Stock Market News

US and European stock markets made a soft start to the week although losses were limited by strength in the financial sector after Bank of America delivered a solid set of quarterly results.

What you need to know: >Energy stocks weigh on indices as Brent oil falls more than 4%. >Well-received earnings from BofA help limit S&P 500 drop. >Netflix due to report second-quarter figures after the close. >Chinese economic growth slows. >US retail sales data match expectations.

StockMarketNews.Today – Steep losses for energy stocks ensured that US and European stock markets made a soft start to the week although losses were limited by strength in the financial sector after Bank of America delivered a solid set of quarterly results.

US technology stocks were little changed as participants awaited quarterly figures from Netflix, due out after the Wall Street close.

Michael Hewson at CMC Markets noted that the company’s share price had already doubled so far this year.

”At its last update the company hit 125m subscribers and investors will be looking for this trend to continue, as well as its plans for further expansion into India,” he said.

Meanwhile, the S&P 500 energy sector was down 1.4 per cent as Brent crude sank to a three-month low as recent worries about disruptions to supply appeared to ease.

Analysts noted that Libyan ports had reopened for exports and also pointed to reports that Saudi Arabia had offered extra crude to its Asia markets in response to rising prices.

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The dollar was broadly weaker — in spite of rising Treasury yields — as participants digested a batch of US data releases ahead of Federal Reserve chairman Jay Powell’s semi-annual monetary policy testimonies.

“He is likely to repeat the warning included in the minutes of the last Fed policy meeting that trade uncertainty could already be weighing on investment, and may also face questions on the flattening yield curve,” said Andrew Hunter at Capital Economics.

Reports yesterday showed headline US retail sales rising 0.5 per cent in June, meeting expectations, while business inventories rose less than forecast and the New York Fed’s Empire State index of business conditions edged back.

In China data showed the economy growing 6.7 per cent in the second quarter, the slowest pace since 2016, “as a heavy deleveraging campaign continues to take effect,” said Fiona Cincotta at City Index.

“Whilst the growth is still above the official government target of 6.5 per cent, it comes at a time when the Chinese government is attempting to tackle excessive credit and debt risk and as China faces headwinds over the US trade tariffs.”

Equities:

By midday in New York, the S&P 500 was down 0.1 per cent at 2,978 and the tech-heavy Nasdaq Composite was also 0.1 per cent lower, after closing at a record peak on Friday.

Bank of America shares were up 2.4 per cent, helping the financial sector gain 0.8 per cent. Citigroup and JPMorgan shares were also smartly higher.

But energy stocks were down 1.4 per cent, with Marathon Oil down 7 per cent. Netflix was up 0.5 per cent.

In Europe, the region-wide Stoxx 600 index ended 0.3 per cent lower. Frankfurt’s Xetra Dax eked out a 0.2 per cent gain but the FTSE 100 in London fell 0.8 per cent as BP and Royal Dutch/Shell each fell more than 2 per cent.

The CSI 300 index of China’s major mainland stocks lost 0.6 per cent after the release of the GDP data, while Hong Kong’s Hang Seng ticked up 0.1 per cent.

Markets in Japan were closed for a national holiday.

Forex and fixed income:

The dollar index was down 0.2 per cent at 94.61 as the euro inched up 0.1 per cent to $1.1697. The US currency was little changed against either the yen or sterling.

The yield on the 10-year Treasury was up 4 basis points at 2.87 per cent while the two-year yield was 2bp higher at 2.60 per cent — finally bringing the recent flattening of the yield curve to a halt, for now at least.

Commodities:

Brent oil was down 4.2 per cent at $72.22 a barrel and heading for its lowest close since April 17. US West Texas Intermediate was 4.1 per cent weaker at $68.08.

Despite the slightly softer tone of the dollar, gold was down $2 at $1,238 an ounce.

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