Global Shares Decline Amid Oil's Weakness
21 Junho 2017 - 5:08AM
Dow Jones News
By Riva Gold and Ese Erheriene
Global stocks extended losses Wednesday after a steep drop in
oil prices, although Chinese shares outperformed after MSCI Inc.
said it would add Chinese shares to its emerging-markets index.
The Stoxx Europe 600 was down 0.7% in the early minutes of
trading, led lower by banks, autos and insurance companies. Markets
across Asia moved lower amid declines in banks and energy
companies, while futures pointed to a 0.2% opening dip for the
S&P 500.
The S&P 500 and Dow Jones Industrial Average posted their
biggest daily losses in over a month Tuesday while government bonds
firmed as oil prices dropped to their lowest level since
September.
WTI crude futures were last down 0.1% at $43.45 a barrel after
returning to bear-market territory Tuesday as cuts by the
Organization of the Petroleum Exporting Countries were offset by
increasing production elsewhere. U.S. oil production has climbed
around 7% since OPEC announced plans to cut output in November, and
the number of active rigs in the U.S. is at a two-year high.
Yields on 10-year U.S. Treasury notes were little changed at
2.152% Wednesday after the fall in crude sent yields down to 2.153%
Tuesday, close to their low of the year. Lower energy prices tend
to damp inflation expectations, boosting the value of long-term
debt. Yields move inversely to prices.
The impact of falling oil on credit markets was limited and
largely contained to oil-and-gas companies, according to
strategists at Commerzbank.
Earlier, stocks were lower across the Asia-Pacific region as
lower oil prices hurt energy companies and financial stocks fell
amid an earlier decline in global government bond yields.
The Nikkei Stock Average was down 0.5% as the yen strengthened,
while South Korea's Kospi and Hong Kong's Hang Seng Index were also
0.5% lower. Australia's S&P ASX 200 logged its biggest decline
of the year, falling 1.6% amid further losses for bank shares and
mining and energy companies.
Mainland China markets inched higher after MSCI Inc. said it
would include Chinese stocks in its emerging-markets index. The
Shanghai Composite Index was up 0.3% and stocks in Shenzhen were up
0.2% as positive sentiment from the MSCI decision narrowly offset
outflows from the energy sector.
Xu Yang, an analyst at Hua An Securities, said the move's
near-term impact was mostly on raising market sentiment.
"As the world's second-largest stock market, A-shares don't lack
money...Confidence is what this market lacks," he said.
Some investors worried that China's domestically traded A-shares
were overvalued when compared with global levels, and there were
also concerns about whether China's volatile market will adapt to
international best practices.
"China's entry into the MSCI global indices is a historic
milestone," although challenges remain, said Hao Hong, managing
director and head of research at Bocom International.
In currencies, the WSJ Dollar Index was flat following two days
of gains after Federal Reserve Bank of Dallas President Robert
Kaplan said he would like to see more evidence of inflation before
raising interest rates again.
The British pound edged down 0.2% to $1.2607, extending
Tuesday's decline, while the dollar fell 0.3% against the yen.
In corporate news, shares of Provident Financial PLC fell nearly
15% after it warned that a disruption caused by a transition of the
home credit business would reduce the unit's 2017 adjusted earnings
by around 48%.
Kenan Machado, Stephanie Yang, Tapan Panchal and Shen Hong
contributed to this article.
Write to Riva Gold at riva.gold@wsj.com and Ese Erheriene at
ese.erheriene@wsj.com
(END) Dow Jones Newswires
June 21, 2017 03:53 ET (07:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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