World stocks tick lower on recovery doubts
World stocks ticked lower for a fourth consecutive day toward a two-week low on Tuesday while the low-yielding yen rose as doubts persisted over how sustainable a global economic recovery would be.
Investors grew nervous ahead of upcoming second-quarter corporate results. Aluminum producer Alcoa
Coming into this earnings season, there is going to be plenty of speculation as to what are the results coming through, what are the guidance for the forthcoming quarters, said Stephen Pope, chief global market strategist at Cantor Fitzgerald.
To that regard, we are going to see the market's pretty much on a day-by-day basis. I don't think you can see a genuine pattern emerge until ... we are, perhaps, a good third into the earnings season. MSCI world equity index fell 0.1 percent.
The FTSEurofirst 300 index <.FTEU3> fell a quarter percent.
According to Thomson Reuters data, analysts expect Standard & Poor's 500 <.SPX> corporate earnings to fall 36 percent from a year earlier. This rate compares with a forecast for a decline of 31.1 percent back in April and an increase of 28.5 percent in October.
Analysts still forecast a sharp V-shaped rebound in earnings growth with an anticipated growth rate of 183.0 percent in the fourth quarter -- leaving room for a sizeable downgrade if the economy did not recover as expected.
Emerging stocks <.MSCIEF> were steady on the day.
U.S. crude oil fell 0.6 percent to $64.65 a barrel, weighing on oil stocks.
The September Bund future fell 26 ticks, off a seven-week peak set in the previous session. Investors are focused on 7.2 billion euros of Austrian and Dutch supply, which if it attracts good demand could trigger a squeeze in prices.
The low-yielding yen rose a quarter percent to 95.16 per dollar while the U.S. currency <.DXY> rose a third percent against a basket of major currencies.
The market environment now is one of investors reducing risk betting but it has not fully returned to risk aversion. It's still in a phase of correcting excessive optimism over the economy recovery seen previously, said Akira Takeuchi, manager at Chuo Mitsui Trust and Banking in Tokyo.
The U.S. has had a mixture of positive and negative economic data, which needs to be examined closely. But the market is now prone to react to weak figures.
Laura D'Andrea Tyson, an adviser to U.S. President Barack Obama, said the country should be planning for a possible second round of fiscal stimulus to further prop up the economy after the $787 billion rescue package launched in February.
(Additional reporting by Dominic Lau, editing by Mike Peacock)
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