Global stocks pressured ahead of big earnings, Fed meeting

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NEW YORK: Global stocks kicked off the week in a lacklustre fashion on Monday, with US equities retreating from records ahead of a Federal Reserve meeting,

All three major US indices fell in one of the few down days in 2018.

Stock bourses elsewhere were also under pressure, with Paris and Frankfurt edging lower, Tokyo flat, and London eking out a modest gain.

But after a wave of Wall Street records in the first month of 2018, investors are nervous that stocks “may be priced for perfection” heading into the busiest stretch of earnings season, Art Hogan — the chief market strategist at Wunderlich Securities — said.

This week’s earnings calendar includes tech giants Amazon, Apple, and Facebook as well as traditional blue chip companies such as Boeing, ExxonMobil, and McDonald’s.

Worries about aggressive moves by the Fed to tighten monetary policy are also weighing on stocks, Hogan said, citing rising US bond yields.

Higher bond yields could attract funds from equities and elevated interest rates can crimp corporate investment.

Higher yields also boosted the US dollar after volatility last week following remarks by US Treasury Secretary Steven Mnuchin supporting a weak dollar, a stance later amended by Mnuchin and explicitly opposed by President Donald Trump.

Foreign exchange traders said Wednesday’s Fed policy statement could alter the outlook for the US currency.

“While the Fed is not expected to adjust monetary policy at this time, its accompanying statement could reflect an improving US economic backdrop that is currently not being reflected in the value of the dollar,” said Omer Esiner of Commonwealth FX.

“A more upbeat tone to the Fed’s comments this week could move the needle on the market’s outlook for lending rates in 2018 from just under three quarter-point moves by the Fed to four. Such a scenario could help limit additional dollar losses going forward.”

Key figures around 2200 GMT (3 AM PST, Tuesday)

Indexes

New York

DOW: DOWN 0.7 percent at 26,439.48 (close)

S&P 500: DOWN 0.7 percent at 2,853.53 (close)

Nasdaq: DOWN 0.5 percent at 7,466.51 (close)

London

FTSE 100: UP 0.1 percent at 7,671.53 points (close)

Frankfurt

DAX 30: DOWN 0.1 percent at 13,324.48 (close)

Paris

CAC 40: DOWN 0.1 percent at 5,521.59 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,642.91

Tokyo

Nikkei 225: FLAT at 23,629.34 (close)

Hong Kong

Hang Seng: DOWN 0.6 percent at 33,966.89 (close)

Shanghai

Composite: DOWN 1.0 percent at 3,523.00 (close)

Currencies

Euro/dollar: DOWN at $1.2383 from $1.2428 at 2200 GMT on Friday

Pound/dollar: DOWN at $1.4073 from $1.4155

Dollar/yen: UP at 108.98 yen from 108.63 yen

Energy

Brent: DOWN $1.06 at $69.46 per barrel

West Texas Intermediate (WTI): DOWN 58 cents at $65.56 per barrel

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