October 16, 2019 / 8:43 PM / 7 months ago

GLOBAL MARKETS-Stocks flat on data, earnings; pound volatile

 (Adds close of U.S. markets)
    * Brexit negotiations resume in Brussels
    * Pound volatile around Brexit talks
    * Wall Street little changed
    * European shares close mixed

    By Chuck Mikolajczak and Herbert Lash
    NEW YORK, Oct 16 (Reuters) - A gauge of world stock markets
was flat on Wednesday as U.S. data that raised concerns about a
slowing economy was offset by a solid start to earnings season,
while sterling was volatile as negotiations on a Brexit deal
    European stocks pulled back slightly from their strongest
closing high in more than a year as clashing headlines on
Britain's last-minute efforts to forge a divorce deal with the
European Union left investors hanging on the outcome.
    On Wall Street, stocks retreated after monthly retail sales
data for September showed a decline for the first time in seven
months, raising concerns that softness in the manufacturing
sector was starting to spread to the broader economy.

    MSCI's gauge of stocks across the globe
traded at break-even.
    "Retail sales were definitely on the weaker side and given
that the consumer is one of the key pillars holding up the U.S.
economy, any weakness in consumer indicators is obviously a sign
of concern," said Ellen Hazen, portfolio manager F.L. Putnam in
Wellesley, Massachusetts. 
    Data later in the session showed U.S. business inventories
were unexpectedly flat in August, which suggested inventory
investment could also drag on third-quarter economic growth. 
    Concerns about the trade dispute between the United States
and China also weighed. The U.S. House of Representatives on
Tuesday passed legislation related to pro-democracy protests in
Hong Kong, prompting China to warn in response that bilateral
relations would be damaged if the measures became law.

    Losses were offset by a solid start to earnings season. Bank
of America shares rose 1.98% following its quarterly
    Earnings for S&P 500 companies are expected to show a
decline of 3% for the quarter, according to Refinitiv data, down
from 5.1% growth expected at the start of the year. Excluding
energy, the growth rate is a negative 0.7%.
    "They legitimately are coming in better than expected so
far, not by leaps and bounds, but incrementally, yes they are.
This is not just expectations having been set really low, at
least from the earnings estimate standpoint," said Hazen.
    The Dow Jones Industrial Average fell 22.82 points,
or 0.08%, to 27,001.98. The S&P 500 lost 5.99 points, or
0.20%, to 2,989.69 and the Nasdaq Composite dropped
24.52 points, or 0.3%, to 8,124.18.
    Sterling was volatile as negotiators worked to clinch
a last-minute Brexit deal before an EU summit on Thursday.
    French President Emmanuel Macron said on Wednesday a deal
with Britain on its departure from the European Union was being
finalized and could potentially be agreed on at Thursday's
    The pound had strengthened by more than 5% over the past
five sessions as investors rushed to reprice the prospect of a
deal being agreed before Britain's scheduled departure date of 
Oct. 31.
    Sterling was last at $1.2823, up 0.29% on the day.

    The dollar index fell 0.28%, with the euro up
0.39% to $1.1074. The Japanese yen strengthened 0.08%
versus the greenback at 108.79 per dollar.
    The benchmark 10-year U.S. Treasury note rose
7/32 in price to push its yield down to 1.7465%. 
    Hopes of a Brexit breakthrough took the pan-European STOXX
600 to its highest close since May 2018 on Tuesday, but
the index closed down 0.1%. London's exporter-laden FTSE 100
, which tends to fall when the pound gains, lagged the
most of regional indices with a 0.6% decline.
    Germany's DAX edged up 0.3% while the pan-regional
FTSEurofirst 300 of leading companies slid 0.08%. 
    Companies listed on the STOXX 600 index are now
expected to report a decline in third-quarter earnings of as
much as 3.7%, worse than the 3% expected a week ago, according
to Refinitiv data through Tuesday.
    In commodities, oil rose about 1% on a weaker dollar and due
to signs the Organization of the Petroleum Exporting Countries
and allied producers will continue to curb supplies in December.
    Brent crude, the global benchmark, rose 68 cents to
settle at $59.42 a barrel. U.S. crude gained 55 cents to
settle at $53.36. 
    In emerging markets, Turkey's Halkbank saw its
shares drop 4.1% after U.S. prosecutors charged the state-owned
lender with taking part in a multibillion-dollar scheme to evade
U.S. sanctions on Iran, which the company said were part of
sanctions leveled against Ankara over its military operation in
    MSCI's gauge of emerging market stocks rose 0.56%.
    Gold rose on concerns Washington's stance on Hong Kong could
hamper trade negotiations. 
    U.S. gold futures settled up 0.7% to $1,494 an

 (Reporting by Herbert Lash
Editing by Sonya Hepinstall)
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