Stocks slip ahead of earnings season
Major stock markets dipped slightly Monday as investors braced for potential signs of sustained inflation and awaited growth outlooks from the upcoming corporate earnings season.
New York, London, Frankfurt and Paris all were slightly lower at the close, as were major Asian markets.
Investors are now waiting for Tuesday’s release of the US consumer price index (CPI) for March — marking the one-year anniversary of the onset of the Covid-19 pandemic.
The closely-watched report will offer signs of how the huge US stimulus packages and a global economic recovery could generate a sustained bout of inflation.
“Tuesday’s release of CPI is thus going to be important for the dollar and the markets in general,” noted Fawad Razaqzada, a market analyst at ThinkMarkets.
Investors are concerned that rising prices could force central banks to raise the rock-bottom lending rates that have helped fuel a long period of stock market gains.
Federal Reserve Chair Jerome Powell has said repeatedly that inflation will spike initially as the economy reopens, but the increases will be transitory.
But despite long-running market worries that the bank will have to lift interest rates, he insists that monetary policy will remain very supportive until the economy is firmly back on its feet.
US quarterly earnings season gets underway this week, with major banks up first: JPMorgan and Goldman Sachs are to post results on Wednesday, followed by Morgan Stanley on Friday.
With those reports “we finally see a measure of just how far companies have come since the onset of the (coronavirus) crisis,” said analyst Joshua Mahony at trading firm IG.
“The US banks take centre stage for this first week,” he said, noting that investors would closely follow news of any exposure to troubled hedge fund Archegos Capital Management.
Meanwhile, among individual companies, Nuance Communications surged 16 percent after it agreed to be acquired by Microsoft for $19.7 billion. The deal represents “the latest step in Microsoft’s industry-specific cloud strategy,” Microsoft said.
Shares of Microsoft were flat.
Intel fell 4.2 percent after rival Nvidia announced plans for new semiconductor investments that directly challenge Intel’s product slate. Nvidia jumped 5.6 percent.
Bitcoin dipped below $60,000 ahead of Wednesday’s stock market flotation of Coinbase, the largest US cryptocurrency exchange.
– Key figures around 2200 GMT –
New York – Dow: DOWN 0.2 percent at 33,745.40 points (close)
New York – S&P 500: DOWN 0.1 percent at 4,127.99 (close)
New York – Nasdaq: DOWN 0.4 percent at 13,850.00 (close)
EURO STOXX 50: DOWN 0.4 percent at 3,961.90
London – FTSE 100: DOWN 0.4 percent at 6,889.12 (close)
Paris – CAC 40: DOWN 0.1 percent at 6,161.68 (close)
Frankfurt – DAX 30: DOWN 0.1 percent at 15,215.00 (close)
Tokyo – Nikkei 225: DOWN 0.8 percent at 29,538.73 (close)
Hong Kong – Hang Seng Index: DOWN 0.9 percent at 28,453.28 (close)
Shanghai – Composite: DOWN 1.1 percent at 3,412.95 (close)
Euro/dollar: UP at $1.1913 From $1.1899 at 2100 GMT
Pound/dollar: UP at $1.3741 from $1.3707
Euro/pound: DOWN at 86.68 pence from 86.81 pence
Dollar/yen: DOWN at 109.37 yen from 109.67 yen
Brent North Sea crude: UP 0.5 percent at $63.27 per barrel
West Texas Intermediate: UP 0.4 percent at $63.20 per barrel