US, European stocks in red after IMF report, Greece concerns

The Dow Jones Industrial Average index was 0.21 per cent lower at 17,938.41

Published: 19:27 April 14, 2015

By Siddesh Suresh Mayenkar, Staff Reporter

Dubai: US stocks erased early gains on Tuesday after the International Monetary Fund (IMF) cut its growth forecast for world’s biggest economy amid mixed earnings news. European shares extended losses on worries over a report that Greece was preparing for a debt default.

The Dow Jones Industrial Average index was 0.21 per cent lower at 17,938.41, after reaching a high of 18,038.84. The broad-based S&P500 was 0.26 per cent lower at 2,087.03. Nasdaq Composite Index was 0.52 per cent lower at 4,962.07.

“Consistent gains in the US stocks would be tougher due to a strong dollar as it could impact the earnings of export-oriented companies, which are part of the index,” said Pradeep Unni, senior relationship manager, with Richcomm Global.

The IMF, citing the consequences of a strong dollar, is downgrading its outlook for the US economy but raising its forecast for Europe and Japan.

The IMF says that the American economy will grow 3.1 per cent this year, down from a January forecast of 3.6 per cent.

Tuesday saw a mixed bag from earnings news. JP Morgan’s first-quarter earnings jumped 12.2 per cent from a year ago to $5.9 billion, while Wells Fargo’s earnings slipped 1.5 per cent to $5.8 billion on higher expenses.

However, strong retail sales data in the US kept the downside limited.

Retail sales in the US rose in March for the first time since November as consumers stepped up purchases of automobiles and other goods, suggesting a sharp slowdown in economic growth in the first quarter was temporary.

In Europe, Euro Stoxx 50 price was 1.50 per cent lower at 3,771.51, while DAX index was 1.16 per cent lower at 12,195.24.

A report said that Greece was preparing for a debt default if it did not reach a deal with its creditors by the end of the month. Greece, however, denied the Financial Times report and said the negotiations were proceeding “swiftly” towards a solution.

Watch out

The economic calendar will pick up in the coming days, with traders likely to keep a close eye on reports on industrial production, housing starts, and producer and consumer price inflation.

“Earnings season will also pick up steam over the next few days, although many analysts expect the quarterly results to be weak,” broker MENACORP said in a note to its clients.

Intel, Bank of America, Netflix, Goldman Sachs, American Express, and General Electric are among the big-name companies due to release their results this week.

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