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(Bloomberg) -- U.S. stocks dropped the most in seven weeks while the dollar slumped as an uneven batch of corporate earnings reports thwarted a risk-on rally and turmoil in Washington threatened the president’s tax overhaul.

The S&P 500 Index fell for the second time this week, with weak results hammering shares in Chipotle Mexican Grill Inc. and Advanced Micro Devices Inc. Ten-year Treasury yields narrowed after reaching their highest since March, and gold rose as investors sought havens from slumping equity markets.

Wednesday’s stock retreat comes the day after Republican senators Jeff Flake and Bob Corker publicly criticized President Donald Trump just as he tries to push through big changes in the U.S. tax code.

“The whole Jeff Flake episode at the end of the day yesterday took some time to sink into the markets,” Michael O’Rourke, chief market strategist at JonesTrading Institutional Services LLC, said by phone. “If you’re at the point where you have Flake and then Corker coming after the president, he’s really going to have to negotiate to get the tax reform he wants.”

The loonie fell after Canada’s central bank warned it would remain “cautious” when considering future rate increases, while Mexico’s peso rallied. Sterling jumped as accelerating U.K. growth spurred rate-hike bets. The rand plunged after South Africa’s finance minister signaled the country would ramp up debt to help plug the budget deficit.

Investors are looking hard this week at earnings and economic data for indications of broadening growth that may sustain the rallies even as the Federal Reserve and other central banks start to pull back on stimulus. 

The European Central Bank is expected to announce a reduction in the size of its monthly bond buying at its policy meeting Thursday, the biggest scheduled event for markets this week. U.S. orders for business equipment increased more than forecast in September, pointing toward economic growth for the quarter.

The Stoxx Europe 600 Index declined as companies in the region reported mixed results. Benchmarks in Asia were largely higher, but Japan’s Nikkei finally snapped its record run of gains. India’s S&P BSE Sensex jumped as much as 1.6 percent after Prime Minister Narendra Modi’s government said late on Tuesday it will inject an unprecedented 2.11 trillion rupees ($32 billion) into the banks over two years to revive growth.

Terminal users can read more in our Markets Live blog.

These are some of the key events coming up:

  • South Korea reports on GDP and Hong Kong on imports and exports, while Japan reports on CPI later in the week.
  • The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
  • Companies reporting earnings this week include Alphabet Inc., Microsoft Corp. and Twitter Inc. in the technology sector. Ford Motor Co. and Volkswagen AG headline cars. European banks reporting include UBS Group AG, Deutsche Bank AG and Barclays Plc.
  • The week also boasts rate decisions from Norges Bank and Riksbank.

And here are the main moves in markets:

Stocks

  • The S&P 500 Index fell 0.47 percent Wednesday in New York, while the Dow Jones Industrial Average declined 0.48 percent and the Nasdaq Composite Index dropped 0.52 percent.
  • The Stoxx Europe 600 Index fell 0.57 percent.
  • The U.K.’s FTSE 100 Index decreased 1.1 percent.
  • Germany’s DAX Index dropped 0.46 percent.

Currencies

  • The Bloomberg Dollar Spot Index decreased 0.2 percent.
  • The euro gained 0.3 percent to $1.1801.
  • The British pound climbed 0.9 percent to $1.3249.
  • The rand fell 2.2 percent to 14.0609 per dollar, the weakest in about 10 months.
  • The Mexican peso rose 1 percent against the greenback; the Canadian dollar sank 1 percent.

Bonds

  • The yield on 10-year Treasuries gained two basis points to 2.44 percent.
  • Germany’s 10-year yield climbed one basis point to 0.48 percent.
  • Britain’s 10-year yield gained five basis points to 1.404 percent, the highest in almost nine months.

Commodities

  • Gold rose 0.1 percent to $1,277.61 an ounce.
  • West Texas Intermediate crude dipped 0.5 percent to $52.21 a barrel.

Asia

  • Japan’s Topix index fell 0.3 percent and the Nikkei 225 declined 0.5 percent at the end of trading in Tokyo. Australia’s S&P/ASX 200 Index rose 0.1 percent. The Hang Seng Index climbed 0.5 percent, while the Shanghai Composite Index gained 0.3 percent. India’s Sensex advanced 1.3 percent.
  • The Japanese yen gained 0.1 percent to 113.75 per dollar.

--With assistance from Andreea Papuc Adam Haigh John Ainger and Samuel Potter

To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

©2017 Bloomberg L.P.

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