Friday, 07 August 2015 00:50
NEW YORK: Weak earnings dragged stocks lower on Thursday and oil fell on continued oversupply concerns, while Treasuries prices rose ahead of US jobs numbers seen as key to determine the timing of a rate hike from the Federal Reserve.
Sterling fell sharply against the US dollar after just one Bank of England official voted for higher interest rates at a meeting in which the bank said a strong pound and low oil prices would keep inflation subdued. Wall Street traded lower, weighed by a second day of sharp declines in media companies after Viacom’s earnings miss was linked to viewers increasingly shifting to online streaming.
At 11:33 a.m. EDT (1533 GMT) the Dow Jones industrial average fell 112.61 points, or 0.64 percent, to 17,427.86, the S&P 500 lost 16.41 points, or 0.78 percent, to 2,083.43 and the Nasdaq Composite dropped 78.97 points, or 1.54 percent, to 5,060.98.
London’s FTSE 100 equity index fell 0.1 percent, outperforming a 0.8 percent drop for the pan-European FTSEurofirst 300 index. Weak corporate results hit the shares of enzyme company Novozymes and Deutsche Post.
A gauge of stocks across the globe fell 0.6 percent. Emerging market stocks slipped to their lowest in over two years on nervousness about the timing and scope of a US interest rate hike and continued weakness in commodity markets.
“People will go back to the US, put money into the US coming out of emerging markets. Weakness there is specifically linked to the Fed,” said Michael Testorf, co-fund manager at R Squared Capital Management in New York.
Market participants were looking ahead to US jobs data on Friday that could give a strong pointer to when the Fed will raise rates for the first time in nearly a decade.
The Fed next meets in mid-September. US Treasuries prices rose on caution ahead of the key US jobs report, while reduced inflation fears also supported long-dated Treasuries prices.
US 30-year Treasuries prices were last up 29/32 in price to yield 2.898 percent compared with a yield of 2.943 percent late Wednesday. Benchmark 10-year notes US10YT=RR were last up 11/32 in price to yield 2.230 percent, compared with a yield of 2.268 percent late Wednesday.
Sterling fell 0.6 percent to $ 1.5504, having traded as high as $ 1.5636.
The euro was little changed versus the greenback at $ 1.0907 with the dollar index on track for a second straight week of gains, lifted by a batch of economic data that, overall, has reinforced expectations that the Fed will raise interest rates next month.
“Assuming the Fed is raising interest rates, differentials will be in favor of the US,” said Testorf.
Brent futures, the global oil benchmark, fell more than 1 percent to hit a low of $ 48.88 per barrel, its lowest since late January. US crude set a day low of $ 44.20, not far from the six year low of $ 42.05 hit in March.
“Prices are likely to consolidate or weaken further,” Carsten Fritsch, an oil analyst at Commerzbank, said. “The perception is that over-supply will be there for much longer.”
London copper was flat after gaining as much as 0.8 percent, still near a six year low hit earlier this week. Spot gold struggled to pull away from a 5-1/2-year low as it stood near $ 1,090 an ounce.
