Global markets split amid corporate earnings

Shares of Google's parent Alphabet slumped after the markets closed Monday. An EU fine took a big bite of the search engine company's profit.
A street sign near the New York Stock Exchange in New York.
A street sign near the New York Stock Exchange in New York. PHOTO: AFP

NEW YORK (AFP) - Wall Street and major European stocks ended in mixed territory on Monday (July 24) amid a busy week of US corporate earnings.

Meanwhile, the dollar continued to weaken on receding expectations that the US central bank will raise interest rates again in 2017.

In New York, the tech-heavy Nasdaq had another record finish, driven up 0.4 per cent in anticipation of Monday's earnings report from Google-parent Alphabet.

The Internet giant added 0.5 per cent but fell after hours as the company said last month's US$2.7 billion (S$3.7 billion) European antitrust fine had taken a bite out of quarterly profits.

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Meanwhile, the blue-chip Dow Jones Industrial Average and broader S&P 500 were dragged lower by pharmaceutical giant Johnson & Johnson, which suffered on news of competition for a rheumatoid arthritis drug.

The Dow fell 0.3 per cent and the S&P lost 0.1 per cent.

After months of rallying, Wall Street equities are expensive, leaving investors looking to earnings to justify high corporate valuations.

"The companies are delivering on the earnings but investors and expecting more," Mr Jack Ablin of BMO Private Bank told AFP.

Elsewhere, London stocks were hit by airline sector turbulence and Frankfurt skidded lower on worries over collusion by carmakers.

London's FTSE 100 index ended the day down 1.0 per cent, with air carriers bearing the brunt after Ireland's low-cost Ryanair posted soaring first-quarter profits but hinted at a price war.

HIGH HOPES FOR THE EURO

The euro retreated from a near two-year high against the US dollar ahead of this week's meeting of the Federal Reserve, which is expected to announce on Wednesday it is leaving benchmark American interest rates untouched.

The single currency has extended last week's rally against the greenback after European Central Bank boss Mario Draghi said policymakers would address its vast stimulus programme in the autumn, fuelling speculation they would start winding it in.

"The euro is generally being boosted by the belief that the ECB will announce tapering before the end of the year," Oanda analyst Craig Erlam told AFP.

"While the Fed has openly been on a tightening path, the recent commentary has suggested the pace could slow."

While the strong euro hurts Eurozone exporters, French stocks managed a 0.2 per cent gain on the day, mainly due to a survey on private sector business activity showing a pickup in manufacturing.

Frankfurt stocks were hit by worries that German carmakers could face huge fines if allegations they colluded illegally for decades prove true.

Major Asian stocks were mixed, with the Nikkei and Hang Seng adding 0.6 and 0.5 per cent, respectively, while Shanghai fell 0.4 per cent.