Stock market rally stalls as weak earnings dampen sentiment: markets fall

(Bloomberg) — Global stocks halted their rally Wednesday as euphoria over a possible dovish turn by central banks faded and earnings at many companies fell short of expectations.

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Europe’s Stoxx 600 index slipped 0.2% and U.S. stock futures fell. Burberry Group Plc fell 9% after saying weaker demand for high-end products could make its sales forecast unattainable. HelloFresh SE fell 18% after the meal kit company cut its sales forecast. Cisco Systems Inc. lost 10% in premarket trading after it said orders for new products were slowing.

Ten-year Treasuries settled near 4.5% after yields rose nearly nine basis points in the previous session. The dollar was little changed and West Texas Intermediate fell as low as $76 per barrel.

This week’s rally in stocks and bonds has prompted some to wonder whether the market is moving too fast in the face of expectations that interest rates will fall. Even though the data shows a slowdown in U.S. inflation, other economic measures such as retail sales and Target Corp.’s profits are slowing. indicate that consumer demand remains robust.

“The inflation discussion is done and dusted,” said Peter Kinsella, head of foreign exchange strategy at Union Bancaire Privée UBp SA. “Now the narrative will slowly shift from inflation risks to growth risks, and we have to wait and see what happens with the labor market data. »

Focus now shifts to early US jobless claims and industrial production figures due later on Thursday, with investors also likely to listen to a series of speakers from the Fed and Central Bank European. Walmart Inc.’s earnings will provide additional insight into the state of the economy.

Meanwhile, shares of Hotel Chocolat Group Plc soared 160% after Mars Inc. agreed to buy it for £534 million ($662 million) and pledged to help it develop internationally.

The story continues

In earlier trading, the MSCI Asia-Pacific Index ended a three-day streak of gains. Chinese stocks were undermined by data showing property prices fell at their fastest pace since 2015. Investors are also awaiting earnings from Alibaba Group Holding Ltd. later today, following encouraging results from JD.com Inc and Tencent Holdings Ltd.

Separately, President Xi Jinping’s comment that his country will not fight a cold or hot war with the United States is seen as a sign that Beijing intends to repair its recently deteriorated relations with the United States. He spoke after a meeting with his American counterpart Joe Biden.

“The tone on both sides seems conciliatory and that’s a good thing,” said Redmond Wong, market strategist at Saxo Capital Markets in Hong Kong.

Key events this week:

• First unemployment claims in the United States, industrial production, Thursday

• Walmart earnings Thursday

• Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed Vice Chairman for Supervision Michael Barr will speak Thursday.

• Bank of England Deputy Governor Dave Ramsden and ECB President Christine Lagarde speak at an event on Thursday.

• Housing starts in the United States, Friday

• The US Congress faces a midnight deadline to pass a federal spending measure on Friday.

• ECB President Christine Lagarde speaks on Friday

• Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly will speak Friday.

Some of the main market movements:

Actions

• S&P 500 futures were little changed as of 5:20 a.m. New York time.

• Nasdaq 100 futures little changed

• Dow Jones Industrial Average futures little changed

• The Stoxx Europe 600 fell 0.3%

• The MSCI World index fell 0.1%

Currencies

• Bloomberg Dollar Spot Index little changed

• The euro remained unchanged at $1.0848

• The British pound fell 0.2% to $1.2397

• The Japanese yen was little changed at 151.27 per dollar

Cryptocurrencies

• Bitcoin fell 0.7% to $37,367.65

• Ether fell 0.2% to $2,043.4

Obligations

• The 10-year Treasury yield fell three basis points to 4.50%

• The German 10-year yield fell three basis points to 2.62%

• The UK 10-year yield fell seven basis points to 4.16%

Raw materials

• West Texas Intermediate crude was little changed

• Spot gold rose 0.3% to $1,966.49 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Tassia Sipahutar and Chiranjivi Chakraborty.

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