US stocks fall as oil leads commodities rebound

Dubai - US stocks fell amid tepid earnings reports, while European shares dropped for the first time in three days as a note of caution spread across markets with shares near records. Oil headed toward $48 a barrel, while gold was poised to snap its six-day losing streak.

The S&P 500 Index slumped as Macy’s results disappointed, adding to concerns that the US consumer continues to hold back on spending. Canadian equities fell after Moody’s Investors Service cut ratings on six of the nation’s largest banks amid housing woes.

The Stoxx Europe 600 Index declined even after the ECB boosted growth forecasts. The pound retreated after Bank of England (BoE) warned UK households will have a difficult year. Oil added to the biggest advance this year as stockpiles fell by more than forecast.

While company earnings and economic data are painting a picture of robust global growth and political risk has eased following France’s presidential election, investors are showing a lack of conviction as global equities trade at record-high levels and volatility evaporates.

The path for interest rates will remain a major focus amid growing bets for a Fed increase in June and talk of tapering by the European Central Bank. The BoE said on Thursday it may need to raise interest rates faster than the market suggests, assuming that Brexit goes well.

“Investors are trying to make sense of contradictory forces,” said Ben Kumar, a London-based investment manager at Seven Investment Management, which oversees about £10bn.

“Everyone’s quite optimistic and companies are making lots of money and this is all good stuff, and they start thinking about Mario Draghi and the taper and how much that will hurt.”

Here are the key events this week:

US April retail and CPI figures are on Friday. March industrial production data the same day could prompt a revision to the first reading of eurozone GDP growth. Germany’s preliminary growth figure for the first quarter is also on Friday.

And here are the main moves:

Stocks

The S&P 500 slipped 0.3% at 14:31, after the underlying gauge rose 0.1% on Wednesday to an all-time high. The S&P/TSX Composite Index slid 0.1%, with banks in the measure leading declines. The Stoxx Europe 600 fell 0.5%, after gaining 0.2% on Wednesday to the highest level since August 2015. 

Currencies 

The euro fell 0.2% to $1.0845 as the Bloomberg Dollar Spot Index added 0.1%. Sterling lost 0.6%. The kiwi fell 1.5% to 68.35 US cents. The Reserve Bank of New Zealand kept its benchmark rate unchanged and said it will keep rates there for an extended period in expectation that inflation will slow. The Canadian dollar dropped 0.7% after Moody’s Investors Service downgraded six Canadian banks.

Bonds

The yield on 10-year Treasury notes fell one basis points to 2.40% after rising for the past three sessions. German benchmark yields rose two basis points to 0.44%.

Commodities

West Texas oil rose 0.9% to $47.75 a barrel after jumping more than 3% on Wednesday. Gold added 0.1% to $1 220.88 following the longest losing streak since October.  Iron ore on SGX AsiaClear in Singapore fell as much as 4.5% to $59 a ton, the lowest since October amid a clampdown on leverage in China, the top consumer, and expanding global supply.

Asia

Asian equity markets climbed to multi-year highs, with South Korea reaching a fresh record while the Nikkei 225 Stock Average approached the 20 000 level. Chinese shares erased earlier losses. The kiwi fell as much as 1.8% after New Zealand’s central bank chief downplayed rising price expectations.

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