World stocks cautious as investors eye US data, Fed comment

AP News
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Posted: Apr 29, 2015 7:28 AM
World stocks cautious as investors eye US data, Fed comment

HONG KONG (AP) — World stock markets were cautious Wednesday as investors waited for a U.S. growth report that is expected to provide the latest sign of slowing momentum in the world's biggest economy and a Federal Reserve policy statement.

KEEPING SCORE: France's CAC-40 fell 0.2 percent to 5,162.61 and Germany's DAX was flat at 11,810.94. Britain's FTSE 100 edged down 0.1 percent to 7,022.70. U.S. stocks were poised to open lower, with Dow and S&P 500 futures down 0.1 percent.

US ECONOMY: Investors are pulling back as signs mount that growth in the world's biggest economy is slowing. A Conference Board report on Tuesday showed that consumer confidence unexpectedly fell to its lowest in four months, knocked by a slowdown in hiring. Further bad news is expected when an initial estimate of first quarter growth is released later Wednesday. Economists are expecting quarterly growth of 1 percent, down from 2.2 percent in the previous period, because of severe winter weather and a stronger dollar that's hurting American manufacturers.

FED STATEMENT: Hours after the U.S. economic data is released, the Federal Reserve is set to issue a policy statement from its two-day meeting. Investors will be looking for any hints on when it will raise interest rates but expectations now are that they'll stay at record lows until at least September. The tempered outlook has also weakened the dollar against other major currencies.

ANALYST VIEW: "Traders looking for direction will look no further" than U.S. first quarter GDP data and the Fed statement, said Will Leys, a CMC Markets sales trader in Sydney. "These events could potentially confirm a soft run of U.S. data, and continue the greenback's recent wane. Conversely, if there's a surprise to the upside, the Fed's first rate raise may be back on the cards."

ASIA'S DAY: Hong Kong's Hang Seng lost 0.2 percent to 28,400.34 and South Korea's Kospi fell 0.2 percent to 2,142.63. The Shanghai Composite Index in mainland China ended flat at 4,476.62 after swinging between losses in the morning and gains in the afternoon. Australia's S&P ASX/200 sank 1.9 percent to 5,838.60. Japan's stock market was closed for a holiday.

EARNINGS: Corporate earnings reports were mostly weak, particularly in Asia. Samsung Electronics Co. said its first quarter income plunged 39 percent as consumers switched to Apple's bigger iPhones. LG Electronics Inc. saw profit plunge 59 percent because of losses at its TV business and state-owned Agricultural Bank of China Ltd. reported that profit edged up just 1.5 percent as the world's second biggest economy slowed.

Reports were mixed in Europe, where Barclays bank booked a 52 percent drop in earnings as it accounted for the cost of regulatory fines, though Volkswagen saw its profit rise by about a fifth.

CURRENCIES: The dollar rose to 119.23 yen from 118.82 yen late Tuesday. The euro rose to $1.1006 from $1.0972.

ENERGY: U.S. benchmark crude dipped 32 cents to $56.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 7 cents to close at $57.06 a barrel on Monday.