US stocks and the dollar ended the week on a cautious note Friday, with Technology among the laggards for the session following results from Amazon that fell short of consensus expectations. Tepid US wage growth and the latest setback to the Republicans plans to repeal Obamacare weighed on the dollar.
Tobacco stocks were in sharp focus Friday following news that US regulators might force producers to lower nicotine levels in cigarettes. Altria Group, the largest cigarette company in the US and owner of the Marlboro brand, fell 9% following the news.
Oil prices extended recent strength as Brent Crude settled at $52.52 per barrel, 2% higher for the session and up 9% for the week, its largest weekly gain this year.
Corporate earnings will remain the primary focus for markets for the week ahead with 130 companies listed on the S&P 500 – including Apple, Pfizer and Time Warner – set to report. Of the 57% of companies on the S&P 500 that have reported results already, 73% have posted better-than-expected earnings.
The weak US session and the stronger euro weighed on European equities Friday. The Euro Stoxx 50 index fell 0.7% while the export sensitive German DAX index settled 0.4% lower. Tobacco stocks also dragged the FTSE 100 lower as British American Tobacco (BATs) and Imperial Tobacco fell 7% and 3% respectively.
The Bank of England is set to deliver its latest monetary policy decision on Thursday this week. Economists expect the bank rate to remain unchanged at 0.25% while commentary on inflation and the reinvestment of bond proceeds will remain in focus.
This morning in Asia, Chinese equities have strengthened despite July manufacturing PMIs (Purchasing Managers’ Index) which were a bit softer than expectations. A firmer Yen weighed on Japanese equities which closed marginally lower.