in capital markets."

Trump last week by renewed a threat to impose tariffs on another $325 billion of Chinese goods, even as hopes grew that the two sides would soon resume face-to-face negotiations in a bid to end their year-long trade war.

Elsewhere in currencies, the pound fell nearly half a percent amid increasing bets on a no-deal Brexit before the Conservative Party chooses its new leader on Tuesday. The pound was last down 0.3% at $1.2463 , having declined 1.6% against the dollar so far this month. It was also lower against the euro at 89.98 (EURGBP=D3).

In commodities, Brent crude futures (LCOc1) and U.S. crude futures (CLc1) jumped around $1 to $63.46 and $56.36 per barrel following a 1% jump on Friday.

Iran's Revolutionary Guards on Friday captured a British-flagged oil tanker in the Strait of Hormuz after Britain seized an Iranian vessel earlier this month, further raising tensions along a vital international route for oil shipments.

Spot gold hovered at $1,425.9 an ounce after rising as high as $1,452.60 on Friday, its strongest since May 2013.

Asia stocks fall on likely smaller Fed rate cut, pricier oil
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Kevin Ryan
Kevin Ryan Jul 21, 2019 9:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They will be green by end of day! China trade talks resume trumps people going to middleceast this week and china buys agriculture from US!
Michael Glenn
Michael Glenn Jul 21, 2019 9:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That sounds very remarkable. It's what I have been thinking on and hoping for since the end of last week.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email