Stock markets around the world were little changed yesterday as investors awaited the onslaught of corporate earnings to be released this week, which could help offset signs of weakness in the economy.
Markets were held back by a weak read on US retail sales, though a milder-than-expected slowdown in China’s economic growth lifted shares in Asia and Europe.
The US dollar edged slightly higher while the euro fell on continued expectations that the US Federal Reserve will be first among the major central banks to scroll back on ultra-loose monetary policy. Yields on the 10-year US Treasury rose and Bunds rebounded.
US retail sales rose 0.4 per cent in June, only half the 0.8 per cent economists polled by Reuters had expected. The disappointment was tempered by accelerating growth in New York State’s manufacturing sector in July, according to a report from the New York Fed that provides one of the earliest monthly guideposts to US factory conditions.
The mixed picture added to the debate over when and how quickly the Fed would start to slow its stimulus programme, which has been widely credited with driving major stock indexes to all-time highs.
European stocks rose 0.3 per cent, as the Chinese data eased fears over a slowdown in China, the world’s second largest economy. US shares were flat, supported by strong earnings at Citigroup Inc. Shares of the bank rose 2.1 per cent to $51.87, and the S&P 500 financial industry sector index gained 0.3 per cent.
While earnings for the second quarter have largely come in stronger than expected so far, only a small percentage of S&P 500 components have reported to date. This week will see results from dozens of components, including numerous Dow components.
US shares were also boosted by Boeing Co, which jumped three per cent to $104.91 as an investigation into a fire that broke out on one of the company’s 787 Dreamliners did not blame the plane’s batteries.
China’s economic growth cooled to 7.5 per cent in the second quarter from a year ago, while other figures showed a healthy rise in retail sales and a minor undershoot of forecasts in industrial output. Shares in Shanghai rose one per cent.
Comments by Beijing last week had led markets to think the numbers might have been weaker, so the outcome brought relief. Commodities initially drove higher, but like stocks faced some profit-taking following a strong week last week.
The Dow Jones industrial average was up 7.79 points, or 0.05 per cent, at 15,472.09. The Standard & Poor’s 500 Index was up 1.16 points, or 0.07 per cent, at 1,681.35. The Nasdaq Composite Index was up 4.02 points, or 0.11 per cent, at 3,604.10.
Oil slipped from a three-and-a-half-month high as it hovered just under $109 a barrel, while copper, gold and silver all nursed minor losses.
The Australian dollar, closely attuned to China’s fortunes due to the country’s appetite for Aussie raw materials, lost some of its post-data ground to stand 0.2 per cent higher at $0.9095. The U.S. dollar was up 0.1 per cent against a basket of currencies . The euro fell 0.1 per cent to $1.3053, rebounding from a session low of $1.2993.
In the bond market, trading was largely subdued. The benchmark 10-year US Treasury note was up 12/32, with the yield at 2.5465 per cent.
Benchmark German Bund futures were 0.15 per cent lower at 143.42, having gained almost two points last week, while a sell-off in Portuguese bonds steadied as traders awaited developments after the country’s political troubles.
French bonds gave a Gallic shoulder shrug to a downgrade by Fitch, which on Friday became the last of the big three ratings firms to strip Paris of its AAA status.