NBR: World stocks end lower as dollar rebounds, commodities fall
A rebounding US dollar and lower commodity prices sent stocks on Wall Street down at the end of the week, clawing back most of the previous session’s gains.
All major indexes finished in the red despite starting the week at record highs for the year. A raft of solid corporate results failed to outweigh events on the commodity and currency markets.
Sharemarkets in Canada and also Europe closed down, with the exception of the UK where shares rose on poor GDP figures and indications interest rates would therefore remain low.
The Dow Jones Industrial Average declined 109.13 points, or 1.1%, to 9972.18. It traded as high as 10,109.57 during the session.
American Express sank 5.1% despite reporting earnings and revenue that beat analysts' forecasts. Microsoft tempered the declines, jumping 5.4%.
Exxon Mobil and Schlumberger led energy shares lower after crude slid for a second day.
The S&P 500 fell 13.31 points, or 1.2%, to 1079.60. Every sector declined, with basic-materials shares dropping 2%.
The Nasdaq Composite Index fell 10.82 points, or 0.5%, to 2154.47 despite the gains in Microsoft and Amazon, whose shares hit an all-time high, ending up 27% at $US118.49 after it posted strong third-quarter results that suggested it's taking market share.
For the week, the Dow was down 0.2%, breaking a streak of two weekly gains, while the S&P 500 fell 0.7% and the Nasdaq fell 0.1%. A jump on Monday had sent stocks to new 12-month highs.
Canadian stocks fell the most in three weeks as Agrium declined after indicating analysts over-estimated its earnings and energy producers dropped with prices for natural gas.
Agrium, North America’s third-largest fertiliser producer, dropped 7.1% after saying third-quarter earnings plunged. Canadian National Railway slumped 2.1% after US-based Burlington Northern Santa Fe cut its fourth-quarter forecast.
EnCana decreased 2.7% as gas fell a third day amid record US gas supplies.
The S&P/TSX Composite Index lost 151.24 points, or 1.3%, to 11,382.13, the steepest decline since October 1. The equity benchmark fell 1.1% this week after two straight weekly gains.
The UK's FTSE 100 index was the only major European market to close higher as investors priced in the likelihood that interest rates would remain at record low levels for a while yet after the country's recession unexpectedly continued into a sixth quarter.
The Dow Jones Stoxx 600 Index sank 0.5% to 244.89, erasing a gain of as much as 1.4% in afternoon trading as US equities slid.
National benchmark indexes fell in 13 of the 18 western European markets.
The FTSE closed 35.21 points, or 0.7%, higher at 5242.57 despite figures showing output unexpectedly fell by 0.4% in the third quarter from the previous three-month period.
Meanwhile, German and French markets closed lower after figures provided further evidence that the recovery in Europe was gaining traction. Germany's DAX ended 22.68 points, or 0.4%, lower at 5740.25 while the CAC-40 in France was 12.61 points, or 0.3%, lower at 3808.24.
Commodities: Oil, gold down
Crude oil dropped for a second day as equities retreated and the dollar rebounded from a 14-month low against the euro.
Crude for December delivery fell 69USc to settle at $US80.50 a barrel in New York. Futures are up 80% this year and touched a one- year high of $US82 a barrel on October 21.
Gold prices fell for a second day in New York as a rebound in the dollar curbed demand from investors who buy the precious metal as a hedge against inflation.
Gold futures for December delivery dropped $US2.20, or 0.2%, to $US1,056.40 an ounce.
Currencies: Dollar up, yen down
The dollar strengthened against the yen to the strongest level in a month and gained versus most actively traded currencies on speculation the US Federal Reserve will increase interest rates sooner than forecast.
The pound fell against all of its major counterparts after the UK’s economy unexpectedly contracted in the third quarter.
The dollar appreciated 0.9% to ¥92.08 from ¥91.30, and earlier touched ¥92.08, the strongest level since September 10.
The dollar also gained 1.9% to $US1.6312 per pound from $US1.6624. The greenback traded at $US1.5002 per euro from $US1.5033.
The yen depreciated to ¥138.14 per euro after earlier trading at ¥138.36, the weakest level since August 10.
Canada’s dollar weakened for a second day after central bank Governor Mark Carney warned that the currency is too strong, spurring investors to look elsewhere for higher yield.
The Canadian dollar posted for its first weekly drop in a month as crude oil, the nation’s biggest export, and stocks fell.
The currency depreciated 0.5% to $C1.0522 per US dollar, from $C1.0475 on Thursday. It dropped 1.5% for the week, the first five-day decline since September 25.
