Tuesday 26 September 2017

Markets edge lower as global uncertainty weighs

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt
Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt

US stocks edged lower on Wednesday as investors assessed uncertainty stemming from rising geopolitical tensions and the upcoming corporate earnings season.

The United States launched missiles at a Syrian airfield last week to retaliate a deadly chemical attack on civilians. The strikes pushed US President Donald Trump - who came to power in January calling for warmer ties with Syria's ally Russia - and his administration into confrontation with Moscow.

Also, Chinese President Xi Jinping called on the US for a peaceful resolution with North Korea, which has warned it would launch a nuclear attack if provoked by the United States.

A US Navy strike group is headed toward the western Pacific.

The S&P 500 fell below its 50-day moving average, while the price of gold and VIX, Wall Street's fear gauge, rose to their highest levels since November.

At 10.57am in New York, the Dow Jones Industrial Average was down 52.9 points, or 0.26pc, at 20,598.4, the S&P 500 .SPX was down 7.27 points, or 0.31pc, at 2,346.51 and the Nasdaq Composite was down 19.45 points, or 0.33pc, at 5,847.32. Earnings are likely to be the next catalyst for the market.

The big banks, which have outperformed in a post-election rally since November, are of particular interest as investors fret over valuations amid a lack of clarity on Trump's ability to deliver on his pro-growth policies of tax and regulatory cuts.

Financials were the worst hit on Wednesday. The S&P 500 financial index tumbled 0.91pc, setting it up to post the fourth straight day of decline.

"Technically, we are due for a breather and if the earnings season disappoints, it could provide the correction that we need," said Josh Jalinski, president of Jalinski Advisory Group.

JPMorgan, Citigroup and Wells Fargo are scheduled to report results today, which will be the last trading day of the week on Wall Street ahead of the Good Friday holiday. Seven of the 11 major S&P sectors were lower.

Utilities, real estate and consumer staples, defensive sectors with slow but predictable growth, rose. Chipmaker Qualcomm dropped 2.8pc to $53.81 after it was asked to refund Canada's BlackBerry $814.9m in an arbitration settlement.

Delta Air Lines was up 3.5pc at $46.90, boosted by a quarterly profit beat.

Shares in rival US airline United turned lower, after an early rebound of as much as 1.4pc, having plunged earlier in the week in response to footage of a customer being forcibly removed from a flight.

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