European stocks struggle to sustain momentum; dollar climbs

Eddie van der Walt, Bloomberg

European stocks followed Asian shares lower on Tuesday, while US equity benchmarks pointed to a softer open in the wake of Tuesday’s record close.

Treasuries climbed and the dollar extended its rally to a six-week high. Losses for raw-material producers threatened to end the longest run of gains since October 2017 for the Stoxx Europe 600 Index, with banks drifting lower despite positive earnings from Credit Suisse.

Futures on the S&P 500 slipped after the underlying index closed at a record on Tuesday. The MSCI Asia Pacific Index retreated as shares dropped in Tokyo.

Core European sovereign bonds climbed, while the common currency fell after data showed Germany’s business confidence worsened.

Crude oil dipped and gold held recent losses.

The buoyancy that took US stocks to record highs appears to have triggered some soul-searching among investors, with positive earnings surprises in Europe failing to erase lingering concerns about the region’s economic outlook.

So far, almost 80% of S&P 500 companies reporting results have exceeded estimates. Still looming is economic news, with US first-quarter gross domestic product data due on Friday, while emerging market investors will be nervously watching the dollar’s climb.

In China, markets got little help from the central bank’s move to support liquidity in the banking system to fund lending.

The People’s Bank of China injected the equivalent of about $40bn in medium-term loans. The PBOC has refrained from stronger measures, such as lowering the country’s benchmark lending rates, as an upturn in economic data reduces the pressure for more stimulus.

Wescoal serves 274 contract employees with notices of dismissal

JSE-listed mining Group Wescoal says that 274 contract employees at one of its subsidiaries have been served with notices of dismissal following what it described as "work stoppages, strike actions and riots".

In an update to shareholders on Tuesday, Wescoal said that production at Vanggatfontein Mine in Mpumalanga will be suspended for a period of between six to eight weeks.The mine is run by Keaton Mining, a subsidiary of Wescoal. The operations are outsourced to a mining contractor.

Global stocks struggle, even as US hits record

Cormac Mullen, Bloomberg

Asian stocks fell back Wednesday with the region lacking the catalyst that propelled their US counterparts to record highs: stronger corporate earnings releases.

Australia’s dollar slumped after a surprisingly weak inflation reading. The MSCI Asia Pacific Index retreated as shares dropped in Tokyo, Seoul and Hong Kong, and fluctuated in Shanghai.

Australian equities bucked the trend as flat consumer price growth stoked bets on lower interest rates and pulled down the Aussie, bolstering its competitiveness. Earlier, the S&P 500 Index marked fresh highs following favourable first-quarter figures from the likes of Twitter, Lockheed Martin and Hasbro

The dollar strengthened, while Treasury yields ticked lower. European futures were lower.

The weaker tone in Asian equities contrasts with the overnight move in the US, which was bolstered by the fact that almost 80% of S&P 500 companies have reported results that exceeded estimates.

Still looming is economic news, with US first-quarter gross domestic product data due on Friday, while emerging market investors will be nervously watching the dollar’s climb.

In China, markets got little help from the central bank’s move to support liquidity in the banking system to fund lending. The People’s Bank of China injected the equivalent of about $40bn in medium-term loans.

The PBOC has refrained from stronger measures, such as lowering the country’s benchmark lending rates, as an upturn in economic data reduces the pressure for more stimulus. Elsewhere, the pound held losses as UK Prime Minister Theresa May confronted further challenges to her leadership.

Oil retreated after three sessions of gains.