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Indian Morning Briefing: Asian Markets Mostly Lower at Start of the Week

24 Jul 2017 3:00 am
 
GLOBAL MARKETS 
DJIA         21580.07   -31.71  -0.15% 
Nasdaq        6387.75    -2.25  -0.04% 
S&P 500       2472.54    -0.91  -0.04% 
FTSE 100      2472.54    -0.91  -0.04% 
Nikkei Stock 19915.83  -183.92  -0.92% 
Hang Seng    26835.36   129.27   0.48% 
Kospi         2445.49    -4.57  -0.19% 
SGX Nifty     9920.50     8.00   0.80% 
July contract 
 
USD/JPY 110.94-95  -0.17% 
Range   111.13   110.77 
EUR/USD 1.1669-72  +0.04% 
Range   1.1684   1.1664 
 
CBOT Wheat Sept $4.992 per bushel 
Comex Gold    $1,254.90   +0.8% 
Nymex Crude (NY) $45.67   -$1.25 
 
 
U.S. STOCKS 

The S&P 500 edged lower Friday, but notched a gain for the week as corporate earnings continued to drive some of the biggest moves.

The Dow Jones Industrial Average fell 32 points, or 0.2%, to 21580. The S&P 500 and the Nasdaq Composite declined less than 0.1%. Friday's declines end the Nasdaq's 10-session winning streak, the tech-heavy index's longest such streak since February 2015.

Technology shares have notched fresh milestones this week, with the S&P 500's best-performing sector this year continuing to attract investors for its ability to increase earnings amid soft economic growth. On Wednesday, the information technology sector set a new all-time high for the first time in almost 20 years. Despite a 0.1% decline Friday, it still sits at levels not seen since the dot-com boom.

Microsoft shares slipped 0.6% Friday from their all-time high, despite posting a jump in profits after the market closed Thursday that beat analyst projections. Earlier in the week, shares of Netflix, which is classified as a consumer stock in the S&P 500 but often grouped with highflying technology firms, had their best day of the year after the streaming giant beat its subscriber-growth estimate. Facebook and Amazon.com have also flirted with share-price milestones this week ahead of upcoming earnings.

Earnings figures across sectors so far have generally been solid, said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.

"The initial read here looks pretty favorable," Mr. Lefkowitz said. "There are always pockets of strengths and weakness within earnings season, but overall it's been more strength than weakness," he said.

With U.S. stocks resting near records, many analysts and investors say robust corporate earnings and forecasts will need to continue to help push major indexes even higher.
 
 
ASIAN STOCKS 

Asian shares began the trading week modestly lower, with stocks in Japan and Australia underperforming Monday as additional declines in the U.S. dollar continued to weigh on investor sentiment.

A fresh pullback in commodity prices also hurt equities, despite the weaker dollar. Many assets in the sector are denominated in the dollar and often rise when the currency falls.

Concern about policy direction from the White House and Capitol Hill since the failure to repeal the Affordable Care Act and investigations into contacts with Russians before November's election have helped fuel dollar selling. The currency ended the week at its worst level since late September, according to the WSJ Dollar Index.

Amid declines in U.S. trading on Friday and fresh selling Monday morning in Asia--the dollar hit a one-month low versus the yen and a two-year intraday low versus the euro--stock benchmarks in Australia and Japan fell 1%.

That comes as the Federal Reserve is scheduled to meet this week. Vishnu Varathan, a senior analyst at Mizuho Bank in Singapore, predicts there will be some commentary "that weak inflation are not entirely due to transitioning factors." Such a comment could stoke worries that the central bank may slow the pace of rate increases, a dollar negative.

Among the biggest stock decliners in Japan were export-reliant companies, as is often the case when the yen strengthens, as that eats into such firms' earnings. Meanwhile, fresh declines in bond yields hit insurers, which are heavy investors in fixed income. Dai-ichi Life and T&D Holdings slid some 2.5%.

Weaker commodity prices, notably in iron ore after its recent gains, pushed down Australian stocks, said Gary Huxtable, a senior adviser at ASR Wealth Advisers in Melbourne. Equities there have been underperforming for several months, and the S&P/ASX 200 fell for two of the previous three weeks.

Beyond Japan and Australia, though, index moves were muted to start Monday. Most other benchmarks were within 0.2% of Friday's finishes, though after a quiet start buying returned to Hong Kong stocks. The Hang Seng Index was recently up 0.6% after its nine-session winning streak ended Friday.
FOREX 

China held the yuan essentially steady against the dollar, leaving the Chinese currency at its highest level since October in the fix. The central bank set the daily trading midpoint at CNY6.7410, compared with CNY6.7415 on Friday. Still, as recent trading shows, the yuan hasn't been trading at such-strong levels. The gap between the central bank's fix and where the yuan finishes the day in onshore trading has been growing, on Friday hitting the widest since May.
METALS 

London spot gold prices ticked slightly lower at the beginning of the week, after rising for the sixth straight session Friday. Investors will focus on the Fed meeting later this week for its views on rate changes, though expectations are that it will go slow on the pace of increases. Gold is seen having some further upside from current levels, particularly with political uncertainty around the Trump administration continuing to provide support. Spot gold was recently trading 41 cents down at $1,254.50/troy ounce.
OIL SUMMARY 

After falling by more than 2% on Friday, crude futures start the week modestly lower in Asia despite continued declines in the U.S. dollar. That as a tanker-tracking data firm said OPEC's daily output is surpassing 33 million barrels this month. In the cartel's meeting today, it is set to review members' compliance to the production caps and discuss the possible inclusion of Nigeria and Libya into the plan. September WTI and Brent were both recently down 0.3% at $45.64 and $47.92/barrel, respectively.
 
 
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(END) Dow Jones Newswires

July 23, 2017 23:00 ET (03:00 GMT)

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