Markets

Global markets edge lower in Big Tobacco selloff; oil rises

Stock markets fell worldwide on Friday as results from some big US companies disappointed and tobacco shares slumped, while oil prices had their biggest weekly percentage rise this year.

Altria Group fell 9.5 per cent and was the biggest drag on the S&P 500, while US-listed shares of British American Tobacco dropped 7 per cent, after the US Food and Drug Administration said it aims to reduce nicotine levels in cigarettes while exploring measures to shift smokers towards e-cigarettes.

Amazon’s stock fell after the world’s largest online retailer reported late on Thursday a 77 per cent fall in quarterly profit, even though retail sales jumped. Results from Exxon Mobil and Starbucks also disappointed.

Despite Friday’s share reactions, second-quarter results in the US have come in mostly better than expected, and stocks are trading near record highs. 

The Australian sharemarket kicks off its profit reporting season on Tuesday.

The Dow Jones Industrial Average rose 33.76 points, or 0.15 per cent, to close at 21,830.31, the S&P 500 lost 3.32 points, or 0.13 per cent, to 2,472.1 and the Nasdaq Composite dropped 7.51 points, or 0.12 per cent, to 6,374.68.

MSCI’s 47-country All World share index was down 0.2 per cent, while the European STOXX 600 index was down 1 per cent.

Oil prices rose, extending this week’s strong rally built on news that key OPEC members pledged to reduce exports and bigger-than-expected US inventory drawdowns.

Brent crude futures rose $US1.03 to settle at $US52.52 per barrel, while US crude futures rose 67 US cents to settle at $US49.71.

For the week, US crude rose nearly 9 per cent, its biggest weekly gain this year. The gains in Brent pushed the difference between the two benchmarks to the widest in two months.

“The bullish inventory report this week has helped confirm the declining trajectory of global inventories,” said Sarp Ozkan, analyst at Drillinginfo.com. That, along with Saudi Arabia reducing exports, has “buoyed the expectations of continued inventory normalization.”

The US dollar was broadly lower as a combination of uninspiring US economic data and political uncertainty kept traders biased toward the euro and other world currencies such as the Aussie.

US gross domestic product growth picked up to 2.6 per cent in the second quarter, matching expectations of economists polled by Reuters.

In Washington, US Senate Republicans failed early on Friday to overturn the healthcare law known as Obamacare, in a stinging blow to President Donald Trump.

The euro moved higher against the dollar, and was last up 0.7 per cent at $1.1751. The Swiss franc fell for a fourth straight day and was set for its largest monthly drop in six years against the euro.

US Treasury yields fell. Other data showed that US labour costs increased less than expected in the second quarter. The Employment Cost Index, the broadest measure of labour costs, increased 0.5. per cent in the April-June period.

Benchmark 10-year notes rose 5/32 in price to yield 2.29 per cent, down from 2.31 per cent on Thursday.

Reuters

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