By Herbert Lash
NEWYORK – A gauge of global equities edged higher on Monday as another drop in Boeing shares and concerns U.S. companies will report a decline in earnings for the first time in three years were offset by rising crude prices that lifted oil shares.
Oil prices rose to their highest since November, driven by fighting in Libya along with ongoing supply cuts pledged by the Organization of the Petroleum Exporting Countries and U.S. sanctions against Iran and Venezuela.
West Texas Intermediate, the U.S. benchmark, gained more than 2% while global benchmark Brent rose over 1%, lifting the energy components of the FTSE 100 index in London and the S&P 500 on Wall Street.
BP Plc and Royal Dutch Shell Plc contributed the most upside in London, while Exxon Mobil added the fourth most points to the Dow and S&P 500 indexes.
The S&P 500 posted its eighth straight session of gains and the Nasdaq rose, both pushed higher by Apple and Amazon.com, in a late-day rally. Investors have braced for what could be the first decline in corporate profits since 2016 as the quarterly reporting of earnings begins in earnest at the end of the week.
The earnings season will pit negative profit expectations against this year’s stock rally, said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
“The market is going to struggle to continue to find catalysts to move at this pace. It’s been a great start and a lot of good news already priced into the stock market,” Arone said, referring to the S&P 500’s 15 percent gain year-to-date.
If earnings are better than expected and are positive, that could give stocks more upside, especially if the U.S.-China trade war is resolved and economic data remains solid, he said.
Graphic: World earnings growth expectations – https://tmsnrt.rs/2I5yaRq
MSCI’s gauge of stocks across the globe rose 0.16% to set a fresh six-month high. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.14%, but the FTSE 100 in London rose 0.07%.
Most European shares slid as data showed German exports and imports fell more than expected in February, the latest sign that Europe’s biggest economy will likely post meagre growth for the first quarter.
On Wall Street, the Dow Jones Industrial Average fell 83.97 points, or 0.32%, to 26,341.02. The S&P 500 gained 3.03 points, or 0.10%, to 2,895.77 and the Nasdaq Composite added 15.19 points, or 0.19%, to 7,953.88.
Boeing Co fell 4.4% after the company said it would cut production of its 737 MAX aircraft in response to a worldwide grounding of the jets in the wake of the fatal Ethiopian Airlines crash on March 10.
Boeing’s woes weighed on its suppliers. Spirit AeroSystems and Triumph Group fell 5.1% and 6.2%, respectively.
France’s Safran SA, which provides Boeing with engines for the 737 in a joint venture with General Electric Co, slid 2%.
GE fell 5.2% after JPMorgan downgraded the company’s stock to “underweight” from “neutral.”
The dollar fell against a basket of currencies as recent strong economic data eased worries about global growth and led investors to reduce safe-haven positions in the greenback.
The euro moved further above a one-month low set last week as investors squared positions before a European Central Bank meeting this week.
The dollar index fell 0.35%, with the euro up 0.41% to $1.126.
The Japanese yen strengthened 0.19% versus the greenback at 111.51 per dollar.
Graphic: World FX rates in 2018 – http://tmsnrt.rs/2egbfVh
U.S. Treasury debt prices edged lower in generally quiet trading, pressured by upcoming government debt and corporate supply.
The benchmark 10-year U.S. Treasury note fell 6/32 in price to lift its yield to 2.5204%.
Greek government bond yields were near their lowest in more than 13 years as encouraging headlines boosted sentiment towards the country and zero percent German Bund yields pushed investors into riskier assets before an ECB meeting on Wednesday.
The yield of Greece’s 10-year bond dropped below the 3.50% mark for the first time since January 2006, holding around 0.05 percentage point lower on the day at 3.48%.
U.S. West Texas Intermediate (WTI) crude futures rose $1.32 to settle at $64.40 per barrel, while Brent gained 76 cents to settle at $71.10 per barrel.
Gold briefly breached $1,300 an ounce and remained at its highest in more than a week.
U.S. gold futures settled 0.5% higher at $1,301.9 an ounce.
(Reporting by Herbert Lash; Editing by Steve Orlofsky and Richard Chang)