World stocks slip as tech shares crumble after Dow breaks 22,000

Image result for World stocks slip as tech shares crumble after Dow breaks 22,000

World stock markets fell on Thursday, led by a tumble in tech shares as investors locked in recent gains after Wall Street’s Dow Jones Industrial Average broke the 22,000 barrier for the first time in its 121-year history.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, with South Korea’s tech-heavy Kospi index slumping 1.7 percent to its lowest level in over three weeks. Seoul shares took an additional hit from President Moon Jae-in’s new tax plan.

Japan’s blue-chip Nikkei stock index closed down 0.3 percent.

European stock markets opened broadly lower, Germany’s DAX slipping 0.6 percent and France’s CAC 0.4 percent lower. Britain’s FTSE was down 0.2 percent.

“We haven’t seen a major correction in tech shares so far this year so they may be hitting a speed bump,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

In New York overnight, the Dow Jones Industrial Average topped the 22,000 mark for the first time on the strength in Apple shares following its earnings.

But as the positive impact faded, investors were encouraged to take profits.

Samsung Electronics, which last Friday posted its biggest daily fall since October, slid 2.5 percent, giving up the gains made so far this week. SK Hynix dropped more than 3 percent.

Technology stocks in Europe slipped 0.3 percent.

“I don’t see too much in the way of downside for European stocks because economic data is strong – take a look at the Italian data today,” said Michael Hewson, chief market analyst at CMC Markets.

Data on Thursday showed Italy’s service sector posted its fastest growth for a decade in July, boosting prospects for economic output in the euro zone’s third-largest economy.

Dollar Edges Up

In currency markets, the dollar inched away from a 15-month low versus a basket of currencies, but was still looking wobbly due to doubts about whether there will be another U.S. interest rate rise this year.

U.S. inflation has been contained even as the labor market appears to be in its best shape in many years, with the jobless rate staying near a 17-year low.

Friday’s closely watched government employment report could provide more clues on the economic outlook.

The dollar index, which measures the greenback’s value against a basket of six major currencies, rose about 0.12 percent to 92.951. On Wednesday, it slid to 92.548, its weakest level since May 2016.

The euro was a touch weaker at $1.1841, after rising to around $1.1911 on Wednesday, its highest level since January 2015.

Britain’s pound held near Wednesday’s 11-month high of $1.3250 ahead of a Bank of England interest rate decision. The central bank will also release its latest inflation report.

The BoE is expected to keep interest rates at a record low. When they last met in June, rate-setters voted by a narrow 5-3 margin to keep Bank Rate at 0.25 percent.

The surprisingly close decision pushed up sterling and British government bond yields as investors pulled forward their expectations of a rate hike.

Oil prices dipped as a rally that pushed up prices by almost 10 percent since early last week lost its momentum, despite renewed signs of a gradually tightening U.S. market.

Brent crude futures slipped 0.8 percent to $51.94 per barrel, not far from Wednesday’s high of $52.93, its highest level in 10 weeks.

Euro zone business activity lost some momentum in July, still strong: PMI

Image result for Euro zone business activity lost some momentum in July, still strong: PMI

Euro zone businesses started the second half of 2017 with robust growth although the pace slowed slightly from June as a loss of momentum in Germany and France dragged on activity, a survey showed on Thursday.

IHS Markit’s final composite Purchasing Managers’ Index for the euro zone was 55.7 in July, down from June’s 56.3 and a flash estimate of 55.8. It has been above the 50 mark that divides growth from contraction since mid-2013.

“The surveys indicated a slight cooling in the pace of growth in July, but this is still an encouragingly upbeat picture of business conditions,” said Chris Williamson, chief business economist at survey compiler IHS Markit.

Williamson said the data pointed to a 0.6 percent economic growth rate, matching official preliminary estimates for the second quarter that were released on Tuesday. A Reuters poll last month predicted a 0.4 percent pace.

Signaling the positive readings could continue into August, new orders rose, backlogs of work were built up and firms increased headcount. The employment sub-index held steady at June’s 54.4, one of the highest readings in the last 10 years.

Activity in Germany’s services sector slowed to a 10-month low, however, and France’s private sector grew more slowly in July than in the previous month, earlier figures showed. Spain’s services PMI dipped last month.

“Of the four largest euro members, only Italy recorded faster growth in July,” noted Williamson.

A PMI covering the bloc’s dominant service industry held at June’s 55.4, matching the flash estimate. Tuesday’s manufacturing PMI dipped from the previous month.

New business for services firms came in at a faster rate last month. The sub-index nudged up to 55.2 from 55.1 in June.

Global demand for gold drops 14 percent in first half of 2017 – WGC

Global demand for gold fell 14 percent in the first half of this year due mainly to a sharp decline in purchases by exchange traded funds, the World Gold Council said in a report on Thursday.

Central bank buying also fell slightly in the first half but purchases of bars, coins and jewellery grew thanks to strong demand in India and Turkey, the industry-funded WGC said in its latest Gold Demand Trends report.

Gold-backed ETFs saw record inflows last year to match a 30 percent rise in gold prices between January and June.

But with prices rising only around 8 percent in the same period this year, funds added only 56 tonnes in the second quarter, down 76 percent from last year, bringing first half inflows to 167.9 tonnes.

European ETFs accounted for 76 percent of first half inflows taking their holdings to a record 978 tonnes.

“This year demand is a little more balanced,” said Alistair Hewitt, the WGC’s head of market intelligence. “While we saw huge inflows into ETFs last year, the physical markets of jewellery, bars and coins slumped to multi-year lows.”

Total global demand for gold amounted to 2,004 tonnes in January-June, down from 2,318.7 tonnes in the same period last year. For the second quarter alone, demand was 953 tonnes, the lowest quarterly total in two years.

Jewellery purchases rose 8 percent over April-June helped by a rebound in buying in India ahead of a new sales tax and in Turkey thanks to a more stable economy, but first half buying remained below 1,000 tonnes for only the fourth time since 2000.

Purchases of gold bars and coins were up 13 percent in the second quarter and 11 percent in the first half as Chinese, Indian and Turkish demand increased.

Central banks bought 94.5 tonnes of gold in the second quarter as Turkey joined Russia and Kazakhstan in expanding its reserves, but first half purchases were down 3 percent at 176.7 tonnes.

Hewitt said he expected central banks to buy 350-450 tonnes of gold over the full year and for total annual demand to be around 4,200-4,300 tonnes. That would be slightly below last year’s 4,337.5 tonnes, the highest annual level since 2013.