BofA warns Fed risks policy mistake with early rate cuts
* MSCI world equity falls for third straight day
* European shares bounce on ECB inflation revamp report
* U.S.-China trade war takes toll on earnings
(Updates with open of U.S. markets, changes dateline; previous
LONDON)
By Chuck Mikolajczak
NEW YORK, July 18 (Reuters) - A gauge of global shares
declined for a third straight session on Thursday on worries
over how the trade war between the United States and China could
dent corporate earnings, while oil prices dropped on
expectations of rising output.
On Wall Street, shares of Netflix NFLX.O plunged 11.40% in
the wake of its quarterly results as it missed targets for new
subscribers overseas. Honeywell HON.N , up 1.99%, helped curb losses as its
results topped expectations and it raised its full-year outlook.
However, the diversified manufacturer said it is planning
"somewhat cautiously" for the second half due to the volatile
geopolitical and economic movements. "Netflix did nothing to soothe investor concerns around what
earnings prospects are likely to unfold over the next couple of
weeks," said Mark Luschini, chief investment strategist at
Janney Montgomery Scott in Philadelphia.
Still, earnings are now expected to show growth of 0.6% for
the second quarter, according to Refinitiv data. S&P 500
companies were expected to show a decline as recently as
Tuesday.
Officials of the U.S. and China were scheduled to hold a
telephone call later on Thursday on trade, U.S. Treasury
Secretary Steven Mnuchin told CNBC. The Dow Jones Industrial Average .DJI fell 106.75 points,
or 0.39%, to 27,113.1, the S&P 500 .SPX lost 6.53 points, or
0.22%, to 2,977.89 and the Nasdaq Composite .IXIC dropped
38.66 points, or 0.47%, to 8,146.54.
In Europe, stocks were initially weaker as disappointing
earnings from software firm SAP SAPG.DE pulled down its shares
as much as 10%, dragging the technology sector with it, as it
flagged the impact of the U.S.-China trade war.
But the Euro STOXX 600 .STOXX managed to erase some of its
earlier losses in the wake of a Bloomberg News report that
European Central Bank staff are studying a potential revamp of
the bank's near 2% inflation goal, which could prolong its
stimulus program more than currently expected.
The pan-European STOXX 600 index .STOXX lost 0.19% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.31%.
In commodities, oil slumped more than 2% on an expectation
that crude output would rise in the Gulf of Mexico following
last week's hurricane in the region. U.S. Treasury yields moved higher after economic data on
manufacturing in the mid-Atlantic region rebounded, while weekly
jobless claims showed the country's labor market remains strong.
Despite a flurry of strengthening economic data recently,
market participants consider it a certainty the Federal Reserve
will cut rates by at least a quarter of a percentage point at
its July 30-31 meeting. Benchmark 10-year notes US10YT=RR were unchanged in price
to yield 2.0606%, from 2.061% late on Wednesday.
In currencies, the dollar slipped slightly in the wake of
the data while sterling rose, in part after a vote by lawmakers
to make it harder for Britain's next prime minister to try to
force a no-deal Brexit. The dollar index .DXY fell 0.07%, with the euro EUR= was
unchanged at $1.1223. Sterling GBP= was last trading at
$1.2487, up 0.45% on the day.
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Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
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