Tag Archives: Stock Market

World stocks retreat from record highs as valuations give cause for a pause

FILE PHOTO: Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange (TSE) in Tokyo, Japan, February 9, 2016. REUTERS/Issei Kato/Files

By Vikram Subhedar

LONDON (Reuters) – Global stocks paused near record highs as worries over China’s banking system provided an excuse for investors to lock in some profits. The dollar was set for its best week of the year on bets the Federal Reserve will raise U.S. interest rates in June.

A dip on Wall Street overnight on signs of weak consumer spending and waning enthusiasm over the recovery in European corporate earnings has put MSCI’s gauge of world stock markets <.MIWD00000PUS> on track for its first weekly loss in four.

The index trades at now trades at more than 16 times forward earnings, according to Thomson Reuters data, and above its long-term average of 15.6 times.

U.S. stock futures <ESc1> were down another 0.2 percent on Friday.

“We’ve had a nervous twitch about China, over this week,” said Sean Darby, chief global equity strategist at Jefferies. “We’ve had a bit more of a regulatory overhang coming through in the financial system.”

China’s banking regulator this week launched emergency risk assessments of lenders’ new business practices, sources told Reuters, as Beijing extends its crackdown on shadow banking.

With corporate earnings seasons in the U.S. and Europe drawing to a close investors, focus is likely to shift back to central banks, particularly in the United States, where inflation pressures are growing.

U.S. data on Thursday showed producer prices rebounded more than expected last month, leading to the biggest annual gain in five years.

Combined with a tightening labor market, firming inflation backs market expectations that the Federal Reserve will raise interest rates at its meeting next month. The central bank has forecast two more increases this year after raising rates a quarter of a point in March.

The stronger fundamentals in the U.S. helped offset uneasiness over political turmoil after President Donald Trump abruptly fired FBI chief James Comey.

The dollar index, which tracks the currency against a basket of six major rivals, was flat on the day at 99.622 <.DXY>, but was up 1 percent for the week.

Sterling was steady on the day at $1.2886 <GBP=> after dropping to a one-week low on Thursday following the Bank of England’s decision to keep interest rates unchanged. Policymakers indicated that rates were unlikely to rise until late 2019.

EUROPE’S SWEET SPOT

In Europe, stock markets steadied this week. Company profits are expected to grow 20 percent in the first quarter, the best corporate results in a decade, according to Morgan Stanley.

Their outperformance this year against global peers remains intact, with the benchmark’s <.STOXX> 10 percent gains outpacing the 7 percent rise on the S&P 500 <.SPX>.

Greek stocks <.ATG> snapped a their longest winning streak in two decades.

“European stocks are still in the sweet spot of basking in the removal of political risk in Europe for the time being, though it is somewhat ironic that we could see a modest decline on the week as investors take stock,” said Michael Hewson, chief markets analyst at CMC Markets.

European equity funds pulled in a record $6.1 billion in inflows in the week to May 10, according to data from EPFR, with centrist Emmanuel Macron’s win in the French presidential election seen as a trigger.

Concerns over valuations are beginning to emerge. Credit Suisse strategists cut their rating on Spain, the euro zone’s top performing market for the year, to “underperform,” saying the strong earnings and economic momentum was moderating.

At the same time, the collapse in volatility across asset classes to multi-year or record lows, is tempting more investors into making bets that markets will remain calm given the brighter outlook for global growth.

Bank of America Merrill Lynch said its high-net-worth clients cut cash and resumed buying low-volatility exchange-traded funds.

Yields for the euro zone’s weaker borrowers, such as Italy, Portugal and Spain, were all also 1 to 3 basis points lower as investors awaited announcements of the volumes for expected bond sales next week by France and Spain.

Oil prices held recent gains as traders expected OPEC-led production cuts to extend beyond the middle of this year and as U.S. crude inventories fell to their lowest levels since February.

International Brent crude futures <LCOc1> were at $50.78 per barrel. U.S. West Texas Intermediate crude futures <CLc1> were at $47.85 per barrel, both little changed on the day.

(Reporting by Vikram Subhedar, editing by Larry King)

Dollar slips, yen gains, after Trump fires FBI chief

Dollar banknotes are seen in this picture illustration taken April 28, 2017. REUTERS/Dado Ruvic/Illustration

By Jemima Kelly

LONDON (Reuters) – The dollar fell and the perceived safe-haven yen gained on Wednesday, after U.S. President Donald Trump abruptly fired FBI Director James Comey in a move that shocked Washington and dampened some of this week’s strong risk appetite.

Rekindled fears that North Korea could be gearing up for another weapons test also underpinned the yen, which had sunk to an eight-week low the previous day as investors’ appetite for riskier currencies increased on the back of a weekend French election result that eased euro break-up fears.

The dollar, which had strengthened to as much as 114.325 yen on Tuesday <JPY=>, slipped back to 113.87 yen.

Trump said he had sacked FBI Director James Comey – who had been leading an investigation into the Trump 2016 presidential campaign’s possible collusion with Russia to influence the election outcome – over his handling of an email scandal involving presidential nominee Hillary Clinton.

But the move ignited a political firestorm, raising suspicions among Democrats and others that the White House was trying to blunt the FBI probe involving Russia.

The dollar slipped 0.2 percent against a broad index <.DXY>.

“There’s not much risk sentiment – that’s to some extent the main driver today, mainly with respect to geopolitical questions,” said Credit Agricole currency strategist Valentin Marinov in London.

Comments from European Central Bank President Mario Draghi failed to have any clear impact on the euro, which was flat at $1.0878 <EUR=>. Draghi said it was too early for the ECB to declare victory in its quest to boost euro zone inflation.

“Draghi is repeating the same message that he made at the last ECB press conference – there are no big surprises. He’s defending the ECB’s dovish policy stance,” said Marinov.

The euro had risen to a six-month high above $1.10 on Monday, after Emmanuel Macron defeated the anti-EU Marine Le Pen in France’s presidential run-off, as worries over European political risk faded and focus returned to central bank policy.

The Swiss franc, another safe-haven currency, fell to its lowest in seven months on Tuesday and stayed close to that at 1.09575 francs per euro, flat on the day <EURCHF=>.

Commerzbank currency strategist Esther Reichelt, in Frankfurt, though, said risk appetite could only drive the currency market so far before new drivers were needed.

“Dollar strength could materialize more, given the more benevolent risk environment, but that can only move the market for so long – you always need new impetus,” she said.

U.S. political uncertainty has tended to weigh on the dollar in recent months, on the view that a divided Congress could derail Trump’s promised tax reform and stimulus programme.

(Reporting by Jemima Kelly, editing by Larry King)

Oil spill leaves commodities spinning, safe-havens shine

Investors look at an electronic board showing stock information at a brokerage house in Shanghai, China, March 7, 2016. REUTERS/Aly Song/File Photo

By Marc Jones

LONDON (Reuters) – A slump in oil prices to the lowest in almost six months rattled markets on Friday, prompting a rally in safe-haven bonds, the yen and gold and taking the shine off a record-breaking week for world stocks.

Bourses flinched in both Asia and Europe and Wall Street also looked set for a subdued start as investors, who had been expecting to spend the day mostly looking ahead to U.S. jobs data and Sunday’s French elections, were caught off guard.

Traders had had to duck for cover overnight as both Brent <LCOc1> and U.S. <CLc1> crude fell more than 3 percent amid record trading volumes on mounting concerns about global oversupply.

Things only fully stabilized when Saudi Arabia’s OPEC chief hit the wires in European hours, saying there was a growing consensus among oil pumping countries that they needed to continue to “rebalance” the market.

Brent clawed back to $46.86 a barrel almost two dollars better off than its overnight low, but the scars left it an eye-watering 6 percent lower than at the start of the week.

“The whole commodity complex has been affected by this and it could have some pretty big implications if it continues for much longer,” said Saxo bank’s head of FX strategy John Hardy.

“If you look at global risk appetite, equities have been pretty quiet and that feeds into FX as well if carries on and there is a risk switch.”

Big commodity price drops do not just have an immediate impact on financial markets either.

As was seen during a slump between 2014 and 2016, they cause major headaches for countries that rely on their revenues. They also unleash deflationary forces, but can help energy-importing economies, firms and households by lowering their energy bills.

Oil has not been the only commodity that has suffered this week. Chinese iron ore futures <DCIOcv1> fell almost 7 percent in Shanghai overnight after tumbling 8 percent on Thursday.

Mining giant Rio Tinto <RIO.L> hit a six-month low, Glencore <GLEN.L> was set for its worst weekly loss in two months and copper miner Antofagasta <ANTO.L> since December.

The Canadian dollar <CAD=>, the Australian dollar <AUD=> and Russia’s rouble <RUB=> – some of the world’s most commodity- sensitive currencies – were all sent spinning, falling respectively to 14-month, four-month and seven-week lows.

They all fought back, though, after the Saudi OPEC governor’s comments to Reuters that: “A six-month extension (to production cuts) may be needed to rebalance the market, but the length of the extension is not firm yet.”

Rio Tinto <RIO.L> hit a six-month low on Friday, and Glencore <GLEN.L> was set for its worst weekly losses in two months, while for copper miner Antofagasta <ANTO.L> since December

LE PEN TO THE SWORD?

In calmer waters, the euro <EUR=> touched a six-month high of almost $1.10 ahead of France’s weekend election, in which polls now expect centrist Emmanuel Macron to convincingly beat right-wing and anti-euro rival Marine Le Pen.

The gap between French and German 10-year government borrowing costs also hit a six-month low and despite the dip on the day, European shares <.STOXX> were heading for a healthy 1.2 percent rise for the week. World shares <.MIWD00000PUS> hit a record high on Wednesday.

“I think now this election is no longer an issue and the market is already starting to focus on new issues: inflation, the (euro zone) economy, and the U.S. data,” said DZ Bank strategist Daniel Lenz.

He was referring to U.S. non-farm payroll numbers due out at 1230 GMT (8:30 a.m. EDT) are expected to show 185,000 jobs were created in April following March’s underwhelming 98,000 figure.

The dollar <.DXY> and U.S. government bond yields <US10YT=RR> had both been nudged lower by the commodity market worries. It is set to be the fourth weekly fall on the trot for the greenback which is now at its lowest since November.

The yen <JPY=> and gold <XAU=> rose in tandem as investors took refuge in safe havens, though the latter remained on track for its biggest weekly decline in nearly six months on bets that U.S. interest rates will rise again in the coming months.

“I think the payrolls will be under consensus,” said fund manager Hermes chief economist Neil Williams.

“It fits with my view that the U.S. is going to peak out at a far lower interest rate than markets expect. The Fed’s dot plots says 3 percent, but I’m going closer to 1.5 percent.”

Emerging markets were also caught in the commodities sell-off. The main emerging currencies were all on track for weekly losses and MSCI’s closely-followed EM stocks index <.MSCIEF> hit a 10-day low.

China markets have also been wobbling in recent weeks but the commodity market woes have been the central focus.

Brent traded volumes on Thursday reached an all-time high of nearly 542,000 contracts, suggesting that big betting hedge funds may have been ripping out long positions.

“It is now-or-never for oil bulls,” said U.S. commodity analysis firm The Schork Report. “They either put up a defence here or risk further emboldening the bears for a run at the $40 threshold (for WTI).”

(Addition Reporting by Abhinav Ramnarayan, Veronica Brown and Helen Reid in London; Editing by Hugh Lawson and Ed Osmond)

Wall St. flat as Fed meet kicks off; Nasdaq hits record

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 1, 2017. REUTERS/Brendan McDermid

By Tanya Agrawal

(Reuters) – Wall Street was little changed on Tuesday, with the Nasdaq Composite edging lower after eking out another record high, as the Federal Reserve’s meeting kicks off.

While the Fed is widely expected to stand pat on interest rates, investors are awaiting the central bank’s statement, due on Wednesday, for clues regarding the future path of rate hikes.

“While no one expects any changes to policy, the 500-word statement will probably provide some direction to the dollar,” said Hussein Sayed, chief market strategist at FXTM.

“‘Will the Fed acknowledge a slowdown in growth and thus send rate hike expectations lower for 2017?’ The Fed’s statement should be answering these questions, and based on that, traders will act.”

Strong corporate earnings for the first quarter have largely outweighed concerns about patches of weak economic data, including a report last week that showed the U.S. economy grew at its slowest pace in three years in the first quarter.

At 9:50 a.m. ET (1350 GMT) the Dow Jones Industrial Average <.DJI> was up 5.59 points, or 0.03 percent, at 20,919.05. The S&P 500 <.SPX> was down 1.45 points, or 0.06 percent, at 2,386.88 and the Nasdaq Composite <.IXIC> was down 6.52 points, or 0.11 percent, at 6,085.09.

Ten of the 11 major S&P 500 sectors were higher, with the industrials index’s <.SPLRCI> 0.34 percent rise leading the advancers.

Investors are bracing for another heavy week of corporate reports to see if quarterly earnings will keep on exceeding expectations.

Overall, profits at S&P 500 companies are estimated to have risen 13.6 percent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.

Shares of Apple <AAPL.O> rose as much as 0.8 percent to $147.69, hitting a record high for the second straight day. The stock was the biggest boost on the S&P and Nasdaq. The iPhone maker is due to report results after the close of market.

Dow component Pfizer <PFE.N> was down 1.2 percent at $33.36 after the drugmaker’s quarterly revenue missed estimates.

MasterCard <MA.N> rose 2.1 percent to $118.73 as the world’s second-largest payments network’s quarterly profit rose.

Advanced Micro Devices <AMD.O> tumbled 16.2 percent to $11.45 after the chipmaker’s second-quarter gross margins forecast raised some concerns.

Coach <COH.N> rose 6.2 percent to $41.12 after the handbag maker reported a higher-than-expected quarterly profit.

Declining issues outnumbered advancers on the NYSE by 1,321 to 1,263. On the Nasdaq, 1,300 issues fell and 1,052 advanced.

The S&P 500 index showed 30 new 52-week highs and four new lows, while the Nasdaq recorded 91 new highs and 19 new lows.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D’Souza)

Frugal U.S. consumers seen holding back first-quarter GDP

People shop at The Grove mall in Los Angeles November 26, 2013. REUTERS/Lucy Nicholson

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy likely hit a soft patch in the first quarter as an unseasonably warm winter and rising inflation weighed on consumer spending, in a potential setback to President Donald Trump’s promise to boost growth.

Reduced business investment in inventories and government spending cuts also crimped gross domestic product growth. A Reuters survey of economists conducted last week forecast GDP rising at a 1.2 percent annual rate, but many economists lowered their estimates after the government on Thursday released advance reports on the goods trade deficit and inventories in March.

The Atlanta Federal Reserve is forecasting the economy growing at only a 0.2 percent rate in the first quarter, which would be the weakest performance in three years.

The economy grew at a 2.1 percent pace in the fourth quarter. The government will publish its advance first-quarter GDP estimate on Friday at 8:30 a.m. The expected sluggish first-quarter growth pace, however, is not a true picture of the economy’s health.

The labor market is near full employment and consumer confidence is near multi-year highs, suggesting that the mostly weather-induced slowdown in consumer spending is probably temporary. First-quarter GDP tends to underperform because of difficulties with the calculation of data that the government has acknowledged and is working to rectify.

“The weakness is not a reflection of the underlying health of the economy, part of it is residual seasonality,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “It has become more understood over the past few years, that’s why people often discount first-quarter GDP.”

Even without the seasonal quirk and temporary restraints, economists say it would be difficult for Trump to fulfill his pledge to raise annual GDP growth to 4 percent, without increases in productivity.

Trump is targeting infrastructure spending, tax cuts and deregulation to achieve his goal of faster economic growth.

On Wednesday, the Trump administration proposed a tax plan that includes cutting the corporate income tax rate to 15 percent from 35 percent, but offered no details.

ANEMIC CONSUMER SPENDING

Economists estimate that growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, braked to below a 1.0 percent rate in the first quarter. That would be the slowest pace in nearly four years and follows the fourth quarter’s robust 3.5 percent growth rate.

The expected weakness in consumer spending is blamed on a mild winter, which undermined demand for heating and utilities production. Higher inflation, which saw the consumer price index averaging 2.5 percent in the first quarter, also hurt spending.

Government delays issuing income tax refunds to combat fraud also weighed on consumer spending. Economists said Federal Reserve officials were likely to view both the anemic consumer spending and GDP growth as temporary when they meet next week. The Fed is not expected to raise interest rates.

“The good news is that the Fed in recent years has distanced itself from the GDP numbers,” said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey. “A weak first-quarter GDP print should not affect the policy debate.”

After contributing to GDP growth for two straight quarters, inventory investment was likely a drag in the first quarter. JPMorgan is forecasting inventories chopping off one percentage point from GDP growth. Trade was likely neutral after being a huge drag in the fourth quarter.

But some good news is expected. Business investment likely rose further, with spending on equipment seen accelerating thanks to rising gas and oil well drilling as oil prices continue their recovery from multi-year lows.

Investment in home building is also expected to have gained momentum in the first quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Nasdaq tops 6,000, Dow surges as earnings impress

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 20, 2017. REUTERS/Brendan McDermid

By Yashaswini Swamynathan

(Reuters) – The Nasdaq crossed the 6,000 threshold for the first time on Tuesday, while the Dow registered triple-digit gains as strong earnings underscored the health of Corporate America.

The tech-heavy Nasdaq rose as much as 0.70 percent to hit a record level of 6,026.02, powered by gains in index heavyweights Apple <AAPL.O> and Microsoft <MSFT.O>.

The index had breached the 5,000 mark on March 7, 2000 and closed above that level two days later during the height of the tech boom.

Tuesday’s gains build on a day-earlier rally, which was driven by the victory of centrist candidate Emmanuel Macron in the first round of the French presidential election. Polls show Macron is likely to beat his far-right rival Marine Le Pen in a deciding vote on May 7.

“Political headlines in Europe don’t tend to stick, but create buying opportunities more than having long-term consequences,” said Stephen Wood, chief market strategist at Russell Investments.

At 12:49 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 235.96 points, or 1.14 percent, at 20,999.85, the S&P 500 <.SPX> was up 13.17 points, or 0.55 percent, at 2,387.32 and the Nasdaq Composite <.IXIC> was up 39.91 points, or 0.67 percent, at 6,023.73.

Investors are also keeping a close watch on the latest earnings season, hoping that companies will be able to justify their lofty valuations, which were spurred in part by President Donald Trump’s pro-growth promises.

Overall profits of S&P 500 companies are estimated to have risen 11 percent in the first quarter – the most since 2011, according to Thomson Reuters I/B/E/S.

Trump, who had promised to make “a big tax reform” announcement on Wednesday, has directed his aides to move quickly on a plan to cut the corporate income tax rate to 15 percent from 35 percent, a Trump administration official said on Monday.

The Dow outperformed other major sectors, largely due to a surge in Caterpillar <CAT.N> and McDonald’s <MCD.N> after they reported better-than-expected profits.

Eight of the S&P 500’s 11 major sectors were higher. DuPont’s <DD.N> 2.8 percent increase, following a profit beat, helped the materials sector <.SPRLCM> top the list of gainers.

Biogen <BIIB.O> jumped nearly 4 percent after the biotech company reported better-than-expected quarterly profit and revenue on Tuesday.

Advancing issues outnumbered decliners on the NYSE by 2,017 to 853. On the Nasdaq, 2,020 issues rose and 766 fell.

The S&P 500 index showed 80 52-week highs and three lows, while the Nasdaq recorded 194 highs and 36 lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)

Wall Street set to open lower as earnings gather pace

A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly

By Yashaswini Swamynathan

(Reuters) – U.S. stocks were on track to open slightly lower on Tuesday as investors weighed quarterly earnings and a possible delay in tax reforms, while keeping an eye on global politics.

U.S. Treasury Secretary Steven Mnuchin told the Financial Times on Monday that the Trump administration’s timetable for tax reform was probably delayed following setbacks in negotiations with Congress over healthcare.

Mnuchin’s statement added to concerns about President Donald Trump’s ability to deliver on his promises to cut taxes and simplify regulations – bets on which U.S. stocks have hit record highs since his election.

A raft of quarterly earnings from corporate heavyweights is expected to keep investors busy. Goldman Sachs <GS.N> shares sank 3.4 percent in premarket trading after the bank reported a lower-than-expected quarterly profit due to weak trading revenue.

Bank of America <BAC.N> inched up 1.2 percent after the company reported a strong jump in quarterly profit.

Shares of Morgan Stanley <MS.N>, Wells Fargo <WFC.N> and JPMorgan <JPM.N> were trading lower.

“The key for the market is still earnings, economic growth etc, and politics is merely a daily side show,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, Illinois.

Dow e-minis <1YMc1> were down 63 points, or 0.31 percent at 8:32 a.m. ET, with 37,433 contracts changing hands.

S&P 500 e-minis <ESc1> were down 6.75 points, or 0.29 percent, with 189,256 contracts traded.

Nasdaq 100 e-minis <NQc1> were down 12 points, or 0.22 percent, on volume of 33,948 contracts.

Safe-havens continued to be in favor ahead of crucial presidential elections in France and rising tensions between the United States and North Korea.

Adding to uncertainties, British Prime Minister Theresa May called for an early election on June 8 to guarantee political stability as the country negotiates its way out of the European Union.

Gold prices hovered close to five-month highs, while the dollar dipped.

Wall Street had closed higher in very thin trading volumes on Monday as investors bought technology and bank stocks.

Shares of Dow component UnitedHealth <UNH.N> rose 1.7 percent to $170.01 after the health insurer reported better-than-expected quarterly results and raised its profit and revenue forecast for the year.

Johnson & Johnson <JNJ.N> was down 1.3 percent at $124.10 after the healthcare conglomerate reported quarterly revenue that missed analysts’ expectations.

Netflix <NFLX.O>, the first of the FANG stocks to report, was up 1.4 percent at $149.24 after the video streaming service

provider reported weaker-than-expected subscriber numbers in the first quarter, but forecast strong growth in the current quarter.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)

U.S. housing starts fall in March, permits rise

A skyscraper reflects clouds in the Manhattan borough of New York May 26, 2014. REUTERS/Carlo Allegri

WASHINGTON (Reuters) – U.S. homebuilding fell in March as the construction of single-family homes in the Midwest recorded its biggest decline in three years, likely reflecting bad weather.

Housing starts declined 6.8 percent to a seasonally adjusted annual rate of 1.22 million units, the Commerce

Department said on Tuesday. February’s starts were revised up to a 1.30 million-unit pace from the previously reported 1.29 million-rate.

Economists polled by Reuters had forecast groundbreaking activity falling to a 1.25 million-unit pace last month. Homebuilding was up 9.2 percent compared to March 2016.

Construction in February was boosted by unseasonably warm temperatures. But temperatures dropped in March and a storm lashed the Northeast and Midwest regions, which could have accounted for the drop last month in homebuilding.

Single-family homebuilding, which accounts for the largest share of the residential housing market, fell 6.2 percent to a 821,000 unit-pace last month. Single-family starts in the Midwest declined 35 percent, the largest drop since January 2014, to their lowest level since August 2015.

Single-family starts in the Northeast were unchanged. They rose 3.2 percent in the South, but fell 5.5 percent in the West.

Last month, starts for the volatile multi-family housing segment dropped 7.9 percent to a 394,000 unit-pace.

Pointing to underlying strength in the housing market, building permits increased 3.6 percent, driven by a 13.8 percent surge in the multi-family segment.

While single-family permits fell 1.1 percent, they were not too far from the more than nine-year high reached in February.

A tightening labor market, which is generating steady wage growth is underpinning the housing market. The sector, however, remains constrained by a dearth of properties available for sale.

Builders have, however, failed to bridge the gap, citing a range of problems including shortages of labor and land as well as rising material prices. A survey on Monday showed homebuilders confidence slipped in April from a near 12-year high in March. Still, measures of current sales and sales expectations remained at lofty levels.

(Reporting By Lucia Mutikani)

Dollar rises after sliding on Trump remarks on currency, rates

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File Photo

By Dion Rabouin

NEW YORK (Reuters) – The U.S. dollar rose on Thursday, rebounding after a slide that investors considered overdone following remarks by President Donald Trump that the currency was getting too strong and he would prefer the Federal Reserve to keep interest rates low.

The greenback and U.S. Treasury yields took a heavy hit after Trump’s comments to the Wall Street Journal, in which he said the strength of the dollar would hurt the economy.

But after losing 0.6 percent on Wednesday – its biggest one-day fall in more than three weeks – the dollar recovered on Thursday against a basket of major currencies <=USD> that tracks its value, rising 0.3 percent.

“Clearly, I think it was oversold yesterday,” said Peter Ng, senior currency trader at Silicon Valley Bank in Santa Clara, California. “The market was very sensitive to headlines given how nervous it has become due to geopolitical risk.”

Trading was also thinner than usual because of the impending Good Friday holiday in the U.S. and Europe this week, Ng said.

Having hit a five-month low of 108.73 yen in early Asian trading, the dollar steadied at 109.20 yen. <JPY=>

“Yes, it was negative what (Trump) said…but it’s not a big surprise – it wasn’t a U-turn in his rhetoric on the exchange rate so far,” said Commerzbank currency strategist Thu Lan Nguyen in Frankfurt.

“The question is: is he able to influence monetary policy in order to get a weaker dollar? That is still an open question.”

Trump’s remarks went against a long-standing practice of both U.S. Democratic and Republican administrations of refraining from commenting on policy set by the independent Federal Reserve. It is also unusual for a president to talk about the value of the dollar, a subject usually left to the U.S. Treasury secretary.

The dollar has shed 1.7 percent against the yen so far this week, its fourth week lower against the safe-haven Japanese currency in five, as a rise in tensions in Asia and Europe prompted yen buying.

Investors are concerned about the upcoming French presidential election as well as possible U.S. military action against Syria and North Korea, and an escalation of tensions with Russia.

The euro fell 0.5 percent to $1.0619 <EUR=> after touching a one-week high in overnight trading.

The dollar was little changed against China’s offshore yuan <CNH=D3>, after falling to a six-day low on Wednesday. It had risen to a one-month high at the start of the week.

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Bernadette Baum)

Wall Street flat as investors assess earnings, Trump comments

Traders work on the floor of the New York Stock Exchange (NYSE) in the Manhattan borough of New York, New York, U.S., April 4, 2017. REUTERS/Brendan McDermid

By Yashaswini Swamynathan

(Reuters) – U.S. stocks were little changed on Thursday as investors assessed the first rush of bank earnings and President Donald Trump’s remarks on the dollar’s strength and interest rates.

Shares of JPMorgan <.JPM.N> and Citigroup <C.N> rose about 1 percent after the two banks reported better-than-expected quarterly profits.

However, Wells Fargo <WFC.N> slipped 2.5 percent after reporting a big drop in mortgage banking revenue.

The earnings reports come in the wake of a frenetic rally in bank shares that started after Trump’s election as U.S. president on hopes that he would rein in banking regulations and introduce other business friendly policies.

At 10:01 a.m. EDT the Dow Jones industrial average <.DJI> was down 0.58 points, flat, at 20,591.28, the S&P 500 <.SPX> was up 0.68 points, or 0.028999 percent, at 2,345.61 and the Nasdaq Composite <.IXIC> was up 10.40 points, or 0.18 percent, at 5,846.56.

“Investors will (be) faced with another day of market uncertainties as bank earnings, geopolitical worries and Trump’s comments on the greenback are being reflected in the volatility index that is flashing trouble ahead,” Peter Cardillo, chief market economist at First Standard Financial, wrote in a note.

Trump told the Wall Street Journal on Wednesday that the dollar “was getting too strong” and that he would like to see interest rates stay low.

The S&P 500 financial index <.SPSY> was up 0.2 percent, while five other S&P sectors were down.

Nine of the 11 major S&P sectors were lower, led by a 0.4 percent decline in financials. Bank of America <BAC.N> and Goldman Sachs <GS.N> are due to report results next week.

Shares of Applied Optoelectronics <AAOI.O> jumped nearly 23 percent to $50.15 after the company said it expected first-quarter earnings to exceed its forecast.

Trading volumes could be lower than usual on Thursday ahead of the Good Friday holiday.

Declining issues outnumbered advancers on the NYSE by 1,403 to 1,186. On the Nasdaq, 1,201 issues fell and 1,163 advanced.

The S&P 500 index showed two 52-week highs and no lows, while the Nasdaq recorded 10 highs and 27 lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)