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London - European stocks fell from a three-week high and US equity-index futures dropped as weaker-than-estimated company earnings revived concern over prospects for economic growth.
Demand for haven assets sent US Treasuries and gold higher.
The Stoxx Europe 600 Index fell the most in two weeks; led by paint maker Akzo Nobel NV, while futures signalled the S&P 500 Index will retreat from an all-time high. The Australian and New Zealand dollars sank as speculation mounted that their central banks will cut interest rates as soon as next month.
Treasuries gained as Morgan Stanley predicted the yield on 10-year debt will sink to 1% in early next year.
While global equities have recovered losses triggered by Britain’s vote last month to leave the European Union amid speculation of more stimulus measures, some earnings have raised the spectre the rally may have come too far, too fast.
The International Monetary Fund is due to update its projections for world growth on Tuesday and Managing Director Christine Lagarde warned last week that estimates may be cut. Investors will be looking at results from Goldman Sachs Group and Microsoft Corporation after Netflix reported subscriber growth slumped to a three-year low.
“The market is taking a pause,” said Tony Farnham, a strategist at Paterson Securities in Sydney. “There isn’t much of a catalyst out there. People are starting to question if there’s still value in the market following the post-Brexit rally.”
Stocks
The Stoxx 600 slid 0.9% at 6:07 a.m. in New York, with trading volumes 30% below the 30-day average. Commodity producers fell the most among 19 industry groups, as Rio Tinto Group dropped 3.6% after its second-quarter iron ore production rose less than expected. BHP Billiton and Glencore also fell more than 3%.
Akzo Nobel slid 6.3% after saying a slowdown in sales in the UK in the run up to the nation’s referendum has yet to recover. Fiat Chrysler Automobiles fell 3% after saying it is under investigation by US authorities over how it reports sales.
Ericsson AB advanced 2.6% as it said it will accelerate cost cuts after posting sales that missed analysts’ estimates. Zalando SE surged 18% after the German online apparel retailer reported second-quarter profit that beat estimates and raised its full-year margin forecast.
S&P 500 futures expiring in September declined 0.3%. Netflix sank 12% in early New York trading.
The MSCI Emerging Markets Index fell 0.2% after rising 6.2% in the previous eight sessions and sending valuations to the highest since May 2015.
Turkey’s benchmark index climbed 1%, after falling 7.1% on Monday, as the central bank holds its first policy meeting after last week’s failed coup attempt. Economists see policy makers lower overnight lending rate by a quarter of a percentage point, scaling back estimates from a half-point reduction prior to the coup attempt.
Moody’s Investors Service put Turkey on review for a potential downgrade on Monday to "assess the medium-term impact" on growth and policy making institutions.
Currencies
The Aussie slipped 1% to 75.16 US cents, after strengthening in each of the last seven weeks. Minutes published on Tuesday from the RBA’s July 5 policy meeting showed that the central bank estimated the economy to have slowed last quarter and policy makers were concerned about currency appreciation.
The likelihood of an August rate cut has increased to 56% from 45% over the past week, derivatives indicate.
New Zealand’s dollar dropped 1.3%. The central bank said it will require property investors buying housing in the nation to have a deposit of at least 40% from September 1, compared with an existing requirement that such buyers in Auckland have at least a 30% deposit. Swaps traders are pricing in a 77% chance of an RBNZ rate cut on August 11, compared with 39% a week ago.
The pound fell 0.5% to $1.3194, briefly paring declines after a report showed the UK’s annual inflation rate rose more than economists forecast in June.
Commodities
Crude oil retreated 0.1% to $45.18 a barrel in New York amid speculation US production may continue gains as drillers put rigs back to work. Companies added drill rigs for the sixth time in seven weeks through July 15, according to figures Friday from Baker Hughes.
Gold added 0.3% $1 332.65 an ounce. Zinc extended its advance to the highest level in more than a year on concerns over a looming supply deficit. The metal used to galvanize steel rose as much as 1.3% to $2 247.50 a metric ton on the London Metal Exchange, the highest since May last year.
Bonds
US Treasuries due in a decade gained for the first time in four days, pushing their yield down by three basis points to 1.56%. The yield reached 1.60% in the last session, the highest it’s been since June 24, when the Brexit vote count was announced.
Similar-maturity bonds in Australia also advanced, cutting their yield by seven basis points to 1.92%. New Zealand’s yield fell seven basis points to 2.26%.
The cost of insuring corporate debt against default rose for the fourth time in five days. The Markit iTraxx Europe index of credit-default swaps on investment-grade companies rose one basis point to 73 basis points.
An index of swaps on junk-rated companies climbed six basis points to 332 basis points.
