Consumer demand fears
knock global stocks, dollar up before Fed decision
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[May 03, 2017]
By Patrick Graham
(Reuters) - Falls in iPhone and U.S. car sales helped beat European
stock markets back from 20-month highs on Wednesday while the dollar
inched up as investors priced in a greater chance of further tightening
of U.S. monetary policy next month.
Falls in the price of copper <CMCU3> and iron ore <DCIOcv1> fed in to a
broadly flatter global mood and Wall Street was set to open lower,
adding to a run of steady losses since the settling of nerves over
French elections a week ago.
The surprise fall in Apple's iPhone sales in the first quarter and drops
in units sold by Ford <F.N> and General Motors <GM.N> added to nerves
about the durability of U.S. growth after a batch of shakier economic
data last month.
"These numbers point to U.S. consumers becoming more cautious and do
seem like a source of some of the weakness today," said Andy Sullivan, a
portfolio manager with GL Asset Management UK in London. "Autos, tech
and basic resources are leading Europe lower."
By 1134 GMT, the STOXX 600 index of leading European shares was down
0.15 percent. France's CAC 40 and Germany's DAX fell 0.25 and 0.1
percent respectively while the resource-heavy FTSE 100 dipped 0.3
After a mixed Asian session, with a number of major markets closed, the
MSCI global share index was marginally lower on the day.
<.MIWD00000PUS>. U.S. futures dipped by 0.1-0.2 percent .
Since December, the U.S. Federal Reserve has finally begun to deliver on
long-disappointed expectations of a steady rise in borrowing costs and
an increase in official rates in June is now 65 percent priced in by
markets, according to Reuters data.
But economic numbers in the past month have been less convincing, and
the latest gains for global share prices look as much the product of an
improving recovery in Europe as the U.S.-based optimism that dominated
the end of last year.
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People are seen in front of an electronic board showing stock prices
outside a brokerage at a business district in Tokyo, Japan, January
4, 2017. REUTERS/Kim Kyung-Hoon
raises the question, ahead of the Fed's May policy decision later on Wednesday,
of how much the world's largest economy is capable of stomaching tighter
monetary conditions without a boost from tax cuts or new public spending.
Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking
Corporation in Singapore, said the weak U.S. auto sales could make market
participants wary of actively buying the dollar against the yen for now.
"Concerns about geopolitical risks such as North Korea had weighed on the dollar
against the yen recently ... But the focus is shifting to whether the (strength)
of U.S. economic fundamentals is for real," he said.
"There is more data coming up including the jobs data, so those need to be
watched closely," he added, referring to the U.S. nonfarm payrolls report due on
The dollar index, which tracks the greenback against a basket of
trade-weighted peers, rose 0.1 percent to 99.069.
It gained around 0.2 percent against the yen <JPY=D4> and the euro on the day
but remained below highs hit over the past week.
(Additional reporting by Nichola Saminather in Singapore; Editing by Catherine
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