Tuesday 19 June 2018

'Geo-political jitters' are priced in as oil markets rally

Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York

Reuters

A gauge of stocks across the world fell on Friday but was still on track to end the week with its strongest performance in five weeks, while crude oil added to recent gains that drove it to highs not seen since late 2014.

Banks stocks led Wall Street lower, with JPMorgan down 3.0pc after its earnings missed estimates.

Scott Brown, chief economist at Raymond James in St Petersburg, Florida, said stock prices have taken in much of the heightened expectations on earnings.

"This has not been the typical pre-earnings season where you're talking down expectations. There is some potential for disappointment; at the same time there is also lot of hope."

US tax cuts are expected to help corporate America post its biggest quarterly profit growth in seven years. Earnings at S&P 500 companies are estimated to grow by 18.4pc from a year earlier.

The larger bank stocks fell 2.6pc on Friday, still up about 1pc for the week.

The Dow Jones Industrial Average fell 76.55 points, or 0.31pc, to 24,406.5, the S&P 500 lost 3.3 points, or 0.12pc, to 2,660.69 and the Nasdaq Composite dropped 14.67 points, or 0.21pc, to 7,125.58.

The pan-European FTSEurofirst 300 index rose 0.1pc and MSCI's gauge of stocks across the globe shed 0.03pc.

In Dublin, the Iseq closed down slightly at 6,638.13.

In emerging markets, stocks lost 0.57pc.

However, oil prices rose and were headed for their largest weekly gain since July on support from lingering concerns about geopolitical risk and reports of dwindling global oil stocks.

"The geopolitical jitters just keep getting priced in here more and more, as we get closer to the moment of the strikes, if there are any," said John Kilduff of Again Capital Management.

Irish Independent

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