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GLOBAL MARKETS-Stocks falter, dollar slips on potential U.S.-China trade delay

Stock Markets Oct 29, 2019 22:09
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© Reuters. GLOBAL MARKETS-Stocks falter, dollar slips on potential U.S.-China trade delay

* S&P 500 hits intraday record, but closes lower

* Poor earnings cloud European equities

* Dollar slips on potential delay in U.S.-China trade deal

* Graphic: World FX rates in 2019

By Herbert Lash

NEW YORK, Oct 29 (Reuters) - Global stocks faltered on

Tuesday as strong earnings from U.S. drugmakers Merck and Pfizer

and expectations the Federal Reserve will cut rates was offset

by a potential delay in a U.S.-China trade deal, which clouded

sentiment and weakened the dollar.

European shares fell as companies headed toward their worst

quarterly earnings in more than three years, according to the

latest estimates by Refinitiv, underscoring concerns about the

deteriorating health of Europe Inc.

The U.S. S&P 500 index eked out a fresh record intraday

high, led by Merck and Pfizer, though a disappointing profit

report from Google parent Alphabet kept the technology-rich

Nasdaq in the red.

The benchmark index had breached its all-time high set in

July on Monday, spurred by hopes of a U.S.-China trade deal and

the likelihood of further stimulus from the U.S. central bank on

Wednesday when it concludes a two-day meeting of policy-makers.

The steepening of the two- and 10-year yield curve suggests

a budding risk-on sentiment among investors, now that some form

of a U.S.-China trade agreement is likely, said Yousef Abbasi,

global market strategist at INTL FCStone Financial in New York.

The spread in the yield curve US2US10=TWEB has gained

about 20 basis points since leaving negative territory, a

recession indicator, in early September.

However, a U.S. administration official said on Tuesday that

an interim trade agreement might not be completed in time for

signing in Chile next month as expected, while adding that did

not mean the accord is falling apart. Technology .SPLRCT shares, a sector of the S&P 500 that

has been closely tied to trade progress, fell 0.92%.

Drugmakers Merck & Co Inc MRK.N and Pfizer Inc PFE.N

rose after reporting upbeat third-quarter results, gaining 3.5%

and 2.5%, respectively. The healthcare sector .SPXHC , which

has been the second-worst performer among the 11 major S&P 500

sectors this year, rose 1.16% as the session's best performer.

A rotation into value stocks that investors have posited for

months seems be taking hold, Abbasi said, pointing to recent

gains in the SPDR S&P Regional Banking ETF KRE as evidence.

The ETF has traded below 56 since May and could be set for

further upside after a recent rally from below 50, he said.

"We're seeing some of those high-flying tech names

struggle," Abbasi said. "We're getting that risk-on move from

sectors that have been ignored all year, the sectors that

haven't been loved."

Apple AAPL.O and Microsoft MSFT.O fell, as did AMZN.O .

MSCI's gauge of stocks across the globe .MIWD00000PUS

gained 0.05%, while the pan-European STOXX 600 index .STOXX

lost 0.16%. MSCI's emerging markets index .MSCIEF rose 0.07%.

On Wall Street, the Dow Jones Industrial Average .DJI fell

19.26 points, or 0.07%, to 27,071.46. The S&P 500 .SPX lost

2.53 points, or 0.08%, to 3,036.89 and the Nasdaq Composite

.IXIC dropped 49.14 points, or 0.59%, to 8,276.85.

Oil pared losses amid expectations that U.S. refined product

stockpiles declined last week.

Brent crude LCOc1 rose 2 cents to settle at $61.59 a

barrel, while U.S. West Texas Intermediate CLc1 crude settled

down 27 cents to $55.54.

Britain's FTSE 100 .FTSE fell 0.34% as uncertainty over a

looming general election compounded a 4.0% drop in shares of BP

BP.L after the oil major posted a sharp drop in third quarter

profit. The losses in Europe followed a mixed performance in Asia,

where Japan's Nikkei .N225 rose 0.4% to reach levels last seen

a year ago. Shanghai blue chips .CSI300 dithered either side

of flat.

Benchmark 10-year U.S. notes US10YT=RR rose 4/32 in price

to yield 1.8367%.

The dollar index .DXY fell 0.09%, with the euro EUR= up

0.13% to $1.1112. The Japanese yen JPY= strengthened 0.10%

versus the greenback at 108.86 per dollar.

Asia stock markets

Asia-Pacific valuations

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election ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

GLOBAL MARKETS-Stocks falter, dollar slips on potential U.S.-China trade delay

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