By IFCMarkets
US stocks retreated on Monday while technology shares paired most of previous session losses. The S&P 500 slid 0.4% to 2755.88. Dow Jones industrial fell 0.5% to 25317.41. The Nasdaq composite index however rose 0.3% to 7468.63. The dollar strengthening resumed despite soft data: the Chicago Fed National Activity Index decreased to 0.17 in September from 0.27 in August. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.3% to 96.00 and is higher currently. Futures on stock indices point to lower openings today.
Technology stocks have been under pressure on US-China trade war concerns which weigh on Chinese stock market. Third quarter corporate reports were positive over the past two weeks: three-quarters of the 140 companies that reported earnings beat Wall Street’s expectations for net profit. However just 58% of companies have beaten revenue estimates, the weakest reading in past six quarters, according to FactSet. 158 SP 500 companies are scheduled to report results this week.
European stocks extended losses on Monday after Moody’s Investors Service downgraded Italy’s sovereign debt rating on Friday by one notch to just above junk, with stable outlook. Both EUR/USD and GBP/USD turned lower reversing earlier gains. Both pairs are falling currently. The Stoxx Europe 600 index lost 0.4%. The DAX 30 slid 0.3% to 11524.34 while France’s CAC 40 fell 0.6%. UK’s FTSE 100 slipped 0.1% to 7042.80. Indices opened 0.8% – 1.5% lower today.
Italy’s budget deficit concerns weigh on investor sentiment. The European Union is expected to reject the budget proposal today, asking the government to go back to the drawing board. The EU has criticized Italy’s budget plan, which includes a budget deficit of 2.4% for next year from a current 1.8%. Italy told the European Commission on Monday it would stick to its 2019 budget plans in defiance of EU fiscal rules.
Asian stock indices are lower today after broad Monday gains. Nikkei fell 2.7% to 22010.78 as yen turned higher against the dollar on back of stronger heaven demand. Chinese shares pared most of Monday’s gains: the Shanghai Composite Index is down 2.4% and Hong Kong’s Hang Seng Index is 3.2% lower. Australia’s All Ordinaries Index fell another 1.1% despite the Australian dollar resumed slide against the greenback.
Brent futures prices are falling today as Saudi Arabia pledges to play ‘responsible role’ in market. Prices edged higher yesterday on tensions between the US and Saudi Arabia linked to a missing dissident journalist: December Brent crude added less than 0.1% to $79.83 a barrel on Monday.
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