Wall St. falls as investors eye a united hawkish Fed
October 18, 2018
Wall St. slips as IBM disappoints; Fed minutes awaited
October 18, 2018Canada’s main stock index declined on Wednesday as the healthcare sector fell more than 1.5 per cent, led by losses in cannabis shares.
Canada became the first industrialized nation to legalize recreational cannabis on Wednesday, but a lawful buzz will be hard to come by in its biggest cities like Toronto and Vancouver, which will have no stores open.
After large initial declines, Canopy Growth Corp. sat down 2.2 per cent, while Aurora Cannabis Inc. fell 0.2 per cent.
Conversely, Aphria Inc. rose up 2.3 per cent after falling early.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 79.72 points, or 0.51 per cent, at 15,500.02.
Also weighing on the main index was the energy sector , which fell 1.4 per cent as U.S. and Brent crude prices fell.
Ten of the index’s 11 major sectors were lower.
A gauge of stocks across the world edged lower on Wednesday following its largest daily run-up in over two years, as the outlook on earnings soured after a warning on the European auto sector and a revenue miss from IBM.
Crude futures fell for the first session in four after U.S. government data showed a much larger-than-expected build in crude inventories.
The U.S. dollar rose as the market awaited the minutes from the latest Federal Reserve meeting. Lower-than-expected UK inflation data weighed on sterling, which gave up the previous day’s gains.
On Wall Street, IBM fell 7.4 per cent, dragging blue-chips lower a day after the company missed revenue expectations. On Tuesday, the S&P 500 posted the biggest daily gain since late March.
Stocks extended losses when oil prices fell further.
“The (stock) indices are pulling back after yesterday’s blockbuster earnings rally that is likely to be challenged by the Fed’s FOMC minutes,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The Dow Jones Industrial Average fell 266.91 points, or 1.03 percent, to 25,531.51, the S&P 500 lost 25.22 points, or 0.90 per cent, to 2,784.7 and the Nasdaq Composite dropped 76.18 points, or 1 per cent, to 7,569.31.
European stocks hit a one-week high in early trade, but then were pulled lower by a 2.5-per-cent fall in an index of auto stocks. Goldman Sachs said slow demand in China could hit earnings in the sector.
The pan-European FTSEurofirst 300 index lost 0.71 per cent and MSCI’s gauge of stocks across the globe gained 1.71 per cent.
Emerging market stocks rose 1.34 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.64 per cent higher, while Japan’s Nikkei rose 1.29 per cent.
Oil prices fell on Wednesday, with U.S. futures slipping below $70 a barrel for the first time in a month, after U.S. stockpiles rose by 6.5 million barrels, almost triple what analysts had forecast, while exports dropped.
U.S. light crude oil fell to $69.96 a barrel, down $1.96, or 2.7 per cent. Oil had been rising on worries about Iranian sanctions and tensions between the United States and Saudi Arabia after the death of Saudi journalist Jamal Khashoggi.
“This market is dangerously close to $70. If it goes down through $70, I think some of that speculative position may have interest in getting out, and that could accentuate the downside,” said Bob Yawger, director of futures at Mizuho in New York.
Brent crude was down $1.84, or 2.2 per cent, to $79.66 a barrel, after gaining $1.15 over the previous three sessions. The global benchmark is trading around $5 below a four-year high of $86.74 reached on Oct. 3.
Crude stocks rose 6.5 million barrels for the week through Oct. 12, and exports were down to 1.8 million bpd, the U.S. Energy Information Administration said, in a report analysts characterized as bearish. Oil futures were already sinking in anticipation of larger crude inventories and in tandem with recent declines in equity markets worldwide.
A Reuters survey of eight analysts estimated crude stocks rose by about 2.2 million barrels last week. On Tuesday, preliminary numbers by the American Petroleum Institute indicated that U.S. crude inventories fell just 2.1 million barrels.
The scandal over the disappearance of prominent Saudi critic and journalist Jamal Khashoggi, who disappeared two weeks ago after entering the Saudi consulate in Istanbul, had underpinned oil markets earlier in the week.
U.S. lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers, but President Donald Trump’s comments suggested that White House may not take additional action against the Saudis, particularly after Saudi Arabia has said it will conduct an investigation.
