World stocks drift after US Fed stays course

World stock markets drift after Federal Reserve delivers no surprises with latest stimulus cut

Associated Press
US stocks slump as earnings disappoint
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Trader James Dresch, right, works on the floor of the New York Stock Exchange, Monday, June 30, 2014. European stocks were lower Wednesday July 30, 2014 ahead of U.S. economic data while cheery earnings from major Japanese companies such as Honda Motor Co. boosted Asian markets.(AP Photo/Richard Drew)

MUMBAI, India (AP) -- Global stock markets were uninspired by an upbeat report on the U.S. economy, with most drifting lower Thursday after the U.S. Federal Reserve said it would make further cuts to its monetary stimulus as expected. Investors are now reckoning with an expiry date for the lavishly easy monetary policy that has underpinned gains in global stock markets for years.

KEEPING SCORE: In Europe, Germany's DAX was down 1.3 percent to 9,471.55. Britain's FTSE 100 eased 0.3 percent to 6,755.91 and France's CAC dropped 1.1 percent to 4,265.33. Wall Street looked set to have another lackluster day. Both Dow Jones and S&P 500 futures were down 0.6 percent .

US CUES: Federal Reserve policymakers said the central bank would make further cuts to its monthly bond purchases, a program that is intended to keep long-term interest rates low and encourage borrowing and spending. At the current pace of cutbacks, the Fed's bond purchases will end in October. The U.S. economy expanded by a better-than-expected 4 percent in the second quarter after a severe winter hit the first quarter's growth. Even so, it was a robust outcome for the world's largest economy.

ANALYST TAKE: Jack Ablin, chief investment officer at BMO Private Bank, said the strong U.S. growth report failed to inspire enthusiasm in the stock market because higher growth and the prospect of inflation will force the Fed to raise interest rates sooner rather than later. "Good news is getting to be bad news again," Ablin said. "The GDP report is obviously good news, so why are stocks off? Because people are wondering when the party will come to an end."

RUSSIAN CHILL: European stocks were weighed by evidence that the standoff between the West and Russia is hurting companies. Germany's machinery industry cut its forecast for production growth this year sharply, citing the crisis in Ukraine. Sports goods maker Adidas saw its shares slump 12 percent after it issued a profit warning because the tensions with Moscow were creating bad business conditions.

ASIA'S DAY: Tokyo's Nikkei 225, the regional benchmark, closed down 0.2 percent and South Korea's Kospi shed 0.3 percent. The Hang Seng in Hong Kong gained 0.1 percent while China's Shanghai Composite added 0.9 percent ahead of manufacturing data due Friday. Australia's S&P/ASX 200 edged up 0.2 percent and India's Sensex was off 0.2 percent.

SORRY SAMSUNG: Shares of South Korean consumer electronics kingpin Samsung dived 4 percent after it reported a bigger-than-expected fall in second quarter profit on slowing smartphone sales. Cheaper upstarts such as China's Huawei are eroding its market share in developing nations and Samsung was uncertain if smartphone earnings would improve this quarter. April-June quarter net profit dropped 20 percent to 6.3 trillion won ($6.1 billion).

BUSY WEEK: It's a busy week for economic news. There's a report on China's manufacturing industry out Friday, and the U.S. Labor Department releases its monthly jobs report the same day.

OIL OFF THE BOIL: Benchmark U.S. crude for September delivery dropped by 64 cents to $99.63 a barrel. After running up to $107 in June, it has steadily fallen back as fears of supply disruptions from Russia and the Middle East ebbed.

CURRENCIES: The euro weakened to $1.3379 from $1.3395 late Wednesday. The dollar inched up to 102.93 yen from 102.86 yen.

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