US Markets
Equities ended mostly higher Friday with value stocks outperforming while growth stocks lagged as US market
interest rates surged again. Equities appeared to catch a bid late in the day to help the NASDAQ recover from
its midday lows. The Dow Jones industrial average rose 0.4 percent, the S&P 500 gained 0.5 percent and the
NASDAQ declined 0.2 percent.
The yield curve continued to flatten Friday, with the US Treasury two-year note yield up 16 basis points on
Friday alone, after a series of hawkish comments from Federal Reserve officials this week, starting with Fed
Chair Jerome Powell’s pledge on Monday to move rates faster into restrictive territory if needed to rein in
inflation. The FANMAG complex mostly retreated Friday, as did software, technology hardware, biotech,
homebuilders, autos, and restaurants.
Banks outperformed on rising rates, and defense stocks advanced again on the war trade. Energy, food,
airlines, insurance, and pharma also beat the market Friday. Among stocks in focus, Teva, the pharma, rose
5.6 percent on an analyst upgrade, and Cutera, the medical device maker, rallied 21 percent on positive clinical
news on its acne treatment
European markets
Equities were narrowly mixed, with most sectors higher, and mixed company news. The Europe-wide STOXX
600 firmed 0.1 percent, the German DAX rose 0.2 percent, the French CAC was flat and the UK FTSE 100
firmed 0.2 percent.
With an evident stalemate in the Ukraine situation, markets focused again on supply disruptions and other
fallout from the conflict, including a much worse than expected German Ifo report on business sentiment, and
a series of hawkish statements from Federal Reserve officials this week appearing to signal more aggressive
rate increases in May and afterwards.
Among sectors, energy and basic materials outperformed on rising commodities prices, and real estate and
technology in particular derived support as European rates edged back after their run-up this week. Retail got
a lift from Next, the UK chain store, up 1.2 percent after an analyst upgrade, and Wickes, the retailer, rose 4.4
percent after an earnings beat.
On the downside, industrial machinery and construction & supplies lagged. Husqvarna, the maker of outdoor
power tools, fell 4.5 percent after warning of supply chain trouble.
Asia Pacific Markets
Asia-Pacific equities were mixed Friday with China off sharply on renewed concern over the impact of US audit requirements on Chinese firms listed in the US. Chinese stocks fell after the Financial Times reported the US Public Company Accounting Oversight Board said it was unclear whether Chinese regulators would allow Chinese firms to release enough information to meet US requirements for listing. Market sentiment appeared shaky as investors are still waiting for the government to back up recent pledges to provide additional policy support, and Covid cases rose in Shanghai and other cities. The Chinese CSI 300 index fell 1.8 percent and the Shanghai index lost 1.2 percent. The Hong Kong Hang Seng index dropped 2.5 percent with health care, internet, and technology stocks lagging. Japanese markets started stronger after tech stocks advanced during the Wall Street hours, but trimmed gains on profit-taking. Japan’s Nikkei 225 rose 0.1 percent and the wider TOPIX was unchanged. Autos and banks lagged while marine shipping, agriculture, and pharma stocks fared best. The Taiwan Taiex declined 0.1 percent and the South Korean KOSPI was flat. The Indian BSE Sensex declined 0.4 percent. Commodities strength helped Australian equities edge up to end the week higher. Weakness in bank stocks offset gains elsewhere. The All Ordinaries index firmed 0.3 percent. Materials, energy, utilities, and industrials were winners while health care, financials, real estate, and information technology lagged.
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Major stock indexes advanced into the close Friday with megacaps leading and growth stocks outperforming for
a second day as the market built on its recent strength. The Dow Jones industrial average rose 0.8 percent, the
S&P 500 gained 1.2 percent and the NASDAQ rose 2.1 percent.
The market saw strong gains among heavily weighted big tech stocks, including Apple, up 2.1 percent, and
chipmakers, including Nvidia, up 6.8 percent, alongside big consumer discretionary stocks, like Tesla, up 3.9
percent, and Amazon, up 2.6 percent, and communications plays, including Discovery Communications, up 2.2
percent, and Netflix, up 2.5 percent.
Long-term market interest rates declined while short-term rates rose, flattening the yield curve, to suggest a
weaker long-term growth outlook. Some cyclicals lagged, including financials, materials, and industrials, amid
worries over the Ukraine situation and hawkish central banks.
Among companies in focus, FedEx slipped 4.0 percent after an earnings miss reflecting Omicron effects and
surging labor costs. Tesla got a boost after Morgan Stanley repeated its overweight rating. Moderna, the vaccine
maker, rallied 6.4 percent on news it will seek approval for a second Covid booster for adults.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 65 cents to US$107.59
while spot gold fell US$16.25 to US$1,920.36. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield declined 8 basis points to 2.41 percent, and the 10-year note yield fell 5 basis points to 2.15
percent.
European markets
Equities edged up Friday with support from company news and gains on Wall Street. The Europe-wide STOXX
600 rose 0.9 percent, the German DAX firmed 0.2 percent, the French CAC rose 0.1 percent and the UK FTSE
100 was up 0.3 percent.
The STOXX 600 rose about 5 percent on the week for a second straight week of gains. Hopes for progress in
Russia-Ukraine talks propelled the recovery but headlines on the talks Friday left markets uncertain headed
into the weekend.
Sectors were mixed Friday with basic resources, technology, travel & leisure, financial services, and retail
outperforming while oil & gas, telecom, and autos & parts lagged.
Among companies in focus, mega-miners Anglo American rose 2.0 percent and Glencore gained 0.9 percent
after analyst upgrades. Meanwhile, Vodafone, the telecom, rose 1.0 percent on reports several investors want
to invest in its mobile phone mast business. Enel, the utility, rose 0.7 percent after raising its dividend.
On the downside, Renault lost 0.4 percent as investors continued to focus on its exposure in Russia. Daimler
slipped 2.2 percent and VW was off 0.9 percent as the market focuses on chip shortages and other supply
chain trouble. Michelin, the auto parts giant, eased by 0.2 percent after reporting disappointing tire sales.
Vonovia, the real estate company, fell 2.6 percent after an earnings miss.
Asia Pacific Markets
Asia-Pacific equities ended mostly better Friday, following a positive close Thursday on Wall Street. Chinese markets rose on speculation that the People’s Bank of China will provide more stimulus as part of a wider government pro-growth effort announced this week. Investors awaited details on the government pledge to rein in a regulatory push and other steps to boost financial markets. The CSI 300 index rose 0.7 percent and the Shanghai composite gained 1.1 percent with real estate outperforming and tech stocks lagging. Hong Kong’s Hang Seng index eased 0.4 percent as weakness in internets and tech stocks outweighed a better showing for oil & gas. Japanese markets improved to extend the week’s advance with support from overnight strength. The Nikkei 225 rose 0.7 percent and the broader TOPIX firmed 0.5 percent, with most sectors better and growth stocks leading. Reaction was limited to mostly as-expected Japanese consumer price figures and the Bank of Japan policy announcement. The Taiwan Taiex firmed 0.1 percent and the South Korean KOSPI gained 0.5 percent as tech stocks rose again. The Indian market was on holiday. Australian equities rose to conclude a strong week with most sectors higher, and energy, technology, and materials leading. The All Ordinaries index gained 0.7 percent. The market’s bullish narrative sees banks benefiting from rising yields, rising commodities prices boosting miners and energy stocks.
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An early equities rally on positive-sounding comments from President Vladimir Putin gave way to selling as
investors doubted that Putin could be trusted and oil prices rebounded. The Dow Jones industrial average lost
0.7 percent, the S&P 500 fell 1.3 percent and the NASDAQ lost 2.2 percent.
Risk aversion returned before another frightening weekend in Ukraine. Investors were quick to sell into strength
on the view that equities remain overpriced for a period of slower growth and lower profits. Meanwhile, a
flattening US Treasury yield curve, with two-year notes up another 5 basis points Friday, underlined expectations
that the Federal Reserve will raise rates more aggressively over time to get inflation under control, even as
growth slows due to surging costs for food, energy and other staples.
Equity losses were across the board. The FANMAG stocks were mostly lower, with Google down 1.7 percent, and
Facebook/Meta off 3.9 percent amid antitrust probes in the UK and EU. Chinese stocks with dual listings in the
US and China tanked amid worries they face delisting after the Securities and Exchange Commission named
several Chinese firms for failing to meet audit requirements.
Weakest sectors included technology, communications services, and consumer discretionary. Utilities held up
best in defensive trading.
Among companies in focus, Rivian, the electric vehicle maker, lost 7.6 percent after an earnings miss and lower
production guidance. DocuSign, the electronic signature leader, plunged 20 percent on weak guidance. On the
positive side, Oracle rose 1.5 percent as the market liked the software giant’s quarterly results. Deere, the
machinery leader, rose 3.0 percent after an upgrade at Wells Fargo.
A much weaker than expected US consumer sentiment report showing rising inflation worries added to the
bearish market narrative. The consumer sentiment index dropped to 59.7 in March from 62.7 in February, below
expectations for a 61.7 reading.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$3.08 to US$112.55
while spot gold fell US$13.33 to US$1984.33. The US dollar rose against most major currencies. Yields on the
US Treasury 30-year bond declined 1 basis point to 2.36 percent, and the 10-year note rose 1 basis point to
1.99 percent.
European markets
Russian President Vladimir Putin’s comment that he sees “positive shifts” in talks with Ukraine boosted equities
Friday. The Europe-wide STOXX 600 gained 1.0 percent, the German DAX rose 1.4 percent, the French CAC
gained 0.9 percent and the UK FTSE 100 was up 0.8 percent.
All sectors rose, led by travel & leisure, financial services, media, insurance, construction & materials, and basic
resources. Lagging but still positive were oil & gas, autos & parts, utilities, and food & beverage.
On the negative side, investors are worried about surging fuel and fertilizer costs and shortages of inputs from
Ukraine and Russia affecting European companies, including automakers. Daimler was off 0.9 percent and down
1.9 percent Friday on these concerns. Separately, the newly hawkish European Central Bank remains in focus
after Thursday’s unexpected news that the ECB would accelerate its withdrawal of quantitative easing and move
up the timeframe to consider rate increases. Hot US inflation readings have prompted markets to ratchet up
expectations for rate increases.
Among companies in the news, Wizz Air gained 6.1 percent after an analyst upgrade. Telecom Italia gained 4.8
percent as it considers KKR’s takeover offer. Fraport, the airport operator, rose 2.5 percent on positive traffic
news.
Asia Pacific Markets
Asia-Pacific equities tracked Wall Street lower on fallout from the Ukraine conflict, hot inflation readings and soaring commodities prices. Chinese stocks recovered from early steep losses triggered by concern that several popular Chinese names may be delisted in the US after the Securities and Exchange Commission named Yum China and ACM Research among others for failing to meet US requirements. Buyers emerged at the lows to help the CSI 300 index end up 0.3 percent and the Shanghai composite up 0.4 percent. Meanwhile, Hong Kong’s Hang Seng index fell 1.6 percent as investors worried that more companies could be added to the SEC list. Alibaba, which has not been named by the SEC, fell 5.5 percent. Japanese markets reacted badly to the weak US close and Ukraine concerns and investors pared risk positions headed into the weekend. The Nikkei 225 lost 2.1 percent and the broader TOPIX lost 1.7 percent with growth stocks leading the selloff. The Taiwan Taiex fell 1.0 percent, the South Korean KOSPI fell 0.7 percent, but the Indian BSE Sensex firmed 0.2 percent. Australian equities followed the region lower with the All Ordinaries index down 1.0 percent. Growth stocks lagged, especially technology, along with consumer discretionary, amid worries that rising fuel costs will sap consumer spending.
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Bearish Ukraine news drove financial markets again Friday as many investors chose US Treasuries and safe
havens over equities -- though late bargain-hunting helped the major averages trim the day’s decline, and US
losses were less than Europe's. The Dow Jones industrial average lost 0.5 percent, the S&P 500 lost 0.8 percent
and the NASDAQ slipped 1.7 percent.
Value/cyclicals fell on concern that rising commodities prices will fuel inflation and undercut demand. Highly
valued growth stocks saw heavy losses on the wide flight from risk assets. Event risk headed into the weekend
added to selling pressure.
Among sectors, banks, airlines, autos, chemicals, retail, and chipmakers lagged the most. Weakness in the
FANMAG complex weighed heavily, with Apple down 1.8 percent and Amazon off 1.5 percent. Holding up best
were precious metals, energy, and aerospace & defense.
Markets mostly looked past better-than-expected monthly US employment figures as the Ukraine war trade
obliterated other concerns. News that average hourly earnings were flat in February, far below expectations,
played into the gloomy narrative about weakening consumer demand and the threat of recession.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US$8.16 to
US$118.72 while spot gold rose US$30.72 to US$1,967.56. The US dollar was mixed against major currencies.
Yields on the US Treasury 30-year bond declined 6 basis points to 2.17 percent, and the 10-year note fell 11
basis points at 1.74 percent.
European markets
European equities dropped again amid uncertainty over fallout from Russia’s attack in Ukraine. Investors are
focusing on the effects of anti-Russia sanctions, the prospect of Russian retaliation, soaring commodities prices,
and supply chain disruptions. The Europe-wide STOXX 600 dropped 3.6 percent, the German DAX plunged 4.4
percent, the French CAC cratered by 5.0 percent and UK FTSE 100 was down 3.5 percent.
Losses were across the board with STOXX 600 banks off more than 6 percent followed by technology and autos
& parts, both off more than 5 percent, to lead the decliners. Travel & leisure, construction & materials, industrials,
personal & household goods, and retail lagged too. Holding up best but still weaker were utilities, health care,
and food & beverage.
Automakers suffered, with Volkswagen off 6.5 percent and BMW down 4.9 percent after they suspended
operations at their Russian factories. Parts maker Michelin fell 7.2 percent after suspending production at some
plants. Deutsche Bank fell 9.7 percent as it faced losses on Russian loans and disruption in its Russian technology
team. Moncler, the luxury clothing firm, lost 6.8 percent despite announcing a revenues beat and share buyback.
Asia Pacific Markets
More Russian attacks on Ukraine, including reports of damage at a Ukrainian nuclear plant, fueled a selloff in Asia-Pacific equities markets and another rally in commodities prices. Japan’s Nikkei 225 dropped 2.2 percent and the broader TOPIX lost 2.0 percent. Losses were across the board, with growth stocks lagging. Among sectors, glass & ceramics, metals, chemicals, banks, and automakers lagged while oil & gas outperformed. Ukraine fears hit mainland Chinese stock as the CSI 300 index fell 1.2 percent and the value-stock heavy Shanghai composite lost 1.0 percent. Hong Kong’s Hang Seng index dropped 2.5 percent, with losses across the board and notable losses in technology. Mainland oil & gas stocks outperformed. The Taiwan Taiex declined 1.1 percent, the South Korean KOSPI lost 1.2 percent, and the Indian BSE Sensex fell 1.4 percent amid widespread risk aversion and concern over the impact of surging energy prices. Ukraine news and inflation worries spurred by rising commodities prices hit Australian equities with the All Ordinaries index down 0.7 percent. Worst hit were technology stocks, off about 3.5 percent, followed by roughly 1 percent declines in consumer discretionary, energy, and real estate investment trusts. Defensive plays held up best, including consumer staples, utilities, and health care
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Equities extended Thursday’s relief rally on Friday as investors appeared to view the market as oversold, and as
many accepted reports that Russia might be willing to conduct high-level diplomatic talks with Ukraine. The Dow
Jones industrial average gained 2.5 percent, the S&P 500 rose 2.2 percent and the NASDAQ gained 1.6 percent.
Investors also appeared to accept the suggestion that the Federal Reserve and other central banks would be less
aggressive in raising interest rates as a result of economic fallout from the Ukraine conflict. Fed officials have
said they are watching the Ukraine situation closely.
Risk appetite benefited as oil prices fell back from recent highs after Western sanctions did not include Russian
sales of energy, and as President Biden pledged steps to limit oil price increases. The market also reacted
favorably to the relatively limited scope of the new sanctions announced Thursday.
Equity gains were across the board with value outperforming to catch up with Thursday’s growth stock rally.
Materials showed extra strength, and banks and other financials recovered Thursday’s huge losses. Health care,
consumer staples, transportation, and consumer discretionary all bounced back. The FANMAG group advanced
as traders piled into beaten-down big names.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 9 cents to US$98.91 while
spot gold fell US$6.82 to US$1,889.22. The US dollar mostly weakened vs. major currencies but rose vs. the
safe-haven yen. Yields on the US Treasury 30-year bond was flat at 2.28 percent and the 10-year note was
unchanged at 1.97 percent.
European markets
European equities rallied as investors bought the dip, following the example set Thursday on Wall Street, after
sanctions on Russia appeared limited, and Russian energy supplies continued flowing to the West. The Europewide STOXX 600 gained 3.3 percent, the German DAX rose 3.7 percent, the French CAC advanced 3.6 percent
and UK FTSE 100 jumped 3.9 percent.
Risk appetite got a boost from investors hoping that central banks will be slower to push up interest rates in
light of the impact of the Ukraine crisis. Markets also responded favorably to headlines suggesting that Russia
may be more willing to consider a diplomatic end to the crisis, now that its forces have encircled Kyiv, the capital.
Bank stocks, viewed as especially vulnerable to Russia sanctions, were notable winners Friday after plunging
Thursday.
All sectors advanced. Best were utilities, basic resources, real estate, banks, and technology, while lagging but
still higher were oil & gas, retail, chemicals, and media.
Asia Pacific Markets
Asia/Pacific markets recovered Friday amid bargain hunting in line with the bounce in US markets on Thursday as investors hope the Ukraine conflict will be brief. China’s markets got a boost from an aggressive injection of liquidity from the People’s Bank of China, but the rebound was restrained by weakness in energy and real estate stocks. A retreat in oil prices undercut energy stocks. CSI 300 index rose 1.0 percent and the value-stock heavy Shanghai composite firmed 0.6 percent. The Hong Kong Hang Seng index lagged, with a decline of 0.6 percent, as energy stocks weighed on the average. Health care outperformed. The Taiwan Taiex rose 0.3 percent and the South Korean KOSPI both rose 1.1 percent. Indian equities rebounded with the BSE Sensex rising 2.4 percent. Japan’s Nikkei 225 rose 2.0 percent and the TOPIX was up 1.0 percent. Growth stocks led the recovery with a cue from Wall Street trading where the NASDAQ outperformed as investors saw value after recent steep declines. The rally was limited by caution over the Ukraine situation as the Russian invasion continued. The Australian All Ordinaries index gave back early strong gains to end up a modest 0.3 percent. Weakness in bank stocks offset strength in technology shares and corporate earnings news proved mixed. Hawkish comments from Federal Reserve Governor Chris Waller, who backed a 100 basis point rate increase by midyear, weighed on risk assets.
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Stocks seesawed lower as sentiment soured amid uncertainty over the Ukraine situation headed into the long
weekend. The Dow Jones industrial average and the S&P 500 both fell 0.7 percent and the NASDAQ lost 1.2
percent.
Heavy options expiration exacerbated the selling pressure, along with disappointing company news. Big tech and
consumer discretionary stocks led the losses, with Nvidia off 3.5 percent and Intel off 5.3 percent. Tesla was
down 2.2 percent, and Amazon off 1.3 percent. Consumer staples, materials, and financials held up better.
Traders were quick to punish growth stocks reporting missed expectations. Roku, the streaming video company,
a pandemic favorite, tanked 23 percent, and DraftKings, the sports betting business, dropped 22 percent after
revenue misses.
Reopening stocks suffered, too, including airlines, cruise lines, and hotels, as they relinquished some of the
week’s gains. Meanwhile, Boeing, down 2.1 percent, and Walt Disney, down 1.0 percent, weighed on the Dow
industrials. On the positive side, Bloomin’ Brands, owner of several restaurant chains, rose 7.6 percent on strong
guidance for its Outback Steakhouses.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 68 cents to US$93.77
while spot gold declined 87 cents to US$1,897.44. The US dollar rose vs. major currencies. Yields on the US
Treasury 30-year bond declined 6 basis points to 2.24 percent, and the 10-year note fell 3 basis points to 1.93
percent
European markets
Equities sold off as investors braced for bad news from Ukraine going into the weekend. The Europe-wide STOXX
600 fell 0.8 percent, the German DAX declined 1.5 percent and the French CAC and UK FTSE 100 both eased
0.3 percent.
Risk appetite also suffered from hawkish-sounding rhetoric from Federal Reserve officials, including Cleveland
Fed President Loretta Mester, who supported St. Louis Fed President James Bullard’s view that the Fed may need
to accelerate its tightening pace in the second half of 2022 if inflation does not slow.
Among sectors, travel & leisure, technology, autos & parts, construction & materials, and industrials lagged while
holding up better were food & beverage, basic resources, and personal & household goods.
Among companies in focus, Pernod Ricard, the drinks leader, rose 2.0 percent after announcing a share buyback.
Teleperformance, the business services company, gained 4.9 percent on better-than-expected trading results.
On the downside, EDF, the utility, fell 2.4 percent after reporting weak output totals.
Asia Pacific Markets
Asia/Pacific markets were mixed with hopeful noises from the Ukraine crisis offsetting negative regulatory news affecting Chinese tech stocks. Japan’s markets edged down with the Ukraine crisis in focus but equities recovered from the day’s lows on hopes for a diplomatic solution. The Nikkei 225 and the wider TOPIX index both slipped 0.4 percent. Among sectors, miners lagged while automakers were relatively strong. China’s CSI 300 index gained 0.5 percent and the value-stock heavy Shanghai composite rose 0.7 percent. Among sectors, real estate improved while industrials lagged. Hong Kong’s Hang Seng index fell 1.9 percent with a selloff in Meituan, down 15 percent, leading internet stocks down after Chinese regulators told ecommerce firms to cut their fees and warned against fund-raising in the metaverse. The Taiwan Taiex eased 0.2 percent and the South Korean KOSPI was flat. Indian equities were mixed with the BSE Sensex ending down 0.1 percent. Ukraine worries and rate hike expectations left the Australian All Ordinaries index off 1.0 percent. Utilities, health care, and technology stocks led the declines while materials, industrials, and energy stocks fared best.
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Stocks dropped and bond yields plunged Friday in a flight from risk after a White House warning that Americans
should leave Ukraine and that a Russian invasion of Ukraine could occur “any day now.” The Dow Jones industrial
average fell 1.4 percent, the S&P 500 lost 1.9 percent, and the NASDAQ dropped 2.8 percent.
The losses moderated somewhat after White House National Security Adviser Jake Sullivan added that the US is
not saying President Vladimir Putin has decided on an invasion. Separately, comments from Federal Reserve
officials appeared less hawkish, including Richmond Fed President Tom Barkin’s remark that he would “have to
be convinced” of the need for a 50 basis point rate hike.
Among sectors, chipmakers and other tech stocks led the selloff, with Advanced Micro Devices dropping 10
percent. Consumer discretionary stocks lagged, too, with Tesla off 4.9 percent, and Amazon down 3.6 percent.
Megacaps were hit, with Microsoft off 2.4 percent, and Apple down 2.0 percent.
Oil prices advanced on the geopolitical worries to lift energy stocks, with oil servicer Haliburton up 3.4 percent
and ExxonMobil up 2.5 percent. Airlines gave back some of their recent gains with United Airlines dropping 4.6
percent on disappointing guidance.
On the positive side, precious metals rallied, with Barrick Gold up 7.2 percent, and aerospace & defense
advanced, with Lockheed Martin up 2.8 percent, on the war trade. Consumer staples outperformed as traders
played defense, with Philip Morris, the tobacco giant, up 2.8 percent.
European markets
Thursday’s spike in bond yields undercut technology and other growth stocks to lead equities down. A better
start on Wall Street helped equities recover from early lows. The Europe-wide STOXX 600 declined 0.6 percent,
the German DAX lost 0.4 percent, the French CAC dropped 1.3 percent, and the UK FTSE 100 was down 0.2
percent.
Among tech stocks in the news, Schibsted, the digital services business, dropped 14 percent after an earnings
miss. TeamViewer, the software firm, fell 4.5 percent after an analyst downgrade. Real estate, banks, and
financial services lagged too.
Auto stocks outperformed, led by Daimler, up 4.3 percent on an earnings beat and rising electric vehicle sales.
BMW gained 3.4 percent after taking a controlling stake in its Chinese EV automaker joint venture BMW Brilliance.
On the downside, Volvo slipped 4.6 percent after a big earnings miss and warning on supply chain trouble.
Among companies in focus, Carl Zeiss Meditec fell 3 percent after warning on uncertainty over global supply
chains. GlaxoSmithKline declined 1.3 percent after the London Times reported the UK pharma may raise its stake
in Theravance, a US biotech.
Asia Pacific Markets
Asia/Pacific markets declined with growth sectors under pressure from rising bond yields and inflation worries and a selloff on Wall Street Thursday. Japanese markets were on holiday. China’s CSI 300 index fell 0.8 percent and the value-stock heavy Shanghai composite declined 0.7 percent. Internet and health care stocks led the decliners while value held up better, especially energy and financials. Hong Kong’s Hang Seng index eased 0.1 percent with financial sector gains outweighing tech losses. Property stocks got a boost on supportive regulatory steps and financials benefited from strong Chinese loan growth. The Taiwan Taiex declined 0.2 percent and the South Korean KOSPI lost 0.9 percent with a selloff in growth stocks weighing. Indian equities saw losses across the board with the BSE SENSEX down 1.3 percent. Tech stocks suffered the most on fallout from bearish US inflation figures and Federal Reserve comments. Materials and financials held up best, but were lower. Fallout from Thursday’s Wall Street selloff hit Australian equities, with the All Ordinaries index down 1.1 percent. Banks and materials held up best while tech, real estate, utilities, health care, and industrials lagged the most.
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Equities recovered in the afternoon from morning losses as bulls focused on a better-than- expected quarter
from Amazon and results from other growth stocks that were not as bad as investors feared. A late round of
selling knocked equities back from afternoon highs as rising bond yields came back into focus. The Dow Jones
industrial average slipped 0.1 percent, the S&P 500 rose 0.5 percent and the NASDAQ gained 1.6 percent.
Much stronger than expected US employment figures pushed equities into the red in the morning as they played
on fears that the Federal Reserve will start off its tightening program with a stiff 50-basis point rate hike in
March. But dip-buying in the beaten-down technology sector led the market higher, along with a boost for energy
stocks from rising oil prices. Banks outperformed, too, as interest rates continued higher. Rising yields remained
a huge concern with short-end Treasury coupon yields up 10-11 basis points, and appeared to inspire selling
into the close.
Bulls seized on stronger-than-expected results from Amazon, which rallied 13.5 percent to boost consumer
discretionary. Snap soared 59 percent after the social media leader recorded its first actual profit. The results
contrasted with the nasty selloff suffered by Meta after its recent earnings misses.
Most other sectors weakened, with materials, communications services, industrials, and real estate lagging.
Weakness in chemicals and paper depressed materials. Consumer staples were soft, along with household and
personal care stocks, with Clorox dropping 14 percent on weaker guidance linked to cost pressures.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped by US$2.05 to
US$93.08 while spot gold rose US$1.82 to US$1,807.97. The US dollar was mixed vs. major currencies. Yields
on the US Treasury 30-year bond jumped by 7 basis points to 2.22 percent, and the 10-year note gained 9 basis
points at 1.92 percent.
European markets
Earnings news and concern about hawkish central banks undercut equities, with markets tracking the morning
selloff on Wall Street after a strong US jobs report added to rate hike worries. The Europe-wide STOXX 600 lost
1.4 percent, the German DAX fell 1.8 percent, the French CAC slipped 0.8 percent, and the UK FTSE 100 declined
0.2 percent.
Among sectors, autos lagged to hit German and French markets hardest, with Daimler down 2.4 percent, VW off
2.6 percent, and Renault down 4.0 percent. On the positive side, oil & gas stocks outperformed as oil prices
extended their gains. TotalEnergies gained 2.5 percent and ENI up 1.4 percent.
Among companies in focus, TomTom, the consumer electronics company, lost 16 percent after posting a big
earnings miss and warning on supply trouble. Sanofi, the pharma, fell 1.1 percent after disappointing earnings.
On the positive side, Assa Abloy, the lockmaker, gained 7.0 percent after an earnings beat and raising its
dividend. Carlsberg, the brewer, rose 0.5 percent after raising its guidance and dividend.
Asia Pacific Markets
Asia/Pacific markets advanced with a boost from dip-buying in technology and other growth stocks after US equity futures recovered on strong results from Amazon after Thursday’s Wall Street close. Activity was limited as mainland Chinese markets remained on holiday. Hong Kong’s Hang Seng index rallied 3.2 percent on its return from the Lunar New Year holidays. Tech stocks advanced, including Alibaba, up 5.6 percent, and Meituan, up 3.3 percent. Banks advanced with a boost from rising bond yields after hawkish news from the Bank of England and European Central Bank on Thursday. HSBC gained 5.0 percent and Standard Chartered rose 4.8 percent. Japanese markets recovered from early weakness as US equity futures turned higher. The Nikkei 225 gained 0.7 percent and the Topix rose 0.6 percent. Nintendo rose 3.6 percent after raising its earnings guidance. Japan Airport Terminal gained 7.4 percent on reports Japan may ease travel restrictions. Auto stocks suffered from supply chain worries, with Nissan down 3.0 percent. The South Korean KOSPI gained 1.6 percent as technology shares bounced back. Naver, the internet conglomerate, rose 2.2 percent and Daewoo Shipbuilding rose 4.5 percent on news of huge orders. Indian equities ended mixed to slightly lower headed into the weekend with the BSE SENSEX off 0.2 percent. Financials, tech, and oil & gas lagged while metals fared best. Australian equities improved with the All Ordinaries index and the ASX 200 both up 0.6 percent to end up about 2 percent on the week. Most sectors rose Friday with industrials, tech, and energy stocks best.
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Equities rebounded late with growth stocks leading on upbeat earnings and position adjustments headed into
the weekend and month end. The Dow Jones industrial average gained 1.7 percent, the S&P 500 rose 2.4 percent
and the NASDAQ rallied 3.1 percent.
Technology and communications services stocks, which have suffered a brutal January, led the way higher as
investors shifted back into these sectors at quarter end after weeks of growth lagging value/cyclicals on the
threat of Federal Reserve tightening.
Apple surged 7.0 percent to lead the FANMAG complex after beating analyst sales estimates in nearly every
category, and saying supply chain issues were improving. Microsoft, up 2.8 percent, bounced back from early
losses to end at the day’s highs, as did Amazon, up 3.1 percent. Among financials, Visa gained 11 percent on
better-than-expected results. Other winners included telecoms, media, and biotechs.
Among value stocks, Caterpillar fell 5.2 percent as investors reacted badly to rising costs despite a big earnings
beat. Chevron dropped 3.5 percent after a big earnings miss, and Kroger fell 4.3 percent after an analyst
downgrade.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.05 to US$90.57
while spot gold fell US$6.49 to US$1,788.70. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield was unchanged at 2.09 percent, and the 10-year note fell 2 basis points at 1.79 percent.
European markets
European equities fell as risk appetite faltered and earnings came in mixed. The Europe-wide STOXX 600 declined
1.0 percent, the German DAX declined 1.3 percent, the French CAC lost 0.8 percent, and the UK FTSE 100 was
down 1.2 percent.
Concern about supply chain problems, Russia-Ukraine tensions, the Federal Reserve’s hawkish turn, and the
prospect of tightening from the European Central Bank and the Bank of England dented equities headed into the
weekend. Among sectors, hardest hit were autos & parts, technology, industrials, and banks. Holding up best
were retail, travel & leisure, and telecom.
Among stocks in focus, SSAB fell 2.3 percent, Electrolux lost 3.9 percent on weak quarterly results, and VW
declined 0.8 percent on worries over parts shortages and delivery delays. On the positive side, H&M rose 5.1
percent and LVMH gained 3.2 percent after earnings beats.
Asia Pacific Markets
Asia/Pacific ended mixed in volatile trading with most markets holding gains amid relief that the heavy selling pressure had abated for now. Chinese markets retreated to end lower after a strong start. Japanese markets tracked US equity futures higher amid bargain hunting. The Nikkei 225 jumped 2.1 percent and the Topix gained 1.9 percent. Most sectors rose, with value outperforming. Marine shipping, miners, autos, and banks were among the day’s best performers. Mainland Chinese equities gave back early gains to end lower nearly across the board, with growth stocks facing renewed pressure despite efforts by state media and state-owned funds to boost the market. China’s CSI 300 index fell 1.2 percent and the Shanghai composite lost 1.0 percent. Hong Kong gave up early gains with the Hang Seng index closing down 1.1 percent. Losses were across the board with health care and biotech stocks lagging. China Evergrande declined 4.1 percent amid reports the government will break it up, and Hopson Development, another property developer, fell 17 percent after its PwC, its auditor, resigned. South Korea’s KOSPI rose 1.9 percent. Taiwan's stock market was closed ahead of the Lunar New Year. Australia’s All Ordinaries rose 2.1 percent, with buyers seeing markets oversold after a week of heavy losses on rate hike worries. Consumer stocks led the way higher, followed by telecom, health care, industrials, real estate, and financials.
read moreUS Markets
Broad, heavy selling continued Friday with investors repricing risk assets to reflect higher bond yields and
expectations for yields to go even higher.
Equities ended at the day’s lows for a third straight week of losses to begin 2022, even as US Treasury yields
fell back following their run-up through last week. The Dow Jones industrial average lost 1.3 percent, the S&P
500 fell 1.9 percent, and the NASDAQ dropped 2.7 percent.
Highly-valued FANMAG stocks led the decline, with the latest phase in the risk-off move triggered late Thursday
after Netflix, down 22 percent, issued disappointing subscriber guidance. The NASDAQ has fallen by 13 percent
year to date as investors have soured on hopeful growth stories.
Cyclicals suffered too, with energy, materials, and consumer discretionary, including automakers, among the
laggards. Among Dow stocks, Disney dropped 6.9 percent, Boeing lost 4.1 percent, and Visa fell 3.9 percent.
In the consumer discretionary category, Amazon was a notable loser, down 6.0 percent, and Tesla, the recent
momentum champion, dropped 5.3 percent to end at the day’s worst levels.
Defensive sectors outperformed, including consumer staples, real estate investment trusts, and utilities.
European markets
De-risking hit European equities with value/cyclicals leading the decline. The Europe-wide STOXX 600 and the
French CAC both dropped 1.8 percent, the German DAX lost 1.9 percent, and the UK FTSE 100 lost 1.2 percent.
Among cyclicals, basic resources saw the worst losses as the sector continued to give back its recent gains.
Energy stocks suffered as crude oil prices fell back from seven-year highs. Autos & parts sagged, and travel &
leisure fell back too. Among growth stocks, technology suffered the most amid concern over higher interest rates
and the Federal Reserve’s hawkish turn.
Among companies in focus, Siemens Energy fell 16 percent and Siemens Gamesa Renewable Energy dropped
14 percent after both cut guidance amid supply chain trouble. Nordic Entertainment, the media company, fell
6.8 percent on readthrough from the negative Netflix guidance. AkzoNobel, the paint giant, fell 2.6 percent on
disappointing profits guidance.
Asia Pacific Markets
Wall Street’s losses Thursday extended into Asia/Pacific markets Friday in a broad risk-off move, though most markets recovered from their opening lows. Japanese stocks rebounded from the day’s worst levels but still ended lower, with growth stocks lagging. The Nikkei 225 fell 0.9 percent and the Topix was off 0.6 percent. Mining stocks led the decliners as commodities prices dropped. Other lagging sectors included tech, autos, oil & coal, banks, and appliances. Toyota fell 2.5 percent after announcing production cuts due to parts shortages. South Korea’s KOSPI fell 1.0 percent and the Taiwan Taiex was down 1.8 percent, led by tech stock losses following NASDAQ's decline. Worries about Federal Reserve tightening dented Chinese equities again, with China’s CSI 300 index and the Shanghai composite both down 0.9 percent. Growth stock lagged. Limiting the declines were expectations for more steps from the People’s Bank of China to boost the economy. Health care led the losers while consumer staples managed gains. Properties stocks outperformed to help Hong Kong’s Hang Seng index recover early losses to end up 0.1 percent. Oil & gas stocks lagged on falling oil prices. Falling commodities prices and worries about Fed tightening and higher bond yields hit Australian equities, with the All Ordinaries plunging 2.3 percent. Materials led the decliners, along with energy, consumer discretionary, and health care. Holding best but still more than 1 percent lower were consumer staple, industrials, and real estate investment trusts.
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Weak US economic data and disappointing earnings undercut value/cyclicals but a late bid for megacaps helped
growth stocks and the NASDAQ recover. The Dow Jones industrial average lost 0.6 percent but the S&P 500 rose
0.1 percent and the NASDAQ gained 0.6 percent.
More hawkish comments from Federal Reserve officials kept upward pressure on US Treasury yields, which hurt
momentum and growth shares early, while a surprisingly weak US retail sales report and poor industrial
production and consumer sentiment readings hurt cyclicals, including industrials, financials, and materials.
Megacaps saw better demand in the afternoon as investors bought them back ahead of the weekend.
Among financials, investors took a dim view of JP Morgan’s quarterly results, with JPM down 6.3 percent after a
revenues miss and a downgrade at Wells Fargo. Citigroup slipped 1.3 percent after an earnings miss. The weak
start to the earnings season was another blow to an already shaky market outlook.
Energy stocks were a bright spot, with oil prices up. Exxon Mobil gained 1.8 percent, and Apache, the driller,
rose 3.9 percent.
Growth stocks including megacap internets and technology saw bargain-hunting, with Facebook up 1.7 percent,
Apple up 0.6 percent, and Microsoft up 1.8 percent to help trim the day’s losses. On the downside, retailers,
restaurants, airlines suffered from concern about weakening consumption after the bleak retail sales report.
In economic data, December retail and food service sales fell 1.9 percent from the prior month, an unexpectedly
steep decline vs. the median forecast of being unchanged in an Econoday survey. Weakness in sales was broadbased with few exceptions.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US2.49 to US$86.37
while spot gold declined US$4.35 to US$1,817.43. The US dollar was mixed vs. major currencies. Yields on the
US Treasury 30-year bond rose 9 basis points to 2.13 percent, and the 10-year note was up 8 basis points at
1.78 percent.
European markets
European equities extended Thursday’s selloff on rising US bond yields and hawkish Fed comments. The Europewide STOXX 600 fell 1.0 percent, the German DAX lost 0.9 percent, and the French CAC lost 0.8 percent. Strength
in energy stocks helped the UK FTSE 100 outperform the region with a decline of 0.3 percent.
Among sectors, tech stocks extended their losses on the week as bond yields continued to rise. Other laggards
included utilities, retail, and chemicals, with losses nearly across the board. Rising oil prices helped oil & gas
outperform, along with real estate.
Among companies in focus, SAP, the software giant, rose 1.7 percent on a revenues beat in its cloud business.
Wacker Chemie rose 2.2 percent on an earnings beat. On the downside, Nordic Semiconductor fell 3.1 percent
despite topping revenues expectations. Among utilities, Electricite de France fell 14.7 percent after warnings on
government pricing curbs. Currys, the telecom retailer, fell 6.9 percent on a profits warning linked to tech goods
shortages.
Asia Pacific Markets
Equities extended their losses from the US session into Asia after more hawkish Federal Reserve comments. Chinese equities slipped with weakness centered in real estate and energy. China’s CSI 300 index was down 0.8 percent and the Shanghai composite was off 1.0 percent. Hong Kong was mixed with weakness in financials while health care and biotech held up better. The Hang Seng index ended down 0.2 percent. Tech stocks saw selling pressure after the NASDAQ selloff Thursday. Japanese stocks saw weakness nearly across the board with carryover from US stock weakness. The Nikkei 225 down 1.3 percent and the Topix off 1.4 percent. Growth lagged. Automakers, real estate, machinery, and services led the decliners. South Korea’s KOSPI fell 1.4 percent and the Taiwan Taiex was down 0.2 percent paced by tech stock losses. Hawkish Fed comments undercut Australian equities with the All Ordinaries down 1.0 percent. Tech stock weakness spilled over to other sectors, including consumer stocks, health care, energy, and financials. Materials suffered too with big miners hit by falling iron ore prices.
read moreUS Markets
Value/cyclical stocks were better bid while growth stocks sagged after a mixed US employment report appeared
to confirm expectations for a relatively quick end to expansive Federal Reserve policy. The Dow Jones industrial
average was flat, the S&P 500 declined 0.4 percent and the NASDAQ lost 1.0 percent.
US non-farm payrolls missed to the downside but other aspects of the report, including a drop in unemployment
and a stronger gain in average earnings, played into inflation concerns that have spurred Fed officials to pledge
a faster end to policy accommodation.
On the positive side, value stocks including financials, energy, industrials, and utilities, added to their recent
gains as investors favored the recovery trade and continued rotating out of pricey growth stocks that have
outperformed during the pandemic era of maximum central bank stimulus. Financials were notable winners
Friday as the 10-year note yield briefly broke above 1.80 percent Friday, up nearly 30 basis points this week.
Lagging Friday were technology, consumer discretionary, and health care. Megacaps were mixed, with bargain
hunting lifting Apple, up 0.1 percent, and Microsoft, up 0.1 percent, after a rough week. Tesla, the momentum
champion, still ended down 3.5 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose one cent to US$81.91
while spot gold rose US$6.73 to US$1,795.21. The US dollar weakened vs. major currencies. Yields on the US
Treasury 30-year bond rose 4 basis points to 2.12 percent, and the 10-year note gained 4 basis points at 1.77
percent.
European markets
Equities mostly weakened on coronavirus news and disappointing economic data. The Europe-wide STOXX 600
declined 0.4 percent, the German DAX fell 0.7 percent, and the French CAC lost 0.4 percent. The UK FTSE 100
gained 0.5 percent with a boost from strength in basic resources and energy.
Concern over anti-Covid restrictions haunted travel & leisure stocks as Europe contends with a surge in Omicron
variant cases. Germany was set to tighten restrictions on access to public facilities. Soft French and German
industrial production reports, and another upside surprise on Eurozone inflation figures were negatives, along
with another soft day on Wall Street after mixed US employment figures.
Other weak sectors included real estate, food & beverage, autos & parts, industrials, personal and household
goods, retail, and construction & materials. On the positive side, rising commodities prices lifted basic materials
and energy stocks, including British Petroleum, up 2.1 percent, and Antofagasta, up 1.9 percent.
Among companies in focus, Royal Dutch Shell rose 0.3 percent after saying it will continue planned share
buybacks. STMicroelectronics, the chipmaker, gained 3.5 percent, on a revenues beat.
Asia Pacific Markets
Equities found support after selling off initially on the Federal Reserve's hawkish turn. Chinese recovered initial losses with support from reported comments from the head of the Chinese Securities Regulatory Commission pledging to limit market volatility. On the negative side, another stingy provision of reserves from the People’s Bank of China added to nerves. China’s CSI 300 index was up 0.1 percent and the Shanghai composite down 0.2 percent. Real estate and energy beat the market while consumer staples lagged. Hong Kong outperformed with a boost from strength in oil and gas stocks, leaving the Hang Seng index up 1.8 percent. Japanese markets were flat to lower with most sectors weaker in cautious trading ahead of US employment figures. The Nikkei 225 was flat and the Topix declined 0.1 percent. Growth stocks continued to lag value/cyclicals, as has been the recent trend. Disappointing Japanese household spending figures put a damper on market sentiment. South Korea’s KOSPI advanced by 1.2 percent with a boost from Samsung, up 1.8 percent after upbeat earnings guidance. Taiwan’s Taiex slipped 1.1 percent on weakness in big tech companies, including Taiwan Semiconductor, off 1.6 percent, as it corrected a strong start to the year. Australian equities rebounded from Thursday’s selloff, with the All Ordinaries up 1.2 percent. Gains were across the board, paced by utilities, energy, and financials. Tech stocks recovered from oversold conditions All sectors advanced, led by sharp gains in energy, financials, and utilities, followed by materials and oversold tech stocks. In economic news, Japanese real spending by households fell 1.3% on year in November, marking the fourth straight year-on-year drop after a 0.6% fall in October. It was much weaker than the median economist call for a 1.6% rise.
read moreUS Markets
Major stock indexes ended slightly lower after a mixed sector performance, with weakness in megacaps weighing
on the market. The Dow Jones industrial average declined 0.2 percent, the S&P 500 slipped 0.3 percent and the
NASDAQ lost 0.6 percent.
Among sectors, communications services and tech stocks lagged while real estate, consumer staples, and
industrials held up best. Health care also outperformed with a boost from Pfizer, up 1.1 percent, after UK
regulators approved use of its anti-Covid pill, and Israel announced plans for a limited second round of boosters.
Meta/Facebook, down 2.3 percent, Amazon, down 1.1 percent, and Tesla, down 1.3 percent, were among
megacaps retreating into the close after strong gains in 2021.
Among other companies in focus, cruise lines Carnival, down 2.0 percent, and Norwegian Cruise Line, down 1.4
percent, remained under pressure after the Centers for Disease Control and Prevention warned Americans
against cruise travel. Peloton, the former stay-at-home favorite, lost 3.9 percent after an analyst downgrade.
Didi, the Chinese ridesharing giant, fell another 4.8 percent as it continued a disastrous run after falling afoul of
Chinese authorities.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.54 to US$77.78
while spot gold rose US$12.69 to US$1,829.67. The US dollar declined vs. most major currencies. Yields on the
US Treasury 30-year bond fell 1 basis point at 1.91 percent and the 10-year note was flat at 1.51 percent.
European markets
Equities edged down in quiet holiday trading, with travel & leisure hurt by worries linked to the dramatic rise in
coronavirus cases. The Europe-wide STOXX 600 declined 0.2 percent, the German market was on holiday, and
the French CAC and the UK FTSE 100 both lost 0.3 percent.
Concern over surging Omicron variant cases was offset in part by more reports suggesting the rate of serious
illness remains low. Market sentiment also drew support from a better-than-expected Chinese manufacturing
purchasers report and a positive readout from a telephone call between US President Joe Biden and his Russian
counterpart Vladimir Putin.
Among sectors, weakest were travel & leisure, retail, basic resources, and oil & gas, while holding up best were
construction & materials, autos & parts, financial services, and real estate.
Asia Pacific Markets
Equities were mixed with Chinese tech stocks outperforming after a bounce earlier during the US hours. Investors are focusing on reports suggesting Omicron cases tend to be relatively mild, even as global economies brace for an array of disruptions stemming from the sheer volume of infections. Markets were shut in Japan, Taiwan and South Korea. Hong Kong’s Hang Seng index jumped by 1.2 percent as Chinese internet/tech, health care/biotech stocks surged on yearend position adjustments during Thursday’s Wall Street session. China’s CSI 300 index rose 0.4 percent and the Shanghai composite index gained 0.6 percent with tech stocks leading. Australia’s All Ordinaries index lost 0.8 percent in thin trading as investors trimmed positions at yearend. Declines were across the board but real estate, consumer discretionary, and financials fared worst while materials and industrials held up best.
read moreUS Markets
Major equity indexes ended a turbulent week lower with sentiment dented by worries about the fast-spreading
Omicron variant, and the Federal Reserve’s hawkish policy shift, with selling exacerbated by heavy options
expiration. The Dow Jones industrial average fell 1.5 percent, the S&P 500 lost 1.0 percent, and the NASDAQ
declined 0.1 percent.
Value/cyclicals stocks lagged but growth stocks fizzled too. Sectors were mixed, with dip-buying in beaten-down
reopening stocks, while energy, financials, materials, and industrials lagged. Banks and other financials were
hurt by the flattening US yield curve. Autos, homebuilders, industrial conglomerates, and retailers also lagged.
Energy stocks suffered from falling oil prices. Technology and communications services saw continuing selling
pressure after Thursday’s losses.
On the positive side, biotechs bolstered health care, including Moderna, up 4.5 percent, and Novovax, up 11
percent on positive Covid vaccine news. Among reopening stocks, airlines and travel/tourism/hotels
outperformed as their beaten-down stocks attracted buyers. Delta rose 2.1 percent a day after raising its profits
guidance for 2022. Real estate outperformed the market but still ended lower.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.60 to US$73.16
while spot gold eased 53 cents to US$1,797.77. The US dollar rose vs. most major currencies. Yields on the US
Treasury 30-year bond declined 4 basis points at 1.82 percent, and the 10-year note declined 2 basis points to
1.41 percent.
European markets
Equities slipped with investors focused on negative Covid news and hawkish central banks, plus spillover from
bearish price action on Wall Street. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX lost 0.7
percent and the French CAC fell 1.1 percent. The UK FTSE 100 edged up 0.1 percent on a weaker sterling.
Many cyclicals were hurt by concern that the pandemic will dampen demand again as governments impose
renewed restrictions. A weak German Ifo sentiment report weighed on risk appetite.
Worst off were autos & parts, oil & gas, banks, chemicals, construction, industrials, and technology. Weak
European auto sales figures and an analyst downgrade hurt automakers, including Daimler, down 3.7 percent
after a downgrade at HSBC. Oil price declines depressed energy stocks, including Royal Dutch Shell, down 1.8
percent.
UK markets outperformed as travel & leisure rebounded, with a boost from IAG, up 4.0 percent, as the owner of
British Airways saw bargain hunting after a rough week on Covid worries. Basic resources also outperformed
with metals prices higher. Other outperformers included real estate, food & beverage, and utilities.
In German economic news, Ifo Institute said economic sentiment deteriorated for a sixth successive month in
December. The headline climate indicator dropped nearly 2 points to 94.7, short of the market consensus and
its weakest print since February. It now stands 1.6 points below its pre-pandemic level in February last year.
Asia Pacific Markets
A selloff in US tech and growth stocks pushed down equities with Japan lagging as investors eyed tightening from major central banks, including the Bank of England’s unexpected rate increase. Fallout from global increases in Covid cases depressed risk assets too. Tech losses paced a selloff in Japanese equities with the Nikkei 225 down 1.8 percent and the Topix off 1.4 percent. Most sectors declined, with metals, autos, and precision makers lagging. Holding up better were natural resources and utilities stocks. Markets saw minimal reaction to the Bank of Japan policy announcement that its basic easing stance is unchanged and it is extending its program to support lending to pandemic-hit small businesses. China’s CSI 300 index lost 1.6 percent and the Shanghai composite index fell 1.2 percent with consumer stocks off the most, along with tech. Hong Kong’s Hang Seng index declined 1.2 percent as tech stocks continued to suffer from worries over China’s regulatory crackdown and the US blacklisting of several Chinese tech firms. Biotech stocks were notable winners after they did not appear on the US blacklist. South Korea’s KOSPI rose 0.4 percent and Taiwan’s Taiex rose 0.2 percent, with equities seeing better demand headed into year end. Australia’s All Ordinaries index firmed 0.1 percent with materials, energy, and financial stocks better while tech stocks dropped after a US regulator launched an investigation into Afterpay, down 7.6 percent, and other buynow-pay-later names.
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Equities rose and were holding onto the week’s gains after a mostly as-expected US consumer price report, with
late gains adding to the day’s advance. The Dow Jones industrial average rose 0.6 percent, the S&P 500 gained
1.0 percent and the NASDAQ firmed 0.7 percent.
Initial reaction to US consumer price figures was positive as the results, while concerning, were not as bad as
feared, and appeared to confirm expectations for the Federal Reserve to accelerate its tapering process at next
week’s policy meeting. US market interest rates declined after the CPI came in strong, as investors appear to
expect slower growth with a tighter Fed stance and lingering Covid concerns.
Most sectors rose but large caps fared best, especially technology and consumer staples, and rising oil prices
lifted energy stocks. Among tech stocks, Oracle rallied 16 percent and Broadcom gained 8.3 percent after
reporting surging growth. In consumer staples, grocery stores and health & personal care stocks perked up, with
Kroger up 2.2 percent, and Procter & Gamble up 1.4 percent. Costco rallied 6.6 percent on a big earnings beat.
Lagging were communications services and health care, with the latter hurt by a selloff in Moderna, down 5.6
percent after the market reacted badly to its update on its experimental flu vaccine. Industrials lagged on
weakness in airlines on Omicron worries.
Among companies in focus, Lululemon fell 1.8 percent on disappointing guidance despite an earnings beat.
Chewy, the pet food leader, fell 8.3 percent after weak customer numbers and guidance.
In economic news, consumer prices rose 0.8 percent on the month in November, above Econoday's consensus
forecast of 0.7 percent but marking a slowdown from 0.9 percent in October. Prices were up 6.8 percent from
November 2020, the largest gain since June 1982, in line with expectations but up from 6.2 percent in October.
European markets
Equities retreated to consolidate gains from earlier in the week, with virus concerns in focus again. The Europewide STOXX 600 fell 0.3 percent, the French CAC fell 0.2 percent, the German DAX eased 0.1 percent and the
UK FTSE 100 was down 0.4 percent.
Among sectors, autos, miners, and food & beverage held up best, while tech, retail, and travel & leisure lagged.
Reopening stocks suffered from rising Covid case counts in Europe and forecasts for cases to continue rising into
year end. Weakness in US technology shares weighed on tech stocks. Rising European natural gas prices
dampened sentiment as reserves continued to shrink and markets were on edge over the Ukraine situation and
the Nord Stream 2 pipeline.
Among companies in focus, Bayer, the chemicals giant, rose 2.0 percent after a California jury issued a favorable
ruling in a lawsuit over its Roundup weedkiller. BioMerieux, the biotech, rose 2.4 percent after raising its
guidance. On the downside, Ashmore, the investment manager, declined 2.7 percent after a downgrade at
Goldman Sachs. Carl Zeiss Meditech, the biotech, lost 1.3 percent after as-expected quarterly results.
Asia Pacific Markets
Equities were mostly lower in cautious trading ahead of US consumer price figures with investors taking profits ahead of the weekend. Growth stocks came under pressure after weakness in US tech stocks Thursday. China’s CSI 300 index declined 0.5 percent and the Shanghai composite index eased 0.2 percent. Most sectors fell, with health care, real estate, and energy off the most. Hong Kong’s Hang Seng index declined 1.1 percent, with health care and biotech leading the way down. South Korea’s KOSPI fell 0.6 percent and Taiwan’s Taiex slipped 0.5 percent, as tech stocks came under pressure after losses on Wall Street. US tech stock losses continued in Japanese markets with the Nikkei 225 down 1.0 percent and the Topix off 0.8 percent. Investors reacted badly to another hot inflation reading in Japanese producer price figures, which raised concern over corporate profits. Australia’s All Ordinaries index dipped 0.3 percent as the market corrected some of its recent gains on reopening optimism. Most sectors slipped, paced by tech, biotech, materials, and financials. Defensive sectors held up better.
read moreUS Markets
A selloff in technology and other growth stocks pushed down equities after the US jobs report fueled expectations
for faster removal of Federal Reserve stimulus. The Dow Jones industrial average fell 0.2 percent, the S&P 500
slipped 0.8 percent, and the NASDAQ lost 1.9 percent.
Investors looked past the downside miss in US nonfarm payrolls to focus instead on falling unemployment and
rising participation rates. St. Louis Fed President James Bullard, a noted hawk, called the jobs report “strong
across the board,” and predicted the economy will reach full employment in early 2022, on top of continued
inflation pressures. Bullard has urged the Fed to complete its taper by the end of the first quarter, and to consider
rate increases thereafter.
Leading the day's selloff were momentum stocks including the FANMAG complex, plus Tesla down 6.4 percent,
software maker Nvidia, down 4.5 percent, Google, down 0.7 percent, and Facebook off 1.1 percent. These stocks
did recover from the day's lows just before the close.
Cyclical and reopening plays suffered too on uncertainty over the impact of Omicron, and concern that withdrawal
of policy stimulus will slow the recovery, along with labor scarcity and supply chain trouble. US bond yields
dropped on expectations for slower growth. Banks, automakers, retailers, steel, and entertainment were notable
decliners. Holding up better were energy, consumer staples, utilities, and materials.
Among companies in focus, Docusign plunged 42 percent on much weaker guidance. Smith & Wesson, the
gunmaker, fell 28 percent on earnings and revenue misses. On the positive side, Big Lots, the retailer, rose 5
percent after topping earnings expectations. Zillow Group, the housing broker, rose 6 percent after reporting
progress in winding down its house-flipping business.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 35 cents to US$69.79
while spot gold rose US$14.37 to US$1,782.97. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond fell 8 basis points to 1.68 percent and the 10-year note dropped 9 basis points to 1.35
percent.
European markets
A selloff in US stocks spilled over to Europe and uncertainty over the Omicron weighed on risk appetite headed
into the weekend. The Europe-wide STOXX 600 and the German DAX both fell 0.6 percent, the French CAC
declined 0.4 percent, and the UK FTSE 100 dipped 0.1 percent.
European stocks turned lower after US markets reacted badly to a mixed US employment report. Weaker-thanexpected payroll growth and Omicron worries hurt risk sentiment, while concern that the Federal Reserve will
proceed with rate increases hurt tech and other highly-valued growth stocks after more comments from Fed
officials underlined their inclination to speed up tapering to allow a more aggressive move on interest rates next
year if needed. European Central Bank officials, on the other hand, have doubled down on their contention that
inflation is likely to recede as the reopening unfolds.
Among sectors, basic resources were the biggest loser, along with banks, on concern over weakening demand
and lower market interest rates. Holding up better were energy stocks, with oil prices rising during European
hours, plus travel & leisure, on bargain-hunting after recent losses.
Among stocks in focus, BP rose 1.3 percent, and Royal Dutch Shell gained 0.9 percent after an analyst upgrade.
Asia Pacific Markets
Equities were mixed to better with a boost from rising energy prices and bargain hunting after recent weakness. Mainland Chinese markets advanced with China’s CSI 300 index and the Shanghai composite index both up 0.9 percent. Most sectors rose, paced by a rally in energy stocks following reports that Chinese authorities may raise coal prices next year after supply shortages this year. Consumer staples and financials showed good gains. Weakness in tech stocks offset strength elsewhere in Hong Kong equities, with the Hang Seng index off 0.1 percent. Tech giant Didi dropped 19 percent after the ride-sharing app said it would delist from the New York Stock Exchange, apparently in response to pressure from Chinese regulators. South Korea’s KOSPI gained 0.8 percent. Taiwan’s Taiex eased 0.2 percent. Japanese markets recovered with value/cyclicals leading on perceptions that recent losses were overdone. Risk assets rose on news that Merck had applied for permission to sell its Covid-19 pill in Japan. The Nikkei 225 gained 1.0 percent and the Topix advanced by 1.6 percent. Most sectors rose, with transportation stocks leading, along with materials, financials, and textiles. Australia’s All Ordinaries index edged up 0.1 percent but risk-taking was limited by uncertainty over Omicron and caution before the monthly US jobs report. Most sectors edged up, led by energy on rising oil prices. Industrials, financials, consumer discretionary outperformed while consumer staples, tech, and telecom lagged.
read moreUS Markets
The pandemic trade returned Friday as global markets saw a nasty flight from risk amid concerns over the
Omicron coronavirus variant identified in South Africa. The Dow Jones industrial average fell 2.5 percent, the
S&P 500 lost 2.3 percent, and NASDAQ slipped 2.2 percent.
Prices for oil and other commodities plunged, along with bond yields as markets priced in a much bleaker
economic outlook. Among stock sectors, travel stocks, including airlines, were hit hard by expectations for
renewed travel restrictions. Big losers included financials, industrials, energy, and consumer discretionary.
Pharmas held up best, including vaccine-makers Moderna, up 21 percent, and Pfizer, up 6.1 percent. Stay-athome stocks advanced, including Peloton, the home exercise machine maker, up 5.7 percent, Zoom, up 5.7
percent, and Netflix, up 1.1 percent. Consumer staples, including grocery stores, and home and personal care
stocks, outperformed too.
These price data reflect observations at 2:00 PM US ET: Dated Brent spot crude oil plunged US$9.41 to US$72.72
while spot gold fell 51 cents to US$1,788.10. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond fell 16 basis points to 1.82 percent, and the 10-year note declined 16 basis points to
1.48 percent.
European markets
Risk assets dropped Friday in response to concern over the coronavirus variant identified in South Africa. Stocks
pegged to the recovery trade suffered the most, especially airlines, while health care and stay-at-home stocks
fared better. The Europe-wide STOXX 600 fell 3.7 percent, the French CAC lost 4.8 percent, the German DAX
lost 4.2 percent, and the UK FTSE 100 dropped 3.6 percent.
Among sectors, travel & leisure saw losses of roughly 5 percent, along with banks, as interest rates sank. Oil &
gas stocks tracked oil prices much lower. Basic resources, autos & parts, and industrials saw big downside moves.
Holding up better but still lower were defensive plays -- health care, utilities, technology, and real estate.
Among stocks in focus, IAG, owner of British Airways, dropped 14.6 percent, Scandic Hotels fell 9.4 percent, and
Carnival, the cruise line, dropped 16 percent.
Asia Pacific Markets
Asian equities saw a dramatic selloff in a risk-off move amid concerns about the new coronavirus variant that may be more contagious, with most markets ending near the day’s lows. Reopening stocks and technology stocks suffered the most. Japanese markets sank in a broad-based response to coronavirus fear with the Nikkei 225 off 2.5 percent and the Topix down 2.0 percent. Value/cyclical stocks were hit hardest. Among sectors, airlines, land transportation and real estate lagged while defensive utilities held up best. The yen rose in the flight from risk. In mainland Chinese markets, equities were hurt by concern over the new coronavirus variant abroad and rising infections along China’s eastern coast. China’s CSI 300 index declined 0.7 percent and the Shanghai composite fell 0.6 percent. Energy and technology stocks lagged while materials managed modest gains. Hong Kong equities dropped across the board tech and internets off the most. Hong Kong’s Hang Seng index fell 2.7 percent. South Korea’s KOSPI fell 1.5 percent and the Taiwan Taiex dropped 1.6 percent as part of the global flight from risk assets, with big tech companies leading the selloff. Australia’s All Ordinaries index declined 1.8 percent in the global risk off mood. Commodities prices led the declines. Energy stocks dropped with falling oil prices. Tech stocks suffered with buy-now-pay-later stocks off sharply, and software company Appen down 18 percent after an analyst downgrade.
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The pandemic trade returned Friday on bearish Covid news from Europe, with investors rotating into highly liquid
growth stocks and ultra-safe US Treasuries while value stocks sold off. The Dow Jones industrial average fell 0.8
percent. The S&P 500 lost 0.1 percent and the NASDAQ gained 0.4 percent.
Recovery hopes took a hit on Austria’s announcement that it was reimposing a nationwide lockdown, starting
Monday, and would require the whole population to be vaccinated from Feb. 1. Investors worry that other
European countries may soon follow suit. With US vaccination rates relatively low, the concern is that the US
may see surging case counts and anti-Covid restrictions over the winter. Markets appeared vulnerable to
consolidation after the S&P 500 and NASDAQ set record high closes Thursday.
Comments from Federal Reserve officials added to the risk-off tone, as a chorus of Federal Open Market
Committee members expressed willingness to consider faster tapering of asset purchases – and an earlier
interest rate liftoff – in response to more rapid growth and rising inflation concerns.
Among sectors, energy stocks lagged the most as oil prices sank. Financials came off as US Treasury yields fell.
A selloff in airlines weakened industrials as markets worry the travel recovery will be aborted.
On the positive side, megacaps and recession-proof technology stocks outperformed, with Facebook up 2.0
percent, Apple up 1.7 percent, Microsoft up 0.5 percent, and Nvidia up 4.1 percent. Tesla gained 3.7 percent
after an analyst upgrade. Household & personal care stocks rose on Covid concerns, with Kimberly-Clarke and
Church & Dwight both up 1.1 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$2.26 to US$78.38
while spot gold fell US$13.14 to US$1,847.33. The US dollar rose vs. most major currencies but declined vs. the
safe-haven yen. Yields on the US Treasury 30-year bond fell 9 basis points to 1.90 percent and the 10-year note
fell 6 basis points to 1.53 percent.
European markets
Falling commodities prices and new restrictions to counter spreading coronavirus undercut European equities.
The Europe-wide STOXX 600 declined 0.3 percent, the German DAX and the French CAC both slipped 0.4 percent,
and the UK FTSE 100 was down 0.5 percent.
With Covid case counts rising across much of Europe, markets expect more restrictions and lockdowns. Austria
mandated vaccines for adults and imposed a lockdown for a maximum of 20 days for unvaccinated people.
German Health Minister Jens Spahn declined to rule out lockdowns even for people who have been vaccinated.
Defensive sectors plus stay-at-home plays like personal & household goods, technology, and health care, held
up best while reopening plays sank.
Oil & gas stocks lagged the most as oil prices dropped on expectations for a release of oil stockpiles from the US
and Chinese strategic reserves, and concern about the impact of rising Covid cases. Autos & parts were hit as
markets anticipate factory shutdowns to curb the pandemic, with Renault off 4.7 percent. Travel & leisure stocks
were hit, with RyanAir off 4.3 percent and Whitbread, the hospitality company, down 2.3 percent. Banks suffered,
with Austria’s Raffeisen off 6.9 percent on Austria’s lockdown.
Among companies in focus, Kingfisher, the retailer, fell 4.4 percent, and Bekaert, the manufacturer, fell 7.8
percent after disappointing trading updates. On the positive side, Hermes, the luxury goods retailer, rose 5.2
percent on reports it may be added to the CAC. Gesco, the manufacturer, gained 3.5. percent on an earnings
beat.
Asia Pacific Markets
Asian equities were mixed with a boost from overnight gains on Wall Street and with company news in focus. China’s CSI 300 index rose 1.1 percent, and the Shanghai composite gained 1.1 percent, with support from a better showing from property stocks and financials including developers China Evergrande, up 5.3 percent, and Country Garden, up 5.5 percent. More losses in tech and internet stocks hurt Hong Kong, with the Hang Seng index off 1.1 percent. Alibaba, the e-commerce leader, fell 11 percent to bring its losses to 14.7 percent on the week, after disappointing quarterly results and bearish guidance. A positive lead from Wall Street and generally favorable reaction to Japan’s fiscal stimulus plans helped Japanese equities, with the Nikkei 225 up 0.5 percent and the Topix up 0.4 percent. South Korea’s KOSPI gained 0.8 percent with a boost from LG Electronics, up 2.0 percent, on a report it is working with Apple on autonomous cars. Taiwan’s Taiex benchmark eased 0.1 percent. Australia’s All Ordinaries index rose 0.2 percent with a boost from Crown Resorts, up 17 percent, after Blackstone’s improved takeover offer. Sectors were mixed with health care, consumer staples, miners, and energy outperforming. Industrials lagged while other sectors were nearly flat.
read moreUS Markets
Dip-buying in megacap technology and communications helped equities recover Friday but inflation concerns
were leaving major indexes lower on the week, with the Dow industrials off 0.9 percent over the last five days.
The Dow Jones industrial average rose 0.5 percent, the S&P 500 gained 0.7 percent, and NASDAQ rose 1.0
percent.
Bargain-hunting lifted Facebook by 4.0 percent Friday while Apple rose 1.4 percent, Microsoft gained 1.3 percent,
Google rose 2.0 percent and Amazon was up 1.5 percent. On the downside, Tesla fell 2.8 percent to weigh on
consumer discretionary on news its founder, Elon Musk, sold more shares.
News that Johnson & Johnson would split into two companies got a warm welcome, as JNJ rose 1.2 percent, but
weakness in biotech depressed health care stocks, with AstraZeneca off 6.6 percent in New York trading on an
earnings miss. Energy trailed as oil prices slipped amid speculation the US may tap its strategic petroleum
reserve.
In economic news, US consumer sentiment fell nearly 5 points to 66.8 for the worst showing in a decade. Yearahead inflation expectations rose another tenth to 4.9 percent, which compares with the low-to-mid 2 percent
range before the pandemic hit last year. More hopeful were 5-year expectations which, at 2.9 percent, are
elevated but at least no more elevated than they were in prior months.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 53 cents to US$82.07
while spot gold rose US$2.07 to US$1,865.84. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond rose 3 basis points to 1.95 percent, and the 10-year note rose 2 basis points to 1.58
percent.
European markets
Company news left major equity indexes mostly higher, with personal and luxury goods leading the winners.
The Europe-wide STOXX 600 rose 0.3 percent, the German DAX rose 0.1 percent, the French CAC rose 0.5
percent and the UK FTSE 100 lost 0.5 percent.
In the luxury space, Richemont, the Swiss conglomerate, rallied 11.1 percent after a big earnings beat. LVMH,
its French competitor, gained 2.5 percent after reports it will open a duty free store in China. Autos & parts were
in focus, with Pirelli, the tire leader, up 3.5 percent after raising its guidance, and Volkswagen up 1.2 percent
after announcing better than expected deliveries.
Energy stocks trailed the market as oil prices retreated, along with negative earnings news from Roseneft Oil,
down 5.1 percent in London trading. TotalEnergies lost 1.6 percent, and Royal Dutch Shell slipped by 0.5 percent.
Declining commodities prices depressed miners, with Glencore down 0.6 percent and BHP down 0.5 percent.
Among other companies in focus, Deutsche Telekom gained 1.8 percent, Hapag-Lloyd, the mega-shipper, gained
1.0 percent, Deutsche Wohnen, the property company, rose 0.9 percent, and Galliford Try, the construction
company, rose 5.1 percent, after topping earnings expectations.
On the downside, AstraZeneca, the pharma, dropped 6.9 percent after an earnings miss, and John Wood, the
consultant, lost 4.5 percent after an earnings miss and restructuring announcement. Knorr Bremse, the
manufacturer, fell 4.7 percent on weaker guidance. Travel & leisure stocks remained under pressure as European
coronavirus case counts remained elevated. Intercontinental Hotel Group fell 1.4 percent Friday and was down
5.3 percent for the week, while Whitbread, the restaurant chain, lost 2.3 percent Friday and 6.4 percent for the
week.
Asia Pacific Markets
Equities advanced Friday with Japan outperforming as the market focused on Japan's fiscal stimulus plans, and China and South Korea getting a boost from a strong showing in China’s Single’s Day shopping event. Japanese major stock indexes popped up as details emerged on the incoming government’s fiscal stimulus plans, including reports that it will top $350 billion. Markets also drew support from bargain-hunting after analyst commentary suggesting Japanese markets have lagged global peers. Japan’s Nikkei 225 rose 1.1 percent and the Topix gained 1.3 percent. Gains were across the board, paced by technology, real estate, mining, iron & steel, automobiles, and banks. Toyota rose 2.4 percent after saying it is moving to restore normal production as the pandemic ebbs. Chinese markets were mixed with property developers backing off after Thursday’s rally. On the positive side, risk appetite got a lift from reports that Single’s Day sales by Alibaba and JD.com came in around $139 billion, a new record. China’s CSI 300 index eased 0.2 percent and the Shanghai composite firmed 0.2 percent. Among sectors, industrials and telecom outperformed while property stocks lagged. Hong Kong’s Hang Seng index rose 0.3 percent as investors focused on strong Single’s Day sales. Consumer goods and internet stocks outperformed while property and banks lagged. Online retailer Meituan rose 2.6 percent and JD.com was up 5.2 percent. Separately, Taiwan’s Taiex benchmark gained 0.4 percent and South Korea’s KOSPI rallied 1.5 percent with support from tech stocks linked to Single’s Day sales strength. Strength in commodities prices lifted miners and energy stocks with the All Ordinaries index up 0.8 percent. Gains were nearly across the board with materials leading as iron ore miners extended Thursday’s rally. Energy outperformed with liquefied natural gas producers strong. Tech stocks, consumer staples, consumer discretionary, and banks advanced. Health care lagged with Resmed, the medical device maker, off 1.6 percent
read moreUS Markets
Surprisingly positive US employment figures, upbeat corporate results, and good coronavirus news helped
equities add to recent gains. The three major averages set new records as the Dow Jones industrial average rose
0.6 percent, the S&P 500 gained 0.4 percent, and the NASDAQ was up 0.2 percent.
Positive quarterly results from prominent companies selling face-to-face services bolstered the reopening trade.
Ride-sharing leader Uber, up 4.2 percent, and Expedia, the travel broker, up 16 percent, lifted sentiment, as
both reported much better business conditions and results. On the virus front, Pfizer gained 11 percent after
clinical trials showed high effectiveness for its anti-Covid pill.
Among sectors, industrials, energy, and utilities paced the day’s winners, along with communications services.
Health care lagged, despite Pfizer’s strength, as Merck, which sells a rival anti-Covid pill, dropped 10 percent,
and Moderna, maker of a leading anti-Covid vaccine, fell 17 percent. Energy stocks got a boost from rising oil
prices, with Chevron up 1.1 percent and Exxon Mobil up 1.0 percent. Utilities, which are considered interest rate
proxies, rose as interest rates dipped.
In US economic news, nonfarm payrolls rose 531,000 in October with a net upward revision of 235,000 for the
prior two months. The unemployment rate fell two-tenths to 4.6 percent in October and the U6 unemployment
rate, which covers discouraged, part-time or underemployed workers, was also down two-tenths to 8.3 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.60 to US$82.20
while spot gold rose US$23.01 to US$1,816.78. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond fell 8 basis points to 1.89 percent, and the 10-year note fell 9 basis points to 1.45 percent.
European markets
Mixed Covid-19 news and an upbeat US employment report left equities firmer. The Europe-wide STOXX 600
was up 0.1 percent, the German DAX firmed 0.2 percent, the UK FTSE 100 rose 0.3 percent, and the French
CAC gained 0.8 percent.
Markets have derived support from the delay in rate increases from the Bank of England and European Central
Bank at their recent meetings. At the same time, many analysts worry the central banks risk a wider outbreak
in inflation by delaying rate increases, or the reverse, that pending rate increases from the BOE will prove
premature.
Market sentiment suffered as another uptick in coronavirus cases in Europe spurred several governments to
consider resuming measures to contain the spread. On the other hand, news of successful trials for Pfizer’s antiCovid pill bolstered sentiment, and supported reopening stocks, with travel & leisure leading the day’s winners.
Among other sectors, best were autos & parts, telecom, personal & household, banks, and oil & gas. Lagging
were health care, utilities, basic resources, chemicals, and real estate. Among utilities, Energias de Portugal lost
1.5 percent after weak earnings.
Asia Pacific Markets
The global equities market rally faltered in Asia on disappointing corporate news, on concerns over supply disruptions, and on renewed liquidity problems in China’s property sector. Chinese equities came under selling pressure with energy and utilities stocks weakest as regulators pressed for power cost cuts. Investor sentiment suffered as Kaisa, the property business, halted trading after missing a debt payment. Kaisa is one of China’s most heavily indebted developers, after China Evergrande. China’s CSI 300 index fell 0.5 percent and the Shanghai composite fell 1.0 percent. Hong Kong’s Hang Seng index dropped 1.4 percent, with big tech and energy stocks leading the selloff. Finance stocks took a hit with HSBC off 3.6 percent after the surprise UK no rate increase. Japanese major stock indexes gave back some recent gains with a trigger from weakness in the region. Japan’s Nikkei 225 declined 0.6 percent and the Topix declined 0.7 percent. Among companies in focus, Toyota fell 1.4 percent after warning it faced more trouble from microchip shortages. Shipping companies extended recent losses with Nippon Yusen down 4.7 percent. Nintendo rose 3.1 percent, despite supply trouble, on reports it would expand its product offerings. Separately, South Korea’s KOSPI slipped 0.5 percent on spillover from Chinese weakness. Taiwan’s Taiex benchmark rose 1.3 percent, led by Taiwan Semiconductor, up 2.2 percent. Australian equities ended higher with the All Ordinaries index up 0.4 percent. Most sectors rose, paced by telecom and utilities as interest rates retreated from recent gains. Precious metals and iron miners lifted materials stocks while biotech lifted health care. Energy lagged as coal producers took a hit from Chinese steps to reduce prices. Tech trailed, with Afterpay down 5.5 percent.
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Negative surprises from Apple and Amazon weighed on equities Friday but other megacaps held up well to limit
the declines, and a late round of buying lifted the indexes into positive territory. The Dow Jones industrial average
gained 0.3 percent, the S&P 500 rose 0.2 percent, and the NASDAQ was also up 0.3 percent
Consumer discretionary lagged with Amazon down 2.2 percent after a big earnings miss due mostly to rising
input costs. Apple, down 1.8 percent, weighed on technology stocks after blaming supply disruptions for its
unusual revenues miss, but strength in Microsoft, up 2.2 percent, offset the effect. Declining oil prices hurt
energy stocks; Chevron managed to rise 1.2 percent and Exxon Mobil gained 0.3 percent after upbeat quarterly
results. Utilities and real estate investment trusts trailed.
On the positive side, megacap internets led the market, with Google up 1.5 percent and Facebook up 2.1 percent.
Consumer staples were strong too, with grocers up, including Kroger, up 0.9 percent. Materials rose, with
industrial metals better, and US Steel rallying 13 percent after an earnings beat and raising its dividend. Health
care and financials were mixed. Pfizer gained 1.3 percent after its Covid vaccine was approved for use by children.
In US economic news, personal income declined 1.0 percent in September from August, on the low end of the
Econoday survey of forecasts, but the drop was due to special factors. Personal consumption expenditures rose
0.6 percent in September. The PCE deflator posted a 4.4 percent year-over-year increase in September as
commodities prices continued their upward push. The core PCE deflator remained at 3.6 percent year-over-year
for a fourth straight month.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 5 cents to US$84.38
while spot gold fell US$15.50 to US$1,782.85. The US dollar rose vs. major currencies. Yields on the US Treasury
30-year bond fell 5 basis points to 1.92 percent, and the 10-year note was down 3 basis points at 1.54 percent.
European markets
A split sector showing left equities narrowly mixed as markets reacted to rising bond yields and falling
commodities prices. The Europe-wide STOXX 600 firmed 0.1 percent, the German DAX eased 0.1 percent, the
French CAC rose 0.4 percent, and the UK FTSE 100 was down 0.2 percent.
Among sectors, best were insurance, autos & parts, banks, and chemicals. Lagging were utilities, telecom, oil &
gas, basic resources, and travel & leisure. Among companies in focus. Eni, the Italian energy leader, rose 2.0
percent after an earnings beat, and Banco Bilbao Vizcaya rallied 7.5 percent on very strong operating results.
On the downside, GN Store Nord fell 8.3 percent after missing on all its metrics.
On a busy day for economic reports, inflation came in hot, with Eurozone HICP (harmonised index of consumer
prices) above expectations in October, at a 4.1 percent year-over-year rate versus expectations for 3.7 percent.
But showing much less upward pressure were both the narrow core (excluding energy, food, alcohol and tobacco)
and the underlying core (excluding energy and unprocessed food), both at 2.1 percent annual rates and both up
only 2 tenths from September's annual rates.
Asia Pacific Markets
Asian equities were mixed with mainland China outperforming while Australia lagged. Growth stocks led Chinese markets mostly higher though property stocks suffered again. China’s CSI 300 index gained 0.9 percent and the Shanghai composite rose 0.8 percent. Among sectors, best were information technology, health care, and industrials. Hong Kong’s Hang Seng index slipped 0.7 percent on weakness in tech stocks. Separately, South Korea’s KOSPI lost 1.3 percent on a mix of disappointing earnings and weak economic data. Taiwan’s Taiex benchmark slipped 0.3 percent. Positive earnings news helped Japanese stocks recover initial declines. The Nikkei 225 index rose 0.3 percent and the broader Topix firmed 0.1 percent. Activity was limited by caution before the weekend elections, which are expected to return the ruling coalition to power. Australian equities slipped on rising yields fueled by inflation worries with the All Ordinaries index down 1.3 percent. Financials and energy shares lagged the most.
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Losses in megacaps and communications services held back the major averages, but financials helped value
stocks outperform. The Dow Jones industrial average firmed 0.2 percent to 35,677.02, its first record high close
since Aug. 16, while the S&P 500 eased 0.1 percent and the NASDAQ lost 0.8 percent.
Snap, owner of Snapchat, the social media phenomenon, plunged 27 percent after missing on third quarter
revenues and lowering its guidance. Snap depressed other communications stocks, with Google off 2.9 percent
and Facebook down 5.1 percent. Amazon, down 2.9 percent, was another weight on the market. Tech lagged
too, with Apple down 0.5 percent, and Intel dropping 12 percent after a big earnings miss and lower guidance,
which prompted several analysts to downgrade the big chipmaker.
A better showing for financials helped the Dow industrials outperform, with American Express up 5.4 percent
after an earnings beat. Other Dow financials rallying included Travelers, up 1.4 percent, and Goldman Sachs, up
1.7 percent. Crude oil prices lifted energy stocks while grocery stores boosted consumer staples.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.03 to US$85.78
while spot gold rose US$9.62 to US$1,794.25. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond dropped 7 basis points to 2.07 percent, and the 10-year note fell 5 basis points to 1.64
percent.
European markets
Earnings news helped equities edge up with help from reports that China Evergrande made a last-minute debt
payment. The Europe-wide STOXX 600 and the German DAX both gained 0.5, the French CAC gained 0.7 percent,
and the UK FTSE 100 was up 0.2 percent.
Among companies in focus, Klepierre, the French real estate investment trust, gained 7.8 percent after raising
its guidance and saying business returned to pre-pandemic levels. Remy Cointreau, the iconic French drinks
maker, rose 1.8 percent after a revenues beat. French luxury goods maker L’Oreal, rose 5.3 percent, and Thule,
the Swedish outdoor equipment maker, gained 9.2 percent on strong quarterly results.
On the downside, Boliden, the Swedish miner, fell 6.8 percent, and Saab, the Swedish automaker, fell 3.6 percent
after earnings misses.
Asia Pacific Markets
Asian equities were mostly steady with a bit of support from reports that China Evergrande made a payment on its dollar debt just ahead of its final deadline. Mainland Chinese markets were mixed with growth stocks beating value. China’s CSI 300 index rose 0.6 percent and the Shanghai composite was off 0.3 percent. Among sectors, energy lagged while consumer discretionary stocks fared best. Hong Kong’s Hang Seng index rose 0.4 percent with a boost from tech and internets. News of China Evergrande’s payment lifted sentiment, along with a continued decline in Chinese coal prices. Evergrande rose 6.5 percent. Big tech gained after Bloomberg reported a top Chinese bank regulator said the government fintech crackdown was entering its final stages. South Korea’s KOSPI and the Taiwan’s Taiex benchmark were both flat. Activity was limited by caution ahead of South Korean economic data releases and major corporate earnings reports next week. Japanese markets recovered slightly after dropping the previous day, with growth stocks topping value. Sentiment drew support from the China Evergrande’s news. The Nikkei 225 index rose 0.3 percent and the broader Topix edged up 0.1 percent. Metals and mining lagged the most, along with banks and transportation equipment. Machinery, appliances, and precision instruments fared best. Australia’s All Ordinaries index ended unchanged after a mixed showing among sectors. Miners and energy stocks fell back with declining commodities prices. Financials were nearly steady. Consumer discretionary outperformed, with gaming and grocery stores outperforming. Health care advanced on strength in biotechs and hospital shares. In economic news, Japan’s national average core consumer price index (excluding fresh food) edged up 0.1 percent from a year earlier in September, as expected, after being unchanged in August. It was the first yearover-year gain since March 2020, when the core reading gained 0.4 percent.
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Strong earnings and better-than-expected economic data lifted equities with value/cyclicals leading but growth
stocks strong too. The Dow Jones industrial average rose 1.1 percent, the S&P 500 gained 0.8 percent and the
NASDAQ was up 0.5 percent.
Stellar results from Goldman Sachs, up 3.8 percent, from Alcoa, up 14.7 percent, and JB Hunt, the transportation
giant, up 8.7 percent, set the mood. Meanwhile, investors keyed on another positive surprise in US economic
data, with retail sales topping expectations, after Thursday’s better-than-expected US jobless claims report.
Weaker New York Empire State manufacturing and US consumer sentiment reports attracted less attention.
In a sign of risk-on sentiment, crypto stocks rallied and bitcoin moved back toward record highs above $60,000
after unconfirmed reports that the Securities and Exchange Commission will allow the launch of exchange-traded
funds based on bitcoin futures contracts traded on the Chicago Mercantile Exchange. The ETFs would allow a
wider range of investors to gain exposure to bitcoin without actually owning bitcoins.
Among stock sectors, Amazon, up 3.3 percent, led consumer discretionary. Credit cards helped financials
outperform, with American Express up 2.5 percent. Rising oil prices boosted energy stocks, with oil servicer
Haliburton up 4.9 percent. Industrials rose on JB Hunt’s big beat, with Caterpillar up 2.4 percent. Materials
lagged, along with tech, consumer staples, and communications services as Facebook declined by 1.2 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 60 cents to US$84.75
while spot gold fell US$28.42 to US$1,768.63. The US dollar was mixed vs. major currencies. Yields on the US
Treasury 30-year bond rose 3 basis points to 2.05 percent, and the 10-year note rose 5 basis points to 1.57
percent.
European markets
Positive earnings news lifted equities with financials and other cyclicals including leading. The Europe-wide
STOXX 600 rose 0.7 percent, the German DAX rose 0.8 percent, the French CAC gained 0.6 percent and the UK
FTSE 100 was up 0.4 percent.
Sentiment drew support from strong US bank earnings and better-than-expected US retail sales and jobless
claims. Other leading sectors included retail, oil & gas, and travel & leisure. Among retail stocks, Hugo Boss, the
German clothing retailer, firmed 0.8 percent after an earnings beat and raised guidance.
On the downside, utilities lagged in response to the day’s rebound in bond yields, and on rising fuel prices, which
are squeezing profit margins.
Among companies in focus, Lufthansa rose 4.1 percent after an analyst upgrade, while Aeroport de Paris rose
2.3 percent on its latest improved traffic figures. Land Securities, the UK real estate investment trust, rose 2.0
percent after its latest trading update. On the downside, Pearson, the UK publisher, fell 16 percent on the
pandemic hit to its education business. Temenos, the Swiss software business, fell 14 percent on a revenues
miss. Rio Tinto, the big global miner, fell 1.4 percent after cutting its iron shipments forecast and blaming labor
shortages.
Asia Pacific Markets
Rising tech stocks propelled most Asian markets higher though China lagged on worries over its fuel crunch and property sector. Energy and tech stocks advanced to help mainland China edge higher, offset in part by declines in health care and consumer staples. China’s CSI 300 index and the Shanghai composite both firmed 0.4 percent. Hong Kong’s Hang Seng index rallied 1.5 percent on its return from two days away, with a support from consumer staples and tech stocks. South Korea’s KOSPI gained 0.9 percent and Taiwan’s Taiex benchmark was up 2.4 percent, with a rally in chipmakers helping Taiwan top the region. Taiwan Semiconductor, the semiconductor bellwether, rose 4.7 percent in Taiwan trading as the market continued to react favorably to its profits beat and plans to expand production. Carryover from US tech stock gains and a weaker yen boosted Japanese equities. The Nikkei 225 index advanced 1.8 percent and the broader Topix rose 1.9 percent. Among companies in the news, Toyota managed to rise 0.4 percent despite announcing it would cut its global output due to chip shortages and the Chinese power shortage. Australian equities improved with the All Ordinaries up 0.7 percent. Reopening plays, including travel and gaming stocks, led the winners after New South Wales, Australia's most populous state, announced additional easing of anti-Covid restrictions. Tech outperformed along with big banks. On the downside, weakness in coal and liquefied natural gas producers weighed on energy, and utilities trailed.
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A split showing among sectors left major stock indexes mixed Friday after a somewhat disappointing US
employment report. The Dow Jones industrial average was flat, the S&P 500 declined 0.2 percent, and the
NASDAQ fell 0.5 percent.
Value stocks topped growth as another advance in oil prices helped energy stocks outperform. Rising bond yields
on inflation concerns undercut growth stocks.
In economic data, monthly US employment figures showed a lower-than-expected increase in total nonfarm
jobs, but private payrolls were closer to market expectations, and investors focused on a much larger than
expected drop in unemployment and a big rise in hourly earnings.
Among sectors, financials outperformed as banks and credit card issuers rose on expectations for upbeat
earnings next week. Consumer staples lagged on weakness in health & beauty products and in beverages. Health
care lagged while utilities and real estate trailed.
Among companies in the news, Oshkosh, the truck maker, fell 5.0 percent after its revenues and profits missed
expectations. Charter Communications, the telecom, lost 4.8 percent after an analyst downgrade. On the positive
side, Momentive, the software firm, rose 9.6 percent on takeover talk. Plug Power, the battery maker, rose 4.2
percent on an analyst upgrade.
In US economic news, September nonfarm payrolls rose 194,000, a disappointing performance compared to the
median expectation of 475,000. Private payrolls jumped 317,000 in the month, with a 123,000 drop in
government jobs that led to the soft headline number. The jobless rate dropped by 4 tenths to 4.8 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 13 cents to US$82.57
while spot gold rose US$1.13 to US$1,756.85. The US dollar was mostly weaker vs. major currencies but rose
vs. the yen. The US Treasury 30-year bond yield rose 3 basis points to 2.16 percent and the 10-year note yield
was up 3 basis points at 1.60 percent.
European markets
Equities were mostly lower Friday as worries about fallout from spiking fuel prices and stagflation talk mounted.
The Europe-wide STOXX 600 and the German DAX both declined 0.3 percent, the French CAC declined 0.6
percent, and the UK FTSE 100 rose 0.3 percent.
Analysts raised doubts about Russia’s ability to address the shortfall in European fuel needs. Investors fretted
that rising energy costs would hit consumer spending while supply chain disruptions continue to hurt industrial
activity. Bond yields rose on inflation fears. On the positive side, Italy and Spain flagged progress in controlling
the spread of Covid-19.
Among sectors, best were oil & gas, autos & parts, banks, insurance, and basic resources. Rising oil prices
propelled energy stocks but added to inflation worries. On the downside, technology, personal & household
goods, industrials, utilities, retail, and chemicals lagged. Tech stocks were hurt by an uptick in bond yields.
Among companies in focus, Daimler rose 2.9 percent after an analyst upgrade. Anglo American, the miner, rose
1.7 percent after announcing a share buyback. On the downside, Zur Rose, the Swiss pharma, slipped 6 percent,
and Unite Group, the UK student housing company, fell 4.6 percent on negative quarterly results.
Asia Pacific Markets
Asian markets mostly tracked US markets higher Friday with mainland Chinese markets making a positive return from the long China Golden Week holiday. China’s CSI 300 index rose 1.3 percent and the Shanghai composite gained 0.7 percent, with support from better Chinese purchasers data and hopes for calmer US-China relations. On the downside, the outlook remained clouded by concern over the impact of Chinese fuel shortages and lack of clarity over the fate of China Evergrande and Fantasia Holdings after both missed large debt payments. Hong Kong shares were mixed with the Hang Seng index ending up 0.6 percent. Tech and financials advanced while property, health care, industrials, and energy stocks slipped. Tech giants Meituan, up 2.1 percent, and Alibaba, up 5.6 percent, led the winners. Their gains occurred despite People’s Bank of China Governor Yi Gang’s renewed warning that regulators are pressing ahead with plans to rein in big tech and fintech. South Korea edged down in cautious trading ahead of the weekend with the KOSPI down 0.1 percent. Taiwan’s Taiex index eased 0.4 percent. Japanese equities rose in line with gains on Wall Street amid relief over better news on the US debt ceiling. The Nikkei 225 index rose 1.3 percent and the broader Topix gained 1.2 percent. Most sectors rose, paced by miners and automakers. Toyota, up 2.9 percent, was among the day’s best performers, with help from a weaker yen. Relief over the positive return of Chinese markets from a weeklong holiday boosted Australian shares, with the All Ordinaries up 0.9 percent. An uptick in iron ore prices lifted materials while energy stocks extended recent gains on rising prices for liquefied natural gas. Banks and retailers outperformed too. Real estate and industrials lagged, with Transurban, the toll road operator, down 1.6 percent. In economic news, the Chinese purchasing managers index for services increased from 47.2 in August, its lowest since April 2020, to 53.4 in September, while the manufacturing PMI survey, released last week, showed an increase in its headline index from 49.2 to 50.0.
read moreUS Markets
Equities snapped back Friday with cyclicals leading on dip-buying and good news on a Covid-19 medication, plus
positive US economic data. The Dow Jones industrial average rose 1.4 percent, the S&P 500 gained 1.2 percent
and the NASDAQ gained 0.8 percent.
News that Merck, up 8.4 percent, said its anti-viral pill was effective against Covid-19 gave reopening plays a
lift. Other big drug makers, including Pfizer and Roche, reportedly have similar medications in late-stage tests.
Cyclicals/value stocks also got a boost from a better-than-expected US purchasing managers’ report. Despite
the better showing Friday, major equity indexes showed big declines for the week in response to higher bond
yields, stagflation worries, and expectations for less supportive US fiscal and monetary policy.
Among sectors, energy led the day’s winners with supermajors strongest. Megacap internet stocks lifted
communications services with help from dip-buying and the day’s reprieve in rising market interest rates, and
strength in media names. Financials and materials also outperformed, and airlines led industrials higher, with
airlines up on positive analyst commentary and reaction to the anti-Covid medication news.
Among companies in focus, Southwest Air rose 5.7 percent and American Airlines rose 5.5 percent. Travel and
entertainment companies including Hilton Worldwide, the hotel chain, up 4.6 percent, and Live Nation, the
concert promoter, rose 8.3 percent, on reopening hopes.
In US economic news, the manufacturing sector index compiled by the Institute for Supply Management jumped
to 61.1 in September from 59.9 in August, coming in stronger than the consensus forecast for 59.8. Separately,
the consumer sentiment index received an upward revision to 72.8 in September, putting it 2.5 points above the
70.3 in August after it plunged from 81.2 in July. The reading beat market expectations, but not enough to lift
the worry that lower confidence could limit consumer spending.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 57 cents to US$79.09
while spot gold rose US$4.17 to US$1,760.16. The US dollar fell vs. most major currencies. The US Treasury
30-year bond yield declined 3 basis points to 2.04 percent and the 10-year note yield slipped by 2 basis points
to 1.47 percent.
European markets
Equities slipped on surging power prices in Europe and more warnings from companies on supply chain
disruptions. The Europe-wide STOXX 600 declined 0.4 percent, the German DAX slipped by 0.7 percent, the
French CAC was flat and the UK FTSE 100 dropped 0.8 percent.
Investors reacted badly to record-high natural gas and electricity prices, and reports that state-owned Chinese
importers were bidding aggressively for scarce global fuel supplies to address China’s own power crunch. Another
ugly Eurozone inflation report played on nerves over rising inflation and added to concern about stagflation.
Among sectors, basic resources and tech stocks lagged along with chemicals, industrial, banks, and food &
beverage. Holding up best were travel & leisure, real estate, media, utilities, and real estate. Among companies,
AO World, the UK online household goods retailer, plunged 24 percent after blaming its revenue miss on labor
and product shortages. Iomart Group, the UK cloud computing company, dropped 18 percent after downgrading
its guidance.
In economic news, Eurozone inflation accelerated in September. A flash 3.4 percent annual rate was up from
August's final 3.0 percent, on the firm side of the market consensus and the highest since September 2008.
Asia Pacific Markets
Asian markets extended overnight declines as the risk-off mood continued and investors focused on negatives including inflation fears, higher bond yields and China’s slowdown. With Hong Kong and mainland Chinese markets on holiday, Taiwan’s Taiex index dropped 2.2 percent and South Korea’s KOSPI lost 1.6 percent. Investors are reacting to the flow of worrisome news affecting China’s growth prospects, including weak economic data this week, power shortages and fallout from the China Evergrande affair. On the positive side are expectations for more policy support from the People’s Bank of China. Japanese equities took their cue from a big drop Thursday on Wall Street, with the Nikkei 225 index down 2.3 percent and the broader Topix down 2.2 percent. Risk appetite suffered from concern about growth in the US after an unexpected uptick in jobless claims and over uncertain prospects for US fiscal measures. Soft Chinese data and focus on China’s power crunch weighed heavily on Japanese markets. Australian equities dropped with the global risk-off mood as the All Ordinaries index lost 1.9 percent. All sectors showed losses, with financials off the most. Materials were hit by weakness in industrial metals amid Chinese growth worries, though precious metals rose. Declines in building materials hurt industrials. Biotechs led the selloff in health care stocks. Retail and gaming depressed consumer discretionary though travel stocks rallied on news of Australia's plans to reopen borders to fully vaccinated people. In economic data, the Bank of Japan’s Tankan diffusion index showing sentiment among major manufacturers rose to plus 18 in September from plus 14 in June, plus 5 in March and minus 10 in December. The September reading topped the median economist forecast of plus 13. The Tankan index measuring sentiment among major non-manufacturers edged up to plus 2 in September from plus 1 in June, which was the first positive figure in five quarters. The result beat the median economist forecast of zero. However, many industries were cautious about their short-term outlook amid supply chain constraints and rising materials costs.
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Equities ended mixed Friday with growth stocks lagging as long-term yields continued to rise, while
value/cyclicals recovered from early weakness with financials and energy leading. The Dow Jones industrial
average firmed 0.1 percent, the S&P 500 rose 0.2 percent, and the NASDAQ was flat.
Tech, biotech, and other highly valued growth sectors saw profit-taking at week’s end as long-term bond yields
rose again, but many growth favorites ended well up from their morning lows. Nvidia, the chipmaker, slipped
1.8 percent, Amgen, the biotech, declined 0.7 percent. and Microsoft declined 0.1 percent. On the positive side,
the steepening yield curve boosted financials, while energy stocks rose as oil prices extended their recent gains,
with Brent crude up another 1 percent on the day.
Among companies in focus, Nike, the sportswear giant, slipped 6.2 percent after missing on sales forecasts and
cutting its guidance due to factory shutdowns in Southeast Asia. Foot Locker, the sports shoe retailer, fell 7.2
percent.
Crypto-linked stocks suffered after China outlawed cryptocurrency transactions, effectively banning bitcoin and
other cryptocurrencies. Coinbase, the crypto exchange, fell 2.4 percent, and Grayscale Bitcoin Trust lost 4.6
percent.
European markets
China Evergrande fears and soft German economic data undercut equities Friday. The Europe-wide STOXX 600
fell 0.9 percent, the German DAX lost 0.7 percent, the French CAC fell 1.0 percent, and the UK FTSE-100 eased
0.4 percent.
Renewed weakness in Chinese markets and worries over the China Evergrande affair weighed on sentiment.
Uncertainty over the outcome of German national elections scheduled Sunday added to caution headed into the
weekend. Finally, a weak German Ifo business sentiment report hurt cyclicals as it pointed to continuing ill effects
of supply chain disruptions on business activity.
Among sectors, weakest were retail, technology, real estate, industrials, financial services, and personal &
household goods. Holding up best were autos & parts, banks, insurance, oil & gas, and travel & leisure. Among
companies, luxury retailers suffered from concern over Chinese demand, with LVMH down 1.7 percent and Kering
off 3.0 percent. Nike, the sportswear leader, fell 6.0 percent after lowering its guidance and warning of supply
disruptions due to the pandemic.
In German economic news, September's Ifo survey found overall economic sentiment deteriorating for a third
month in a row. The headline climate indicator dipped from an upwardly revised 99.6 in August to 98.8, just on
the soft side of the market consensus and a five-month low. It now stands only 2.7 points above its pre-pandemic
level in February last year.
Asia Pacific Markets
Asian equities were mixed Friday with Japan rising but China retreating after Thursday’s bounce amid uncertainty over China Evergrande’s huge off-shore debt payment, which was due on Thursday. China’s CSI 300 declined 0.1 percent and the Shanghai composite lost 0.8 percent, while the Hong Kong Hang Seng fell 1.3 percent. Property stocks retreated with China Evergrande off 12 percent. Commodity-based stocks sold off while consumer staples gained after the Chinese government promised to support consumption and restrain rising commodities prices. The South Korean KOSPI eased 0.1 percent, with risk appetite hurt by concern over Chinese markets. Separately, the Taiwan Taiex rose 1.1 percent, with a boost from Taiwan Semiconductor, up 1.7 percent. Japan’s markets bounced back on their return from a holiday, with support from an as-expected outcome in the Federal Reserve policy announcement and a strong showing on Wall Street. The Nikkei 225 jumped by 2.1 percent and the broader Topix advanced by 2.3 percent, with gains across the board. Value stock beat growth, with shipping leading the winners. Australian markets retreated on a selloff in precious metals and with consumer discretionary shares and REITS hurt by concern over delayed reopenings in Queensland and New South Wales. Australia’s All Ordinaries declined 0.4 percent. On the positive side, energy shares rose on strength in liquefied natural gas and big banks led financials higher with yields up after the Fed policy announcement. India’s BSE Sensex rose 0.3 percent to end above 60,000, with support from signs of better economic activity as new Covid-19 cases slow. The Nifty was up 0.2 percent.
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Risk aversion headed into the weekend undercut equities Friday as an early selloff picked up momentum and
stocks sagged nearly across the board. The Dow Jones industrial average declined 0.5 percent, and the S&P 500
and the NASDAQ both lost 0.9 percent. The S&P ended at 4,433, below key support at 4,437, after testing that
level through the afternoon.
Wall Street trading reflected the selloff in commodities prices that hit mining and materials prices overnight,
along with worries over how China’s government will manage the collapse of China Evergrande, the huge, highlyleveraged property developer.
US equities reacted badly to a weaker-than-expected reading in US consumer sentiment. Markets also reacted
badly to reports suggesting US infrastructure package talks remain stalled and prospects are uncertain for more
US fiscal support. A warning from the Biden administration over the US debt ceiling added to negative sentiment.
Among sectors, materials trailed on declines in industrial metals prices. A selloff in semiconductors hit technology
shares, while weakness in big internet stocks weighed on communications services. A selloff in machinery stocks
hit industrials.
On the positive side, consumer staples outperformed on gains in household products. Health care rose on
strength in managed care. Consumer discretionary rose with retail stocks higher. Financials fared best as regional
banks advanced.
Among companies in focus, vaccine makers retreated after a panel of expert advisers to the Food and Drug
Administration voted against recommending a booster dose of Pfizer’s Covid-19 vaccine. Pfizer declined 1.4
percent and Moderna was off 2.5 percent.
In US economic news, the University of Michigan consumer sentiment index posted another soft reading in the
preliminary report for September. The index managed a meager 0.7 point rise to 71.0 after the nearly 11 point
plunge to 70.3 in August. Most forecasters expected a rebound to 72.0. Although consumers were more optimistic
about future conditions (67.1 in September vs. 65.1 in August), current conditions looked gloomier (77.1 vs.
78.5).
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 34 cents to US$75.34
while spot gold fell US$3.17 to US$1,751.95. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield rose 2 basis points at 1.88 percent and the 10-year note yield gained 4 basis points to 1.37
percent.
European markets
Losses in miners and basic materials stocks weighed on European equity indexes as commodity prices fell. The
Europe-wide STOXX 600 fell 0.9 percent, the German DAX lost 1.0 percent, the French CAC declined 0.8 percent
and the UK FTSE-100 was down 0.9 percent.
Among miners, Anglo American plunged 8.1 percent after analyst downgrades. Other miners dropped as
concerns about soft Chinese demand depressed iron and other industrial metals prices. Rio Tinto declined 2.3
percent and BHP dipped 5.2 percent in London trading.
On the positive side, travel stocks bounced up on reports the UK is considering easing travel restrictions.
Intercontinental Hotels rose 2.2 percent and Air France gained 1.7 percent.
Risk appetite has been hurt by concern about electricity costs and natural gas shortages in Europe. Industrial
firms have warned that rising power costs and shortages may dent profits or force factory shutdowns. Yara, the
Norwegian fertilizer maker, fell 3.7 percent after slashing ammonia production due to rising natural gas prices.
Among companies in focus, Renault, the French automaker, fell 1.3 percent after announcing layoffs and
restructuring. Euronext fell 2.1 percent on news of that BNP Fortis sold its stake in the stock exchange operator.
In economic news, Eurozone inflation accelerated sharply in August. The final report confirmed the jump shown
in the flash data and so leaves the annual rate at 3.0 percent, up from 2.2 percent in July and its highest mark
since July 2012. Separately, UK retail sales fell 0.9 percent in August, in contrast with expectations for an
increase of 0.5 percent, for a fourth consecutive monthly decline.
Asia Pacific Markets
Asian equities were mixed Friday with Chinese markets recouping part of the week’s heavy losses, and Japanese markets remaining better bid, while Australia lagged on commodities weakness. Dip-buying in beaten-up Hong Kong equities lifted the Hang Seng index by 1.0 percent but the index still lost 3.7 percent over the last five days. Leading the uptick were tech and health care, with Meituan, the online retailer, up 3.5 percent. China Evergrande lost another 3.4 percent Friday but other property stocks perked up, including Hang Lung Properties, up 1.7 percent. Among mainland Chinese indexes, the CSI 300 rose 1.0 percent and the Shanghai composite was up 0.2 percent. Risk appetite got a boost from a large injection of liquidity from the People’s Bank of China amid concern over contagion effects from the China Evergrande affair. Consumer staples and health care outperformed while materials and energy lagged, with coal stocks a notable decliner. The CSI 300 remained down 3.0 percent over the last five days, and the government’s ongoing regulatory crackdown in tech, health, gaming, and property markets remained a huge overhang for Chinese markets. South Korean equities edged up with the KOSPI up 0.3 percent as big tech stocks rebounded. Separately, Taiwan’s benchmark Taiex was flat. Japanese markets edged up in quiet trading as asset managers continued to raise exposure to Japan ahead of upcoming elections. The Nikkei gained 0.6 percent and the broader Topix firmed 0.5 percent. Among sectors, semiconductors outperformed, along with marine and land transportation stocks. Lagging were iron & steel, and other metals, as commodity prices slipped. A selloff in metals and miners on falling metals prices pushed Australia’s All Ordinaries down 0.7 percent. Fortescue Metals lost 11 percent, and BHP was down 3.7 percent in Sydney trading. Energy also lagged on weakness in liquified natural gas producers. On the positive side, tech stocks fared best on gains in buy-nowpay-later stocks, including Afterpay, up 3.9 percent.
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Worries over slowing growth hurt equities Friday with losses accelerating into the close, and as heavily-weighted
Apple sold off on an adverse court ruling. The Dow Jones industrial average and the S&P 500 both declined 0.8
percent and the NASDAQ slipped by 0.9 percent.
Investors appeared to take advantage of early gains to exit positions headed into the weekend, and the mood
darkened on signs of slowing economic activity resulting from the pandemic, as Federal Reserve officials continue
to talk up the prospect of tapering asset purchases. A hotter-than-expected reading on US producer prices Friday
played into concerns that the Fed will be obliged to scale back its accommodation headed into year end, even as
the economy weakens.
Among stock sectors, growth lagged slightly, with technology and communications services sectors hurt by losses
in Apple, down 3.3 percent, and Google, down 2.1 percent after a court ruled against Apple’s app store sales
practices. Other laggards were utilities, as bond yields rose, and health care, on weakness in hospitals and
managed care. On the positive side, consumer discretionary and consumer staples outperformed, along with
industrials. Best were energy and materials as commodities prices rebounded from recent weakness.
In US economic data, PPI-FD rose 0.7 percent in August from July and surged 8.3 percent from a year earlier,
above expectations. The annual rate marked the largest gain in nearly 11 years.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.54 to US$72.83
while spot gold fell US$6.26 to US$1,788.36. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield rose 3 basis points at 1.93 percent and the 10-year note yield rose 3 basis points to 1.33
percent.
European markets
A mixed showing among sectors left major stock indexes flat to lower Friday as sentiment was hurt by concern
about slowing business activity due to the Delta variant. The Europe-wide STOXX 600 and the French CAC both
declined 0.3 percent, the German DAX dipped 0.1 percent, and the UK FTSE-100 firmed 0.1 percent.
Among sectors, best performers were basic resources and tech as bargain-hunting in these sectors during the
Asian hours continued in Europe. Asian stocks bounced Friday on news of a rare telephone call between the
Chinese and US leaders. Other sectors beating the market included personal & household goods, industrials, and
autos & parts. Lagging were telecom, utilities, real estate, construction, and banks.
Among companies in focus, LVMH, the French luxury goods conglomerate, edged up 0.8 percent, and Norma,
the German manufacturer, rose 2.4 percent after upgrades at HSBC. On the downside, EasyJet fell 3.9 percent
after turning down an acquisition offer and announcing a new share issue. Cassiopea, the Italian pharma, fell 12
percent after disappointing clinical trial news.
Asia Pacific Markets
Asian equities markets rose on news that US President Biden and his Chinese counterpart Xi had spoken in an apparent bid to improve relations. A rebound in Hong Kong tech stocks that were hit hard Thursday helped Hong Kong’s Hang Seng outperform with a gain of 1.9 percent. Meanwhile, China’s CSI 300 rose 0.9 percent and the Shanghai composite firmed 0.3 percent. Growth stocks outperformed, with financials and tech leading, and energy and utilities lagging. Energy stocks were hurt by weaker oil prices after Chinese authorities said they planned to release some crude oil reserves. The Biden-Xi telephone call and a recovery in tech stocks helped the South Korean KOSPI gain 0.4 percent while Taiwan’s benchmark Taiex rose 1.0 percent. Better sentiment propelled Japanese markets again Friday on hopes for an improved coronavirus situation and a recovery in business conditions with a new government ahead. The Nikkei and the broader Topix both rose 1.3 percent with the Nikkei breaking above 30,000, a key psychological barrier. Most sectors rose, led by financials and transportation equipment. Shinsei Bank ended limit-up 21 percent after an unsolicited bid from SBI. Light bargain-hunting in beaten-down mining and energy stocks helped Australian equities rise with the All Ordinaries up 0.6 percent. Travel and building materials stocks outperformed while health care lagged on weakness in biotechs.
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A disappointing US jobs report left equities mixed Friday with the NASDAQ outperforming in quiet trading ahead
of a long US holiday weekend. Megacap growth stocks outperformed while cyclical/value stocks lagged. The Dow
Jones industrial average eased 0.2 percent, the S&P 500 was flat and the NASDAQ firmed 0.2 percent.
Equities initially dropped after the jobs report as the big miss in US nonfarm payrolls captured the market’s
attention, but the major indexes recovered as investors also focused on offsetting signs of strength -- including
the decline in the jobless rate and a robust rise in hourly earnings, which pushed bond yields higher. They also
considered the prospect that Federal Reserve hawks would be obliged to postpone their proposed taper, though
several sellside analysts said the weak payrolls report would not change anything.
Among sectors, technology and communication services fared best, as they tend to outperform when the growth
outlook is troubled. Friday’s winners included heavyweights Apple, up 0.4 percent, and Broadcom, up 1.2 percent
after an upbeat earnings report. Most other sectors declined, led by financials, industrials, materials, utilities,
and real estate.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 18 cents to US$72.59
while spot gold rose US$18.47 to US$1,828.81. The US dollar was down vs. most major currencies. The US
Treasury 30-year bond yield jumped 5 basis points at 1.95 percent and the 10-year note yield rose 4 basis points
to 1.33 percent.
European markets
A weak US jobs report undercut equities Friday as it fed worries that the Delta variant has pushed back the
timeframe for recovery. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX eased 0.4 percent,
the French CAC lost 1.1 percent and the UK FTSE-100 declined by 0.4 percent.
On the downside, the day’s worst performers were construction & materials, retail, travel & leisure, real estate,
and oil & gas. Basic resources stocks held up best on an uptick in commodities prices. Other sectors lower but
beating the market were media, chemicals, autos, and technology.
Markets are watching for 10 new companies to be added to the DAX to raise its number from 20 to 30 members,
with expectations centering on Siemens Healthineers, Airbus, Hellofresh, among others.
Among companies in focus, Sectra, the Swedish medical technology company, rose 14 percent after an earnings
beat.
Eurozone PMI releases suggested slowing but still robust growth across the euro area. Private sector business
activity was a little weaker than previously estimated in August but still very robust. At 59.0, the final composite
output index was down 0.5 points versus its flash print and now 1.2 points below its final reading in July.
Asia Pacific Markets
Asian equities markets ended mixed Friday with Japan rallying on news Prime Minister Yoshihide Suga would bow out of upcoming elections, while Chinese markets lagged on weakness in internet/tech shares. The ongoing government crackdown on internet/tech stocks weighed on Chinese markets, with Alibaba (down 3.6 percent) in focus after the e-commerce leader joined other high-growth companies in pledging a mammoth donation to the government’s “common prosperity” drive. The CSI 300 dipped 0.5 percent and the Shanghai composite slipped by 0.4 percent. Among sectors, consumer staples and utilities managed gains while lagging were internet/tech, and health care stocks. Separately, Hong Kong’s Hang Seng fell 0.7 percent with tech giants leading the decline. Strength in semiconductors lifted South Korea and Taiwan, with the Korean KOSPI up 0.8 percent and Taiwan’s benchmark Taiex rising by 1.1 percent. Japanese markets rallied after the unexpected news that Prime Minister Suga would effectively step down at the end of his short term amid sliding approval ratings, withdrawing from the Sept. 29 ruling party leadership race, and thus giving up on his earlier plan to call lower house elections. Investors are hoping for more effective leadership, and near-term steps to boost the economy and address the pandemic. The Nikkei rose 2.1 percent and the broader Topix gained 1.6 percent. Among sectors, iron & steel led the broad-based advance, along with machinery, pharma, banks, and transportation equipment.
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Investors bid up risk assets and bond yields declined Friday after Federal Reserve Chair Jerome Powell relieved
the market's worries that he agreed with other policy-makers who have been agitating for the Fed to taper its
emergency asset purchases as soon as the fall.
Powell said the economy has made substantial progress toward the Fed’s inflation goals, but he said he wants
to see more progress toward the Fed’s employment goals. While the job picture has “brightened considerably,”
and while “the prospects are good for continued progress toward maximum employment,” Powell said there is
“considerable remaining ground to reach maximum employment.”
The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 0.9 percent and the NASDAQ advanced
by 1.2 percent. Most sectors rose, with value/cyclicals leading the way. Energy, materials, and technology
outperformed, while defensive sectors including consumer staples lagged.
Energy stocks fared best with drillers and oil services leading as oil prices rose. Materials were bolstered by a
rebound in metals prices and advances in chemicals stocks. Facebook, up 2.3 percent, and Netflix, up 1.6
percent, paced communications services. Financials and industrials outperformed too.
On the downside, consumer discretionary and consumer staples lagged, along with health care. Moderna, the
vaccine maker, was a notable loser, down 4.5 percent, as regulators looked into allegations of contamination of
its vaccines.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.03 to US$72.61
while spot gold rose US$26.36 to US$1,818.84. The US dollar fell vs. most major currencies. The US Treasury
30-year bond yield was down 4 basis points at 1.91 percent and the 10-year note yield fell 5 basis points to 1.31
percent.
European markets
Equities recovered from a weak start to end higher Friday, with commodities leading, against a backdrop of
monetary policy support. The Europe-wide STOXX 600 and the German DAX both rose 0.4 percent, the French
CAC gained 0.2 percent, and the UK FTSE 100 was up 0.3 percent.
Cyclical stocks were bolstered by expectations for easing from the People’s Bank of China, and status quo
comments from Fed Chair Powell, which investors interpreted to mean the Fed is in no rush to start scaling back
its asset purchases.
Miners outperformed, along with real estate, technology, oil & gas, and industrials. Lagging were utilities, retail,
travel & leisure, personal & household goods, health care, and insurance.
Among big miners, Anglo American rose 3.0 percent and BHP rose 2.2 percent, with a boost from higher industrial
metals prices, and a better showing in Chinese equities markets.
Among companies reporting, Steinhof, the retailer, rose 2.2 percent, and Amigo, the UK lender, rose 4.2 percent
after positive quarterly results.
Asia Pacific Markets
Asian equities markets were mixed Friday with an upward bias for greater China on rising expectations for Chinese monetary policy easing. Trading was tentative ahead of Fed Chair Jerome Powell’s appearance due in the US morning. Chinese markets were split with growth stocks lagging value. The CSI 300 rose 0.5 percent, the Shanghai composite gained 0.6 percent, and Hong Kong’s Hang Seng was flat. Risk appetite drew support from another big injection of reserves by the People’s Bank of China, which added to speculation that PBOC will cut bank required reserves to spur lending. On the negative side, sentiment remained constrained by China’s ongoing regulatory crackdown on big internetoriented firms. Alibaba dropped 3.9 percent in Hong Kong trading as investors eyed pending rule changes to limit the firm’s automated use of user data to boost vendor sales on its platform. South Korea markets held slim ranges, with the KOSPI ending up 0.2 percent, as the market awaited the Powell appearance. Separately, Taiwan’s benchmark Taiex gained 0.8 percent, with tech stocks rising in the wake of price increases announced by Taiwan Semiconductor Manufacturing Company (TSMC), the chip manufacturing giant, which also rose 0.8 percent. Japanese stocks tracked US markets lower, leaving the Nikkei down 0.4 percent and the broader Topix down 0.3 percent. Most sectors declined, with land transportation, warehouses, precision instruments lagging most, along with banks and autos. Semiconductors outperformed, with Tokyo Electron up 0.9 percent, after Taiwanese chip maker TSMC extended its gains after announcing price increases this week. Australia held slim ranges in choppy trading with the All Ordinaries index down 0.1 percent. Bearish guidance depressed tech and retail stocks, while miners weakened with mostly lower metals prices. Industrials outperformed with support from airlines and other transports. Among companies in focus, Wesfarmers, the retail and industrial conglomerate, fell 2.8 percent after warning of poor business conditions. On the positive side, CSL, the biotech, rose 1.0 percent to boost health care.
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Bargain-hunting in megacap growth stocks helped equities recover Friday. The Dow Jones industrial average
rose 0.6 percent, the S&P 500 gained 0.8 percent, and the NASDAQ was up 1.2 percent.
Tech stocks Microsoft, up 2.6 percent, Apple, up 1.0 percent, and Nvidia, up 5.1 percent, were the day’s big
winners, with Microsoft rising after an analyst upgrade and news the software leader would raise prices.
Other leaders included communications services, with Spotify, up 5.6 percent after a buyback announcement,
while Comcast rose 0.8 percent, and Discovery Channel was up 1.2 percent.
On the downside, materials lagged on weakness in industrial and precious metals on the slowing global growth
narrative. Other weak links included health care, consumer staples, financials, and energy. Industrials lagged
the most, with Deere, the heavy equipment leader, down 2.2 percent despite an earnings beat, amid caution
about the outlook.
Among other companies in focus, Foot Locker, the athletic apparel store, rose 7.3 percent after reporting blowout
earnings and same-store sales. Meanwhile, Adobe, the software company, rose 1.5 percent after acquiring
Frame.io, a video software company.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 92 cents to US$65.02
while spot gold rose US$1.53 to US$1,782.37. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield declined 1 basis point to 1.87 percent but the 10-year note yield rose 1 basis point to 1.26
percent
European markets
A better opening on Wall Street helped equities recover from early declines Friday, with a boost from UK retailers.
The Europe-wide STOXX 600, the German DAX, and the French CAC all gained 0.3 percent. The UK FTSE 100
rose 0.4 percent.
Despite a better showing Friday, risk appetite has been dented this week by concern about growth and the
outlook for Fed policy, worries over the coronavirus, geopolitics, and the Chinese regulatory crackdown.
Among UK retail stocks, Marks & Spencer rose 14 percent Friday on upbeat earnings news, while Wm. Morrison
Supermarkets gained 4.2 percent after accepting a cash offer from private equity. In other M&A news, Norway
Royal Salmon, the fish farm, gained 13 percent on a takeover bid from its rival, SalMar, which rose 2.8 percent.
Other sectors beating the market included utilities, technology, and telecom. Lagging were autos & parts, food
& beverage, basic resources, chemicals, and oil & gas. Autos remained under pressure after Toyota’s
announcement that it would cut output next month due to parts shortages.
Among companies in focus, Scandinavian Tobacco Group rose 7.9 percent, and Kingspan, the Irish building
materials firm, rose 2.0 percent after both beat earnings expectations.
Asia Pacific Markets
Focus on slowing growth and rising Covid-19 case counts, plus the threat of a wider Chinese regulatory crackdown hit equities again Friday. Investors noted that China left its loan prime rate unchanged Friday but market expectations are rising for monetary policy support as business activity has slowed and financial markets have been hit. Chinese equities were hit again by comments in Chinese state media calling for more government steps to protect consumers, this time in liquor and health care. Investors fretted that the crackdown that has already snared technology, property, and education businesses will continue to widen. The CSI 300 fell 1.9 percent and the Shanghai composite declined 1.1 percent, paced by a selloff in health care/pharma stocks. Hong Kong’s Hang Seng also dropped 1.9 percent. Some big tech stocks saw limited bargain-hunting, with Tencent up 1.0 percent in Hong Kong trading, while Alibaba ended down another 2.6 percent. China Evergrande, the troubled property developer, fell another 1.6 percent Friday for a 14 percent decline over five days, after regulators summoned its executives for a rebuke over the firm’s rising debt. South Korea continued to suffer its own taper tantrum, with the KOSPI down 1.2 percent, as investors reacted to talk that the Federal Reserve will soon scale back its asset purchases. Sentiment was hurt by the deteriorating domestic virus situation and the threat of more restrictions. Big tech stocks continued to pace the declines, with heavy selling from foreign accounts. Automakers and auto parts suppliers led Japanese markets lower in the wake of Toyota’s announcement Thursday that its output would fall next month. The Toyota news added to bearishness over a slowdown linked to the virus wave in Japan, the US, and elsewhere. The Nikkei fell 1.0 percent and the broader Topix lost 0.9 percent. Losses were nearly across the board, with shipping, transportation equipment, and materials stocks hit hardest. Utilities, land transportation, and retailers held up best. Australia’s All Ordinaries index ended down 0.1 percent as sector performance was mixed. Weakness in miners and tech was largely offset by strength in consumer stocks and utilities. BHP fell another 0.7 percent Friday to end down 17 percent for the week after the firm announced plans to unload its energy assets and end its dual listing in London. Miners were already under pressure from falling metals prices on slowdown worries, and Chinese steps to dampen commodities prices. Tech stocks lagged on a selloff in buy-now-pay-later stocks. Among companies in focus, Treasury Wine Estates rose 5.6 percent after upbeat earnings and guidance.
read moreUS Markets
US markets hovered near record highs Friday in summer-thinned trading, with little impetus in either direction.
Sentiment remained buoyant in response to upbeat company news and expectations for continued earnings
strength. The Dow Jones industrial average was flat, the S&P 500 rose 0.2 percent, and the NASDAQ was
unchanged.
A surprisingly weak US consumer sentiment reading helped US bond yields retreat Friday. That helped growth
stocks outperform, including Microsoft, which rose 1.1 percent. Chip stocks bounced back after falling earlier in
the week on negative analyst commentary. Chipmaker Nvidia rose 1.4 percent. Pharma outperformed too, with
Pfizer up 2.6 percent after the US Food and Drug Administration recommended a third Covid vaccination shot
for people with compromised immune systems.
Among companies in focus, Disney rose 1 percent after topping earnings expectations. Ebay, the online market,
gained 7.5 percent after an earnings beat. Airbnb rose 1.1 percent on strong results but it warned the Delta
variant could restrain business. DoorDash, the food delivery service, rose 3.5 percent on strong quarterly results
but investors wonder about its prospects post-pandemic.
In US economic news, consumer sentiment index showed a "stunning loss of confidence" early in the month, the
University of Michigan said. The index plunged 11.0 points in August from July's 81.2 to 70.2, below the August
2020 reading of 74.1 as well as the 2020 pandemic low of 71.8, and far below Econoday's range of expectations.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 99 cents to US$70.19
while spot gold rose US$25.22 to US$1,778.62. The US dollar fell vs. most major currencies. The US Treasury
30-year bond yield dropped 8 basis points to 1.93 percent and the 10-year note yield fell 7 basis points to 1.29
percent.
European markets
Equities continued to trend upward Friday after two weeks of gains, propelled by earnings and recovery hopes
supported by rising European vaccination rates. The Europe-wide STOXX 600 firmed 0.2 percent, the German
DAX rose 0.3 percent, and the French CAC firmed 0.2 percent. The UK FTSE 100 was up 0.4 percent.
Among sectors, best were real estate and utilities. Other winners included food & beverage, insurance, banks,
travel & leisure, and chemicals. Lagging were technology, industrials, basic resources, and media.
Among companies in focus, Dax constituent Deutsche Wohnen, the German property company, rose 0.8 percent
after an earnings beat. Adidas, the German sporting goods leader, rose 1.6 percent after announcing it will sell
its Reebok unit. Zooplus, the online pet food retailer, surged by 40 percent after agreeing to be acquired by
private equity.
Asia Pacific Markets
Asian markets declined Friday with South Korea and Taiwan lagging as big semiconductor stocks took another hit and regional Covid-19 worries mounted. Asia appeared disconnected from other major markets, with the US and Europe setting record highs. Chinese markets came under pressure again as regulatory worries hurt tech firms. Meanwhile, risk appetite suffered as China shut another port facility over Covid concerns. China's benchmark CSI 300 declined 0.6 percent and the Shanghai composite eased 0.2 percent. China will release a batch of economic reports early next week expected to confirm the economy is slowing. Tech giants Alibaba and Tencent, both down 2.5 percent, weighed on the Hong Kong market. The Hang Seng fell 0.5 percent. South Korea extended its remarkable seven-day string of losses with the KOSPI down another 1.2 percent with heavy sales by foreign investors. Negative sellside comments on the chip outlook hit the semiconductor sector. SK Hynix, the big chipmaker, is off 14 percent over the last five days. Separately, Taiwan’s benchmark Taiex was off 1.4 percent as its tech-dominated market remained under pressure. Japan’s markets were flat to lower on fallout from chip weakness and as reopening stocks came under pressure. Japan’s Nikkei eased 0.1 percent while the broader Topix rose 0.2 percent. Pressure on the government to impose new lockdowns continued to rise with reports the pandemic is out of control in Tokyo and other cities. Earnings were an offsetting positive, with Recruit Holdings, the Japanese human resources firm, up 10 percent on an earnings beat. Earnings and share buybacks helped Australian markets outperform the region with the All Ordinaries index up 0.5 percent. The Covid situation continues unabated in Australia but the market is looking ahead and anticipates more government support to offset the near-term hit. Gains were across the board, with health care, utilities, and gaming stocks outperforming. Banks, mining contractors, and grocery stores were notable winners. Materials lagged on weakness in iron ore.
read moreUS Markets
Labor recovery in North America is raising optimism over the economic outlook which is balanced, however, by
an increasing chance of stimulus withdrawal.
In results that will likely raise pressure within the Federal Reserve to begin tapering its asset purchases, US
nonfarm payrolls rose 943,000 in July to top Econoday’s consensus for 900,000 and including a sharp 88,000
upward revision to June to 938,000. Wage pressures came along with the job growth with average hourly
earnings rising 0.4 percent on the month and 4.0 percent on the year, also higher than expected.
Reaction in the US stock market was mixed: the Dow rose 0.4 percent, the S&P inched 0.2 percent higher while
the NASDAQ slipped 0.4 percent. In contrast, the US 10-year yield jumped 10 points which led to rotation out
of gold which fell more than $40.
Canada’s July labour market report was also released Friday, showing a 94,000 rise in employment which missed
Econoday’s consensus for 150,000 but followed June’s very strong 230,700 increase. With gains in
accommodation and food leading the way, the country’s reopening appears to be going well and is raising talk
that additional QE tapering by the Bank of Canada may not be far away. The S&P/TSX rose 0.5 percent.
In other news, the US Senate has so far failed to finalize a $1 trillion infrastructure package though a vote is
scheduled for Saturday.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$0.80 to US$70.49
while spot gold fell a sharp US$42.47 to US$1,761.94. The US dollar rose sharply vs. major currencies. The US
Treasury 30-year bond yield jumped 9 basis points to 1.95 percent while the 10-year note yield jumped 10 basis
points to 1.31 percent.
European markets
Shares were widely mixed in an uneven Friday session that followed not only the strength of the US employment
report but also a batch of mixed economic data from Europe. France’s CAC rose 0.5 percent, Germany’s DAX
edged up 0.1 percent, and the UK FTSE managed only a marginal gain.
German industrial production unexpectedly fell for a third time in a row and for a fifth time in six months, down
a sizeable 1.3 percent in June in what contrasts strongly with Thursday’s sharp rise in manufacturing orders.
The separation underlines the damage being done by the disruptions to global supply chains and helps explain
upside cost pressures at the producer level.
Italy’s FTSE MIB led the gains in Europe, up 1.3 percent following a 1.0 percent rise in industrial production and
that lifted second-quarter output 1.0 percent higher than the first quarter, confirming a positive contribution
from the sector to quarterly GDP.
Company news included a 2.5 percent rise for Allianz after the German insurer raised guidance and a 7.6 percent
fall for HelloFresh after the German meal-kit service lowered guidance.
Asia Pacific Markets
Asian markets were quiet Friday ahead of the US release of July employment data; the Shanghai Composite fell 0.2 percent while the Nikkei rose 0.3 percent. Strong earnings continue to underpin Japanese shares including Friday from optics icon Nikon (up 8.4 percent) and electrical products maker Fujikura (up 16.3 percent). Earnings have helped offset rising Covid cases that have now topped 1 million, including daily counts in Tokyo of more than 4,500 on Friday and a record 5,042 on Thursday. Cases in China have also been on the rise with PMI data released earlier in the week showing related supply disruptions affecting manufacturing though the services sector was seeing no significant impact. The Reserve Bank of India left its policy rate unchanged at 4.0 percent as expected. Although inflation has been above the RBI's target range, RBI Governor Shri Shaktikanta Das said the central bank remains in "whatever-ittakes" mode to support the recovery. The Sensex slipped 0.4 percent on the day.
read moreUS Markets
Risk-off sentiment haunted stocks again Friday with consumer discretionary stocks lagging after a surprising
revenues miss and weak guidance from Amazon, which dropped 7.6 percent. Worries over the Delta variant and
renewed weakness in Chinese stocks added to negative sentiment. The Dow Jones industrial average declined
0.4 percent, the S&P 500 slipped 0.5 percent, and the NASDAQ declined 0.7 percent.
Reopening hopes took a hit from a Center for Disease Control warning that the Delta variant is as contagious as
chickenpox, and that vaccinated people with rare breakthrough cases can spread the disease as much as people
who are unvaccinated. Restaurants and other leisure businesses lagged on the news, with Carnival Corp., the
cruise line, down 4.7 percent.
Energy stocks lagged too, with ExxonMobil down 2.3 percent and Chevron down 0.7 percent despite both
exceeding earnings expectations. On the positive side, materials rose as chemicals and paper packaging stocks
perked up. Consumer staples rose as grocery stores and food businesses gained. Real estate fared best.
Among consumer product leaders in the news, Procter & Gamble rose 2 percent after its earnings and revenues
beat. But Colgate-Palmolive declined 4.8 percent as its earnings guidance reflected pressure on margins from
rising input prices. Caterpillar, the heavy equipment giant, fell 2.7 percent after disappointing guidance amid
uncertainty over market conditions and inflation.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 23 cents to US$76.33
while spot gold fell US$14.83 to US$1,814.13. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield declined 4 basis points to 1.88 percent and the 10-year note yield was down 4 basis points
to 1.23 percent.
European markets
Equities edged down Friday after renewed weakness during the Asian hours and worries about the Delta variant.
The Europe-wide STOXX 600 declined 0.5 percent, the German DAX fell 0.6 percent, the French CAC eased 0.3
percent, and the UK FTSE 100 was down 0.7 percent.
Among sectors, lagging were travel & leisure, basic resources, and energy. Holding up best were chemicals,
health care, and real estate. Banks saw gains, with UniCredit, the Italian bank, up 2.6 percent after an earnings
beat.
In the travel sector, IAG, the owner of British Air, fell 7.5 percent on disappointing results, as its guidance
remained suspended. Miners lagged. with iron prices down and Rio Tinto off 2.9 percent.
Earnings were mixed, with AMS, the Austrian chipmaker, down 1.7 percent, and Holcim, the Swiss building
materials maker down 1.9 percent after disappointing results. Pendragon, the UK auto retailer, fell 2.2 percent
after its trading update. On the positive side, Rightmove, the UK online real estate business, rose 3.4 percent
after an earnings beat.
Asia Pacific Markets
Asian equities slipped Friday after renewed selling pressure on Chinese stocks during Thursday’s US session continued in Asia. Disappointing earnings from Amazon after the US hours Thursday added to the sour mood for tech-oriented growth stocks Friday. China’s CSI 300 declined 0.8 percent and the Shanghai composite slipped 0.4 percent with growth stocks lagging. A selloff in Chinese online education stocks on Wall Street continued into the Asian hours on lingering worry over China’s regulatory crackdown as New Oriental Education & Technology fell another 7.7 percent. More bad news on Covid-19 cases in China and Japan undercut risk appetite too. In Hong Kong, big tech stocks suffered, with Alibaba off 4.2 percent and Tencent down 2.6 percent. Hong Kong lagged mainland markets with the Hang Seng down 1.4 percent. Taiwan’s Taiex index slipped 0.9 percent and South Korea’s KOSPI fell 1.2 percent as tech lagged. Chinese stock weakness plus rising Covid-19 cases and fear of renewed lockdowns hit Japanese markets. The Nikkei 225 index fell 1.8 percent and the broader Topix was off 1.4 percent. Losses were nearly across the board, with pharma and tech stocks lagging most. Shipping stocks held up best. Earnings disappointments contributed to the selloff, with Sumitomo Dainippon Pharma off 11 percent on a big earnings miss. Fujitsu, the IT services giant, fell 9 percent on soft guidance. Tech stocks declined on spillover from weakness in Chinese and US markets to weaken Australian equities, with the All Ordinaries index off 0.4 percent. Buy-now-pay-later stocks weighed on the tech sector. Utilities sagged with Origin Energy down 8 percent after announcing an impairment charge. Energy stocks extended the week’s losses. On the positive side, real estate stocks held up relatively well, along with transportation infrastructure companies. In economic news, Japan's industrial production rose 6.2 percent in June, rebounding strongly from a drop of 6.5 percent in May. Output of motor vehicles, production machinery, and electronic parts and devices increased, partly offset by a drop in the output of transport equipment.
read moreUS Markets
Dip-buying in growth stocks continued Friday for a second day to lead major equity indexes higher and recover
Monday’s sharp losses. The Dow Jones industrial average rose 0.7 percent, the S&P 500 gained 1.0 percent, and
the NASDAQ also rose 1.0 percent.
Expectations for strong quarterly results from the FANMAG complex helped Facebook rise 5.3 percent while
Google rose 3.4 percent to help communications services lead the market. Twitter rose 3.1 percent after
revenues topped expectations, and Snap rallied 23 percent after the Snapchat parent company blew past
earnings and revenues expectations.
Among other megacap winners, Amazon rose 0.5 percent, Microsoft was up 1.2 percent, and Apple rose 1.2
percent.
Lagging were financials, with money center banks weaker. Airlines depressed industrials as they gave back gains
from earlier in the week, plus Honeywell declined 1.5 percent after weak aerospace earnings. Materials sagged
on weaker metals. Energy trailed with oilfield services off the most.
Among companies in the news, American Express rose 1.4 percent after a big earnings beat. On the downside,
Intel fell 5.3 percent despite topping earnings and revenues expectations after the company said chip shortages
would persist.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 43 cents to US$74.06
while spot gold declined US$5.36 to US$1,801.23. The US dollar was mixed vs. major currencies. The US
Treasury 30-year bond yield rose 1 basis point to 1.92 percent and the 10-year note yield was flat at 1.28
percent.
European markets
Equities extended their recent gains Friday with cyclicals leading after upbeat earnings and positive sentiment
after Thursday’s supportive European Central Bank policy announcement. The Europe-wide STOXX 600 rose 1.1
percent, the German DAX gained 1.0 percent, the French CAC advanced 1.4 percent, and the UK FTSE 100 rose
0.9 percent.
Dip-buying continued as some investors argued that concerns about the Delta variant and new lockdowns have
been overblown, along with corporate comments describing robust business conditions. Strong European
purchasing managers data added to positive sentiment.
Among sectors, autos & parts fared best, with Valeo, the French partsmaker, up 5.2 percent after strong firsthalf results. Daimler was another winner, up 5 percent after an analyst upgrade. Basic resources outperformed
with support from rising industrial metals prices. BHP rose 1.3 percent to end up 3 percent on the week.
Utilities were in focus on a report that Spanish utility Iberdrola, up 0.7 percent, is considering acquisitions,
possibly including German utility RWE, up 1.7 percent, and E.ON, the German utility, up 1.5 percent.
In economic news, flash Markit PMI survey data for the Eurozone showed economic conditions improved further
in July, with a moderation in the manufacturing sector outweighed by the strongest increase in service sector
activity in 15 years. The flash manufacturing index for July was 62.6, down from the final estimate of 63.4 in
June. The flash estimate for the service sector business activity index in July was 60.4, up sharply from the final
estimate for June of 58.3. Together these give a flash estimate for the composite output index for July of 60.6,
up from the final estimate of 59.5 in June.
Asia Pacific Markets
Asian markets were mixed Friday in mostly directionless trading with Chinese markets lagging on the latest Chinese government crackdown on tech-oriented companies. Chinese markets sold off on reports that Chinese regulators may impose massive new penalties and curbs on Didi Global, the ride-sharing giant, following its listing in New York over the objection of Chinese authorities. Didi dropped about 11 percent Thursday and was down another 14 percent pre-market Friday. Chinese official action to rein its big tech companies has become a huge overhang for markets. Risk appetite also suffered Friday from news of new lockdowns in eastern China as coronavirus cases rebound. China’s CSI 300 declined 1.2 percent and the Shanghai composite was down 0.7 percent. Hong Kong fared even worse, with the Hang Seng down 1.5 percent. Hong Kong saw weakness centered in tech, education, and property sectors, where the Chinese government has stepped up its regulatory crackdown. Among companies in focus, New Oriental Education & Technology dropped 41 percent as China targets online tutoring companies. Separately, the Taiwan Taiex was flat, and South Korea’s KOSPI firmed 0.1 percent. Among the day’s movers, Humasis, a Korean medical equipment provider, rose 3.5 percent after a big order from Brazil for testing equipment. NH Investment & Securities, a Korean financial firm, rose 2.5 percent on an earnings beat. On the downside, Hyundai Motors fell 1.3 percent after warning of parts shortages, and automaker Kia eased 1.1 percent despite an earnings beat. Japanese markets were on holiday for the start of the Olympics. Markets noted case counts in Tokyo and other major cities continued rising, with a fifth wave of the virus evidently under way. Australian equities recovered early losses to manage modest gains despite the worsening coronavirus situation as investors look to the Reserve Bank of Australia to offset the short-term shock to the economy, and anticipate progress in controlling the pandemic later this year. The All Ordinaries index edged up 0.2 percent. Most sectors saw limited moves with biotechs and buy-now-pay-later stocks bouncing back from Thursday’s selloff. Lagging were financials, casinos, and energy, as oil producers gave back Thursday’s gains.
read moreUS Markets
Unexpectedly strong US retail sales figures boosted equities early Friday but gains were short-lived and
value/cyclicals led the market lower. The Dow Jones industrial average fell 0.9 percent, the S&P 500 declined
0.8 percent, and the NASDAQ was also down 0.8 percent.
Energy stocks extended the week’s selloff. Industrial metals and precious metals added to the week’s losses.
Banks gave up Thursday’s gains; consumer discretionary was a notable decliner, paced by weakness in gaming,
apparel, cruise lines, and autos. Cyclicals fell prey to concern that the pandemic has not been vanquished, and
that growth and inflation may be peaking.
FAANGs were also weaker despite a pullback in bond yields after an initial uptick after the retail sales report.
Facebook fell 1.0 percent and Apple was off 1.4 percent. Holding up best were defensive sectors, including real
estate and utilities, plus consumer staples, especially grocery stores.
Among companies in focus, Moderna, the vaccine maker, jumped 10 percent on news it will be added to the S&P
500 index. Alcoa, the aluminum giant, topped expectations but traded lower, down 4.5 percent, along with the
rest of the sector. Intel declined 1.5 percent after reports it may buy GlobalFoundries, formerly AMD’s chipmaking
business. Among big Dow stocks, Dow Inc., the chemicals giant, fell 3.0 percent after a downgrade at Bank of
America. JP Morgan declined 2.3 percent to relinquish the week’s gains.
In US economic data, retail sales surprised on the upside in June, closing the second quarter on a 0.6 percent
rebound, while analysts had expected a 0.4 percent decline from May. However, the upside surprise was partially
offset by a downward revision to May's estimate, now showing a 1.7 percent decrease, larger than the 1.3
percent decrease initially reported. Meanwhile, the preliminary University of Michigan consumer sentiment index
for July indicated confidence fell early in the month. The index was down 4.7 points to 80.8 in July from 85.5 in
June, although it remained well above the 72.5 in July 2020.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 7 cents to US$73.27
while spot gold fell US$18.63 to US$1,810.73. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield rose one basis point to 1.93 percent and the 10-year note yield was up 1 basis point at 1.31
percent.
European markets
Rising virus cases and the threat of more restrictions hurt European equities Friday. The Europe-wide STOXX
600 declined 0.3 percent, the German DAX slipped 0.6 percent, the French CAC fell 0.5 percent, and the UK
FTSE 100 was down 0.1 percent.
News that new Covid cases in the European Union jumped by 64 percent in the latest week captured the market’s
attention, along with news that most cases were among young adults, who are less likely to die than older adults,
where increases have been limited.
Travel stocks rose after President Biden suggested travel restrictions from Europe may be lifted. Scandic Hotels
rose 5.6 percent after upbeat quarterly earnings. On the downside, basic resources suffered after Rio Tinto,
down 3.4 percent, reported bad quarterly production numbers after storms in Australia hit iron shipments.
Earnings updates were mixed. Among notable companies reporting, Handelsbanken, the Swedish bank, fell 1.4
percent after disappointing results. On the positive side, Atlas Copco, the Swedish industrial conglomerate, rose
2.0 percent after topping expectations. Swedbank, another Swedish bank, rose 2.9 percent on an earnings beat.
Among sectors, best were real estate, utilities, health care, food & beverage, and travel & leisure. Hardest hit
were basic resources, banks, autos & arts, oil & gas, insurance, technology, and construction.
Asia Pacific Markets
Risk aversion spurred by surging Covid-19 case counts across Southeast Asia hit equities Friday and worries mounted over slowing growth. Chinese equities slipped on slowdown fears, with value/cyclicals lagging and growth stocks down too. Focus on renewed US-China conflict added to negative sentiment as reports suggested the US is ready to impose new sanctions on Chinese officials over Beijing’s actions in Hong Kong. The CSI 300 fell 1.0 percent and the Shanghai composite slipped 0.7 percent. Worst hit were utilities and consumer staples while financials and technology held up better but still declined. Hong Kong held up better with the Hang Seng ending flat on the day, bolstered by financials and real estate. Taiwan tracked mainland markets lower with the Taiex off 0.8 percent. Korea’s KOSPI eased 0.3 percent as big tech stocks followed US tech stocks lower. Chip giant SK Hynix declined 1.6 percent. Weakness in US tech stocks also undercut Japanese markets as growth stocks lagged again. The Nikkei declined 1.0 percent and the broader Topix eased 0.4 percent. News that the Bank of Japan left policy steady matched expectations. Meanwhile, more bad news on Covid case counts remained a major overhang for risk assets. Worst performing were pharma, precision instruments, mining and land transportation. Holding up better were shipping, banks, and transportation equipment. Australian markets managed modest gains as health care and consumer discretionary stocks bounced back after recent losses. Most sectors were higher as the All Ordinaries index firmed 0.2 percent. Airlines rebounded too. Lagging were energy, on more oil price weakness, along with utilities and telecom. Among companies in focus, China Evergrande, the massive Chinese property developer, rallied 10 percent as it pressed forward with plans to issue special dividends, despite regulatory trouble. On the downside, Taiwan Semiconductor fell 4.1 percent after its earnings miss. Fast Retailing, the Japanese retail giant, slipped 2.6 percent after lowering its guidance.
read moreUS Markets
Stocks rebounded as a rise in bond yields gave bank stocks a lift; the Dow industrials rose 1.3 percent and the
Nasdaq 1.0 percent, more than reversing yesterday's 0.7 percent losses for each.
Bond yields had moved noticeably lower through most the week but moved higher on Friday, in turn giving a lift
to banking stocks: Bank of America up 3.3 percent, Citigroup up 2.6 percent, Goldman Sachs up 3.6 percent, JP
Morgan Chase up 2.9 percent, and Wells Fargo up 3.8 percent. Banks will begin posting their second-quarter
results next week.
In specific company news, the Food and Drug Administration is calling for a federal investigation into the
accelerated approval of Biogen's Alzheimer's drug Aduhelm. Last month's approval met objections within the
FDA. Biogen fell 2.9 percent.
Citing lack of competition as a factor behind low wage growth, the White House announced a broad executive
initiative aimed at limiting monopolies across US industries. There were no major US economic releases on
Friday, but there was in Canada where employment soared past expectations in June, with 230,700 jobs added
over the month. The S&P/TSX composite rose 1.0 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose $1.45 to US$75.57 while
spot gold slipped US$5.53 to US$1,808.36. The US dollar fell vs. most major currencies. The US Treasury 30-
year bond yield rose 7 basis points to 1.99 percent as did the 10-year note yield to 1.36 percent.
European markets
Reversing much of Thursday's steep losses, European shares rallied Friday despite a batch of mixed-to-soft
economic data. Germany's DAX and Italy's FTSE MIB both rose 1.7 percent while the FTSE rose 1.3 percent.
Banks posting gains on rising yields included Deutsche Bank up 4.6 percent, ING up 4.3 percent, Santander up
3.6 percent, and UBS up 2.1 percent
Expansion for UK GDP was surprisingly slow in May, up 0.8 percent versus expectations for 1.6 percent and the
smallest increase since GDP last contracted in January. Yet trade data for the UK were positive, showing a
narrowing in the goods deficit from £10.95 billion in April to £8.48 billion in May and pointing to dwindling effects
from Brexit.
UK industrial production was also released, increasing 0.8 percent on the month in May, a marked improvement
from April's 1.0 percent decline but well short of the forecast 1.5 percent gain. Auto production, constrained by
microchip shortages, fell sharply. Industrial production in Italy fell 1.5 percent in May in a broad-based decline;
prior releases from France and Germany showed 0.3 percent declines for industrial production pointing to a poor
month for Eurozone's goods-producing sector.
Minutes from the ECB's June meeting confirm that the central bank continues to put securing a sustainable
economic recovery ahead of tackling any potential near-term inflation problems.
Easing restrictions for fully vaccinated travelers in the UK gave IAG (British Airways) a lift, up 3.0 percent as
well as easyJet, up 5.3 percent, and Ryanair up 1.7 percent.
Asia Pacific Markets
A cut in reserve requirements for Chinese banks failed to offset rising Covid cases to make for mixed results in Asia. The People’s Bank of China cut the reserve requirement ratio (RRR) for all banks by 50 basis points yet the Shanghai Composite ended no better than unchanged. The region saw record Covid deaths in Thailand, record infections in South Korea, and a surge of news cases in Indonesia as well. Vietnam announced new restrictions and Australia introduced stay-at-home orders in Sydney. The All Ordinaries fell 0.9 percent. China's CPI, reflecting weaker food prices, came in slightly below expectations, falling 0.4 percent on the month in June for a 1.1 percent annual rate versus May's 1.3 percent rate. China's PPI rose 0.3 percent on the month in June, well down from May's 1.6 percent advance.
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Declining interest rates after a Goldilocks US jobs report helped growth stocks lead equities higher Friday, with
the FANMAG complex faring best. The Dow Jones industrial average gained 0.4 percent, the S&P 500 rose 0.8
percent for its seventh straight record high close, and the NASDAQ was up 0.8 percent.
Nonfarm payrolls rose 850,000 in June, above Econoday's consensus of 703,000. The unemployment rate edged
up to 5.9 percent from 5.8 percent, above the 5.6 percent expected. Amid reports of worker shortages and
reluctance to go back to work, the participation rate remained unchanged at 61.6 percent, just below the
expected 61.7 percent.
Markets judged the jobs report would let the Federal Reserve keep rates on hold for a bit longer, even as
reopening plays got a boost from a recovering jobs market, including the large share of new payroll jobs in
services including leisure and hospitality.
Among sectors, best were information technology, communications services, and consumer discretionary, with
Apple up 2.0 percent, Microsoft up 2.2 percent, Alphabet up 1.9 percent, and Amazon up 2.3 percent, among
the leaders.
Value stocks were held back by industrials with Boeing down 1.3 percent and airlines weaker. Materials lagged
on a selloff in chemical, paper & packaging. Banks lagged as rates slipped, and energy stocks extended their
recent losses.
Among companies in focus, Johnson & Johnson rose 1.8 percent after joining Pfizer and Moderna in saying its
vaccine protects against the Delta variant. Meanwhile, Virgin Galactic rose 4 percent after announcing it will
launch a test flight next week.
Among decliners, Didi Global dropped 5 percent after China announced a cybersecurity review of the rideshare
company. Lordstown Motors fell 11 percent on a report it is being investigated by the Department of Justice.
IBM slipped 4.6 percent on news its president would leave. Tesla recovered from early losses to edge up 0.1
percent after reporting record deliveries in the second quarter, in line with expectations.
European markets
Equities ended flat to marginally better Friday with gains in chipmakers and travel stocks offset by weakness in
banks. The Europe-wide STOXX 600 and the German DAX both rose 0.3 percent, the French CAC and the UK
FTSE 100 were both unchanged.
Dutch chipmaker ASML rose 1.4 percent to lead semiconductors higher on news Micron Technology would use
ASML equipment to make its chips. Travel stocks caught a bid on reports that Germany may ease restrictions
on travelers from the UK, with RyanAir up 1.3 percent.
Other outperformers included real estate, basic resources, technology, and media. On the downside, banks
slipped on news the European Central Bank will step up scrutiny of risky leveraged lending by banks after the
Archegos affair. Banks also suffered from sagging market interest rates on Covid concerns. Other laggards
included oil & gas, insurance, retail, and food & beverage.
Among companies in the news, Ambu, the Danish medical equipment maker, dropped 9 percent after a revenues
miss and lowered guidance. CaixaBank fell 2 percent after the Spanish bank announced big layoffs. On the
positive side, ABB rose 1.6 percent after Reuters reported the Swiss technology company may list separately its
electric vehicle battery charging unit.
Asia Pacific Markets
Asian equities markets were mixed Friday with Chinese markets markedly lower on a liquidity drain from the People’s Bank of China. The PBOC removed liquidity from the banking system at the close of China’s celebration of the Chinese Communist Party’s 100th anniversary. The benchmark CSI 300 dropped 2.8 percent and the Shanghai composite fell 2.0 percent. Hong Kong markets tracked mainland Chinese markets lower with the Hang Seng index down 1.8 percent. Tech stocks lagged as markets reacted to the International Monetary Fund’s call for the Fed to taper next year. Japanese stocks edged up with value stocks leading in cautious trading before the US jobs report. The Nikkei firmed 0.3 percent and the broader Topix rose 0.9 percent. The weaker yen gave exporters a boost, including Toyota, which rose 1.3 percent, and Sony, up 3.7 percent. Most sectors rose, led by miners, banks, and transportation equipment. Pharma and retailers lagged. Korean markets and Taiwan also ended flat with a weak tone as big tech stocks suffered, and risk appetite was hurt by worries about spreading Delta variant cases. The KOSPI was unchanged. Korea and Taiwan both gave up initial gains on a selloff in tech giants, with TSMC, the big chipmaker, ending down 0.8 percent. Australian markets improved after the government unveiled its four-phase reopening plan, with recovery plays leading, including travel and gaming stocks, and big banks. The All Ordinaries index rose 0.6 percent. Most sectors rose with energy outperforming on rising oil prices ahead of the OPEC+ meeting. Airlines and building materials supported industrials. Lagging were tech and materials, as precious metals sagged.
read moreUS Markets
Value/cyclicals led major stock indexes slightly higher Friday while mega cap growth stocks lagged to restrain
gains. The Dow Jones industrial average 0.7 percent, the S&P 500 firmed 0.3 percent, and the NASDAQ declined
0.1 percent.
Cyclicals remained better bid Friday after Thursday’s US infrastructure deal. Growth stocks lost steam as the US
10-year yield rose above 1.5 percent after US personal consumption expenditure price figures came in hot, with
a year-over-year rise of 3.9 percent in May, in line with expectations.
Meanwhile, financials outperformed after big banks passed Federal Reserve stress tests, which clears them to
resume stock buybacks and dividends. Energy stocks rose with oil prices, and managed health and hospitals led
health care higher. An earnings beat at Nike helped consumer discretionary, though Amazon declined 1.4
percent.
Megacap internet stocks declined to dampen communications services, with Google down 0.2 percent, and
Facebook down 0.5 percent. Tech stocks fared worst, with software and chipmakers down. Microsoft was off 0.6
percent and Apple down 0.2 percent.
Among companies in focus, Nike, the sportswear leader, leaped 16 percent on upbeat quarterly results and
better guidance. Virgin Galactic, the space company, rallied 39 percent after getting a full commercial launch
license. Netflix rose 1.7 percent after an analyst upgrade. On the downside, Rite Aid fell 6 percent on an analyst
downgrade. Fedex fell 3.9 percent as margins missed optimistic estimates. Blackberry, the software supplier,
fell 4.3 percent after analyst downgrades.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 60 cents to US$76.12
while spot gold rose US$5.21 to US$1,779.65. The US dollar fell vs. most major currencies but rose vs. sterling.
The US Treasury 30-year bond yield rose 5 basis points to 2.15 percent and the 10-year note yield was up 4
basis points at 1.53 percent.
European markets
A mixed showing among sectors left equity indexes flat to higher Friday with cyclicals mostly better on an upbeat
view of European recovery prospects. The Europe-wide STOXX 600 and the German DAX both rose 0.1 percent,
the French CAC eased 0.1 percent, and UK FTSE 100 rose 0.4 percent.
More dovish comments from European Central Bank officials and upbeat economic data provided support. ECB
Governing Council member Isabel Schnabel repeated her warning that it would be a mistake to withdraw policy
support too soon. And economic data included upside surprises in German consumer sentiment and Italian
consumer and business sentiment reports.
Among sectors, best were basic resources, banks, retail, financial services, insurance, health care, and
construction, while lagging were travel & leisure, autos & parts, utilities, chemicals, technology, and telecom.
Among companies in focus, German sportswear makers Puma, up 2.2 percent, and Adidas, up 5.8 percent,
gained on strong trading results. Credit Suisse rose 1.9 percent on news it is considering another restructuring,
and may consider being acquired by UBS, which rose 0.2 percent. Hornbach Holding, the Swiss store chain, rose
19 percent after strong results and raising its guidance.
In economic data, the German GfK survey was on the strong side of the market consensus. Following a small
upward revision to this month's provisional reading, consumer climate is forecast to rise a surprisingly large 6.6
points to minus 0.3 in July. For Italy, business confidence improved for a seventh straight month in June. From
an upwardly revised 107.3 in May, the headline sentiment gauge rose 5.5 points to 112.8, a multi-year high.
Meantime, consumer confidence (115.1 after 110.6) also improved markedly and moved above its pre-pandemic
level (110.8) for the first time since the virus struck.
Asia Pacific Markets
Follow-through from Thursday’s rally on Wall Street lifted most Asian markets Friday after news of a US infrastructure deal. Hong Kong and mainland Chinese markets outperformed the region. China’s benchmark CSI 300 rose 1.6 percent and the Shanghai composite gained 1.2 percent, with support from a liquidity injection from the People’s Bank of China for a second straight day. Growth stocks topped value, with all sectors higher, paced by materials and consumer staples. Hong Kong’s Hang Seng index rose 1.4 percent as tech stocks rallied, along with energy and materials. Meituan, the online shopping giant, rose 4.8 percent. Tech stocks led Korea and Taiwan higher with the KOSPI up 0.5 percent to a new closing record, and the Taiex up 0.6 percent. Japanese markets tracked the US higher with the Nikkei up 0.7 percent and the broader Topix up 0.8 percent. Most sectors rose, with miners and iron & steel stocks leading. Banks and transportation equipment stocks also outperformed. Shippers lagged. Miners and bank stocks led Australia higher on the US infrastructure deal, though virus news capped the gains. The All Ordinaries index rose 0.5 percent with most sectors higher. Precious metals led materials higher. Consumer discretionary outperformed on strength in Kogan.com, the online retailer, which rose 6.1 percent. Industrials advanced on strength in building materials, while banks and fund managers lifted financials. Stay-athome stocks got a boost on news of weeklong lockdowns in parts of New South Wales, Australia’s most populous state. .
read moreUS Markets
Equities fell nearly across the board Friday after a Federal Reserve official suggested the Fed might act sooner
to rein in inflation. The Dow Jones industrial average declined 1.6 percent, the S&P 500 lost 1.3, and the NASDAQ
was down 0.9 percent.
St. Louis Federal Reserve President James Bullard told CNBC before the US open that he sees a first interest rate
increase in late-2022 as the economy and inflation have outperformed expectations this year. Cyclicals/value
bore the brunt of the selloff, with banks hit hardest as the yield curve flattened on the view that the Fed will act
to ensure the recent inflation uptick remains transitory, a negative for the reflation trade. The Bullard comments
added to perceptions following Wednesday’s policy announcement that the Fed is not as dovish as the market
believed.
Among sectors, energy, financials materials, and utilities fell the most, with energy down despite rising oil prices.
Consumer staples also lagged, with grocery stores and drug stores down. Industrials were in line, with rail and
construction and engineering stocks weak. Health care outperformed, along with consumer discretionary,
communications services. Tech held up best, with support from software, including Adobe, up 2.6 percent after
an earnings beat and better guidance.
Among companies in the news, Lennar, the homebuilder, rose 3.8 percent after an upgrade at JP Morgan. Smith
& Wesson, the gunmaker, shot up 17 percent after topping expectations, raising its dividend and announcing
new share buybacks. On the downside, EQT, the oil pipeline company, fell 5.5 percent after a downgrade at
Morgan Stanley.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 25 cents to US$73.45
while spot gold fell US$2.97 to US$1,770.05. The US dollar was mostly higher but lower vs. the yen. The US
Treasury 30-year bond yield fell 8 basis points to 2.02 percent and the 10-year note yield fell 7 basis points to
1.44 percent.
European markets
Hawkish Fed comments added to a selloff in energy and bank stocks to knock equities lower across the board
Friday. The Europe-wide STOXX 600 dropped 1.6 percent, the German DAX fell 1.8 percent, the French CAC fell
1.5 percent, and UK FTSE 100 lost 1.9 percent.
Among sectors, commodity-linked stocks finished an abysmal week with more losses, led by declines in industrial
metals after China announced more steps aimed at curbing commodities prices. Heavily-weighted oil stocks
were hit Friday, with BP down 2.7 percent, and Royal Dutch Shell off 2.5 percent, while commodities giant Anglo
American fell 5.1 percent.
Financials sold off as the yield curve flattened on expectations for nearer-term rate increases, weaker near-term
growth, and less central bank liquidity. Other cyclicals were hit as stocks that have been propelled by policy
stimulus began to be repriced.
Other laggards included technology, autos & parts, insurance, media, and construction & materials. Holding up
best but still weaker were health care, real estate, food & beverage, chemicals, and utilities.
Among companies in focus, Tesco, the UK retailer, fell 4.6 percent on disappointing first quarter revenues.
Daimler, the automaker, fell 2.4 percent on news it will sell its factory in Brazil. HSBC fell 2.3 percent as it
prepares to sell its French retail banking business.
Asia Pacific Markets
Asia/Pacific equities markets were mixed Friday with growth outperforming value, and regional yield curves flatter in the days since the Federal Reserve policy announcement. US-China conflict remains an overhang as the Biden administration and US regulators are expected to focus increasingly on China. Chinese markets were mixed with the CSI and the Shanghai composite both ending flat. Tech shares continued to outperform after the government announced plans to invest in a new generation of semiconductors, and as the market appetite for tech stocks has generally rebounded. Energy and consumer firms lagged. Hong Kong outperformed with the Hang Seng index up 0.9 percent on a better showing for health care and tech stocks. Utilities and tech stocks held up best. Japanese equities slipped with the Nikkei down 0.2 percent and the broader Topix down 0.9 percent. Most sectors declined, with banks, shipping and air transportation, miners, iron & steel, and energy stocks lagging. Australian markets edged up with the All Ordinaries index up 0.3 percent. Tech outperformed as long terms rates declined and buy-now-pay-later stocks extended the week’s rally. Biotech stocks boosted health care. On the downside, weakness in industrial and precious metals weighed on materials while energy stocks suffered as oil continued lower. Another selloff in big banks depressed financials, with Commonwealth Bank of Australia off 2.1 percent. In economic news, the Bank of Japan said Friday it is maintaining its policy stance, as expected. The bank will also extend the term of its special COVID-19 fund-supplying operations by six months, again, until the end of March 2022 to encourage financial institutions to lend more to needy small businesses.
read moreUS Markets
Equities traded mixed to marginally higher Friday with growth and value shares both about flat as the market
consolidated headed into the weekend. The Dow Jones industrial average rose 0.1 percent, the S&P 500 gained
0.2 percent, and the NASDAQ firmed 0.4 percent.
Growth stocks outperformed on the week, with good gains Thursday after US yields fell despite another hot
inflation reading. The Fed’s consistent message that inflation pressures are peaking appeared to shield investors
from inflation concerns. Beyond that, analysts considered the prospect that the reopening trade and growth may
also have peaked.
Among sectors, financials improved Friday after lagging the most through the week on declining interest rates.
Tech stocks were bolstered Friday by strength in software and hardware stocks, with Apple up 1.0 percent.
Consumer discretionary bounced back with help from homebuilders and retail after weakness Thursday.
Industrial metals lifted materials.
On the downside, energy stocks lagged as oil majors sagged despite rising oil prices, with ExxonMobil down 1.0
percent. Consumer staples were soft. Megacap internets weighed on communications services, with Google down
1.0 percent. Health care lagged the most as pharma receded after rising this week, with Pfizer down 1.3 percent.
Among companies in focus, AMC Entertainment jumped 15 percent after a credit upgrade at S&P. Magnachip
Semiconductor rose 12 percent on reports it received an acquisition offer from Cornucopia Investment Partners.
On the downside, Curis, the biotech, dropped 37 percent after disappointing clinical trial results. Chewy, the pet
food business, fell 5.8 percent after a revenues miss.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 18 cents to US$72.59
while spot gold fell US$20.85 to US$1,876.89. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield rose 1 basis point to 2.14 percent and the 10-year note yield rose 1 basis point to 1.45
percent.
European market
European markets
Equities advanced Friday with miners leading. The Europe-wide STOXX 600 gained 0.7 percent, the German DAX
and the French CAC both rose 0.8 percent, and the UK FTSE 100 was up 0.7 percent.
Markets appeared to accept the relatively muted US market reaction to US inflation figures, and the view that
inflation worries have been exaggerated. At the same time, some analysts said highly-valued cyclicals/value
sectors suggest limited scope for the reopening trade.
Among sectors, miners advanced as industrial metals prices recovered. BHP, the iron mining leader, rose 1.4
percent. Travel and leisure rebounded, with a boost from Spanish hotel chain Melia, which rose 2.0 percent after
its CEO predicted a return to profitability in June. Other outperformers included autos & parts, financial services,
utilities, and technology. Lagging were real estate, banks, food & beverage, chemicals, and telecom.
Among companies in focus, Electricite de France, the utility, rose 3.1 percent on reports it will divest its gas
pipeline unit. Gulf Keystone Petroleum gained 6.4 percent on better production guidance. On the downside,
Naked Wines fell 6.1 percent on an earnings miss. Morphosys, the German pharma, fell 4.2 percent on an analyst
downgrade.
Asia Pacific Markets
Asia/Pacific equities were mixed Friday in muted pre-weekend trading with Korea and Taiwan outperforming while mainland Chinese markets lagged. Mainland Chinese markets weakened with the CSI down 0.9 percent and the Shanghai composite off 0.6 percent. Growth shares trailed value as Chinese investors appeared to take hot US inflation figures more seriously than the US market. Tech and telecom shares lagged. Financials and consumer goods stocks were also weak, with highly-valued liquor stocks seeing long liquidation headed into a three-day weekend. Hong Kong held up better, with the Hang Seng index up 0.4 percent, paced by gains in energy and technology shares. Korea’s KOSPI rose 0.8 percent to lead Asian markets on a boost from big tech, including chipmaker SK Hynix, up 4.1 percent, and battery maker LG Chem, up 5.3%. Taiwan’s Taiex rose 0.3 percent, with TSMC up 0. 5 percent. Japanese equities were mixed with the Nikkei flat and the broader Topix down 0.1 percent as growth stocks topped value, in line with Thursday’s showing on Wall Street. Most sectors weakened, with financials, machinery, and transportation equipment lagging. Pharma and shipping stocks held up best. Australian markets edged up, with the All Ordinaries index up 0.2 percent, with tech stocks and mining stocks leading, with support from declining bond yields after the US inflation report. Most sectors rose, with biotech outperforming along with tech and materials. Among tech shares, Afterpay, the buy-now-pay-later stock, rose 3.7 percent, while gold miner Newcrest rose 3.1 percent. Lagging were gambling stocks, airlines, property, and infrastructure. Financials suffered from lower interest rates.
read moreUS Markets
Growth stocks led US equities higher Friday on upbeat quarterly results and as US interest rates fell back after
a weaker-than-expected US employment report. The Dow Jones industrial average rose 0.5 percent, the S&P
500 gained 0.9 percent, and the NASDAQ advanced 1.5 percent.
Technology and communications services were the day’s big winners after US nonfarm payrolls were reported
up 559,000 in May vs. the whisper number around 800,000. A day earlier, interest rates rose and growth stocks
retreated on better than expected US jobless claims and ADP private employment figures. The market had priced
in a bigger rebound in job growth in May after April’s disappointing result, and pushed back expectations for
Federal Reserve tightening after Friday's results.
Among sectors, semiconductors led technology stocks higher, along with tech megacaps -- Apple, up 1.9 percent,
and Microsoft, up 2.1 percent. Big internet stocks lifted communications services, with Facebook up 1.3 percent,
Google up 2.0 percent, and Netflix up 1.1 percent. Amazon, up 0.6 percent, boosted consumer discretionary.
Health care rose on a rally in medical technology. Energy rose with oil services leading.
On the downside, lower interest rates hurt banks and financials, Thursday's top performers. Transports
depressed industrials, consumer staples lagged, materials were mixed, and utilities declined.
Among companies in the news, Broadcom rose 2.2 percent after an earnings beat and better guidance on
strength across its business lines. Costco gained 1.0 percent after topping same-store sales expectations. On
the downside, Crowdstrike, the cybersecurity business, fell 4.2 percent as traders sold on good earnings and
user growth news, given its lofty valuation. Grocery Outlet fell 2.6 percent on a downgrade at Jefferies.
European markets
Equities were flat to better in a mixed showing, with help from a soft US jobs report that bolstered expectations
for ongoing central bank support. The Europe-wide STOXX 600 and the German DAX both firmed 0.4 percent,
while the French CAC, and the UK FTSE 100 both edged up 0.1 percent.
Among sectors, best were technology, basic resources, health care, real estate, travel, chemicals, and food &
beverage. Lagging were banks, oil & gas, insurance, retail, media, telecom, personal & household goods, autos
& parts, utilities, and industrials. Basic resources got a boost from a rebound in industrial metals after losses
lately.
Airlines suffered after the UK added several countries, including Portugal, to its list that require quarantines on
return for UK travelers. IAG, owner of British Airways, fell 1.6 percent, EasyJet fell 2.5 percent, and Air France
fell 2.4 percent.
Among companies in the news, AMS, the Austrian semiconductor equipment maker, rose 5.1 percent after selling
its North American business. Miners BHP, up 0.9 percent, and Boliden, unchanged, were bolstered by an upgrade
at BNP Paribas. On the downside, ING, the Dutch bank, fell 0.5 percent after a Barclays downgrade. French
telecom Iliad declined 0.5 percent after a report that it may buy into Fibercop, a new fiber optics network.
In economic data, Eurozone retail sales were surprisingly weak in April. After a strong March when purchases
rose 3.3 percent on the month, volumes slumped 3.1 percent, their worst performance since January and
attributable to a tightening of Covid restrictions. Even so, with base effects very positive, annual growth climbed
from 13.1 percent to 23.9 percent.
Asia Pacific Markets
Asia/Pacific equities were mixed Friday with China and Australia better while Japan lagged. News that China would cut its stamp duty helped Chinese markets perk up with the CSI up 0.5 percent and the Shanghai composite up 0.2 percent, though it was unclear whether it would lower trading costs, as many traders seemed to think. Among stock sectors, financials and consumer staples fared best while energy and utilities slipped. News that President Biden had expanded the list of Chinese firms subject to a US investment ban weighed on risk appetite, as it includes all the major Chinese telecom companies. Hong Kong ended lower with the Hang Seng index down 0.2 percent, with tech and telecom firms suffering from the US investment ban. Among companies in focus, Tencent fell 0.7 percent and Baidu was off 3.1 percent. Japanese equities were mixed with value beating growth stocks, with the Nikkei down 0.4 percent and the broader Topix flat. Trading was quiet ahead of the US employment report. Outperformers were materials, shipping, and textiles. Lagging were banks, utilities, and communications services. Australian markets gained with the All Ordinaries up 0.4 percent, as most sectors gained, with utilities and health care leading. Banks outperformed too as bond yields edged up again, while refiners and liquified natural gas producers boosted energy. On the downside, materials lagged as iron ore miners fell back and precious metals weakened. Covid headlines were mixed, as Covid cases declined but the government warned about the presence of new more contagious variants. Indian shares slipped after the Reserve Bank of India kept rates steady with a move to expand its quantitative easing program. The BSE Sensex fell 0.3 percent and the Nifty eased 0.1 percent, with banks lagging while materials and property stocks outperformed. In economic data, Japanese household spending was nearly flat in April, up a seasonally adjusted 0.1 percent after rising 7.2 percent in March and 2.4 percent in February following a 7.3 percent decline in January. Yearover-year, spending picked up from a 6.2 percent rise in March to a 13.0 percent jump in April, largely reflecting base effects from severe weakness in spending 12 months earlier during the start of the Covid-19 pandemic.
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Investors turned back to cyclicals/value stocks Friday after pouring into growth stocks Thursday, with an assist
from positive company news, but the morning gains faded in the afternoon as the market consolidated again.
Another wave of selling in the crypto market added to caution headed into the weekend. The Dow Jones industrial
average rose 0.4 percent, the S&P 500 eased 0.1 percent, and the NASDAQ declined 0.5 percent.
Markets that had been spooked by inflation worries and fears the Federal Reserve was out of touch focused on
comments from Fed officials, which suggested they were at least ready to consider talking about tapering asset
purchases. The latest batch of global purchasing managers data bolstered the reopening narrative as it pointed
to an ongoing rebound in business activity across major economies. Investors reacted cautiously to news that
the Biden administration is offering a smaller compromise infrastructure proposal in talks with Republicans.
Among companies in focus, John Deere rose 1.3 percent after raising its outlook, and Deckers, the footwear
company, jumped 8 percent after a big earnings beat. Ross Stories rose 0.6 percent on a mix of strong results
and cautious guidance. Nvidia, the chipmaker, rose 2.6 percent after announcing a 4-1 split. On the downside,
chipmaker Applied Materials fell 1.3 percent despite a big beat, as investors were quick to cut back on risk.
In US economic news, the reopening of the US economy is having a dramatic effect on the services sector where
the PMI posted an extremely robust and record reading of 70.1 to far surpass Econoday's consensus range.
May's manufacturing PMI rose a point to a very substantial 61.5 to come in on the high end of the consensus
range. Separately, existing home sales slipped 2.7 percent in the month of April to a 5.850 million annual rate,
below expectations, but still robust.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.38 to US$66.68
while spot gold rose US$2.77 to US$1,880.45. The US dollar rose vs. most major currencies but weakened vs.
the Swiss franc and the Canadian dollar. The US Treasury 30-year bond yield was down 1 basis point at 2.33
percent and the 10-year note yield eased 1 basis point to 1.62 percent.
European markets
Equities edged up Friday on company news and upbeat economic data. The Europe-wide STOXX 600 rose 0.6
percent, the German DAX rose 0.4 percent, the French CAC gained 0.7 percent, and the UK FTSE 100 was
unchanged.
Eurozone composite purchasing managers figures showed services rebounded in May, with manufacturing
remaining robust. UK purchasers figures showed broad strength, paced by manufacturing. In central banking
news, European Central Bank and Bank of England officials echoed their Fed colleagues in predicting inflation
pressures would dissipate as the economic reopening continues.
Among sectors, autos and construction outperformed, while basic resources, tech and real estate lagged the
most.
In company news, Richemont, the Swiss luxury goods business, rose 5.3 percent on an earnings and revenues
beat. Compagnie de Saint Gobain, the French construction materials giant, rose 1.1 percent after agreeing to
but Chryso, a smaller competitor. BMW, the carmaker, rose 0.5 percent after saying it would set aside less than
the market expected to pay an antitrust fine. On the downside, Lufthansa fell 1.8 percent on a report of a large
stock sale by a major investor.
In economic news, Eurozone business activity had a surprisingly good May. A 56.9 flash composite output index
was more than 3 points stronger than its 53.8 final April print, well above the market consensus and a 39-month
high. May's unexpectedly sharp gain was attributable to services where demand was boosted by easier Covid
restrictions. Here the flash sector PMI rose from April's final 50.5 to 55.1, a 35-month peak. At 62.8,
manufacturing was barely changed from the previous period's final 62.9. In the UK, private sector business
activity expanded at the fastest rate on record in May. At 62.0, the flash composite output index was up from
April's final 60.7 and, again, well above the market consensus.
Asia Pacific Markets
Asia/Pacific markets were mixed Friday with Japan and Australia tracking US tech stocks higher while China was hurt by Covid worries and more tensions with the US and Europe. Chinese markets slipped with the Shanghai composite off 0.6 percent and the CSI 300 down 1.0 percent, with financials and health care lagging and only energy and utilities higher. Investors reacted poorly to an escalation in trade tensions between China and the EU, and as China criticized the US over the presence of a US warship in contested waters in the South China Sea. Taiwan’s Taiex was the region’s best performer, up 1.6 percent on the tech stock rally. Hong Kong’s Hang Seng was unchanged, as a selloff in Tencent, down 3.4 percent on news of big investment plans, offset other tech stock gains. The Wall Street rebound in growth/tech lifted Japanese equities, with the Nikkei up 0.8 percent and the broader Topix up 0.5 percent. The market faded into the close on worries over delays in vaccinations and the prospect of more lockdowns to cope with rising Covid counts, including news of a new lockdown in Okinawa. Japanese data, including a sharp decline in services activity in May, helped JGB yields decline, which supported growth stocks. In Japanese data, flash PMI survey data for Japan showed another month of strong activity in the manufacturing sector but a sharper contraction in the services sector. This suggests that public health restrictions imposed in response to a recent surge in Covid-19 cases have had a bigger impact on the services sector, though the survey indicates that conditions have also slowed to some extent in the manufacturing sector as well. Australia’s All Ordinaries ended up 0.2 percent as strength in tech was largely offset by weakness in energy and commodities, with iron ore prices down again. Health care outperformed, with CSL, the biotech, up 2.2 percent. An unexpectedly strong Australian retail sales report gave retailers a boost. Australian retail sales rose 1.1 percent on the month in April after advancing a revised 1.3 percent in March. Public health restrictions were relatively light across most of the country during April, with the exception of a three-day lockdown in Western Australia. In year-over-year terms, growth accelerated sharply from a revised 2.2 percent in March to 25.1 percent in April.
read moreUS Markets
Thursday’s rebound in risk assets continued Friday with gains across the board, and energy leading on rising oil
prices. The Dow Jones industrial average gained 1.1 percent, the S&P 500 rose 1.5 percent, and the NASDAQ
advanced 2.3 percent.
Megacaps gave extra weight to the day’s advance, with a boost from declining market interest rates, as US
Treasuries coped surprisingly well with the week’s upside inflation surprises, and yields declined for a second
consecutive day Friday. Energy stocks were paced by Marathon Oil, the driller, up 6.6 percent.
Among sectors, technology beat the market, with chipmakers rising. Reopening plays gave consumer
discretionary shares a lift, with gains in restaurants and travel & leisure. Big internet stocks lifted communications
services, with Facebook up 3.5 percent. Industrials lagged but were higher. Materials were held back by a selloff
in industrial metals after Chinese authorities acted to rein in iron prices.
Among stocks in focus, Disney fell 2.6 percent after it reported slower growth in subscriptions to its streaming
service. Among winners, Doordash, the delivery service, rallied 22 percent on an earnings and revenues beat.
Dillard’s, the upscale retailer, rose 23 percent after topping earnings expectations.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.73 to US$68.71
while spot gold rose US$15.74 to US$1,843.30. The US dollar fell vs. major currencies. The US Treasury 30-year
bond yield fell 4 basis points to 2.35 percent and the 10-year note yield slipped 3 basis points to 1.63 percent.
European markets
A global bounce in risk assets continued in Europe Friday with energy and tech stocks leading, to recover much
of their losses from early in the week. The Europe-wide STOXX 600 rose 1.2 percent, the German DAX gained
1.4 percent, the French CAC rose 1.5 percent, and the UK FTSE 100 was up 1.2 percent. Energy stocks tracked
rising crude oil prices higher.
Reports that the UK and Germany were poised to move ahead with reopening plans gave cyclical/value stocks a
boost. Banks, industrials, autos, retail, and travel & leisure also outperformed. Basic resources lagged as
commodities retreated, with iron ore prices down after Chinese authorities threatened to crack down on
commodity speculators. Other laggards included chemicals, food & beverage, health care, telecom, and personal
& household goods.
Among companies in the news, Sage, the UK software company, rose 3.8 percent on a profits beat and better
guidance. Encavis, the German alternative energy business, rose 4.3 percent after raising its profits guidance.
Sanne, the asset manager, rose 21 percent on news it has been approached for acquisition by private equity
group Cinven. Banco BPM, the Italian bank gained 3 percent, and Diageo, the UK drinks giant, rose 1.5 percent
after analyst upgrades.
Asia Pacific Markets
Asian markets rebounded Friday as investors bought the dip and company news was mostly positive. Despite Friday’s rise, markets were ending the week with losses and risk assets faced an overhang of inflation concerns and Covid worries. China’s Shanghai composite rose 1.8 percent and the CSI 300 gained 2.4 percent as growth stocks outperformed, and foreign buyers stepped back into the market. Most CSI sectors rallied, with financials, health care, and industrials outperforming while energy and utilities lagged. Hong Kong’s Hang Seng rose 1.1 percent as markets had appeared oversold headed into the weekend. Weakness in tech stocks limited the rise, with Chinese tech giants still facing pressure from Chinese regulators. Alibaba, the e-commerce platform, fell 4 percent after the firm posted its first operating loss, due to a $2.8 billion antitrust fine. Meituan, another e-commerce leader, fell 3 percent after its CEO's social media post was seen as criticizing the government. Taiwan’s markets tracked other Chinese markets higher with the benchmark Taiex stock index up 1.0 percent. Singapore lagged, with the Straits Times index down 2.2 percent after the government tightened its restrictions on gatherings and commerce to fight the coronavirus. Japanese stocks recovered with the Nikkei up 2.3 percent and the Topix up 1.9 percent. Tech shares led, along with precision instruments and transportation. Isuzu, the carmaker, jumped 22 percent after better-thanexpected guidance, and IHI, the industrial machinery maker, rose 8.8 percent on a profits beat. Australia firmed with the All Ordinaries up 0.4 percent, but the market gave up most of the morning gains as inflation worries depressed growth/tech sectors. Energy led the winners as liquified natural gas stocks rallied. Defensive sectors advanced, with utilities and real estate outperforming. Banks, grocers, and miners also gained. Materials lagged on a selloff in industrial metals.
read moreUS Markets
Equities advanced Friday despite a surprisingly poor monthly US jobs report, though major indexes retreated
from morning highs headed into the weekend. The Dow Jones industrial average and the S&P 500 gained 0.7
percent, and the NASDAQ was up 0.9 percent.
Equities perked up and interest rates mostly declined on the jobs report as the huge miss in payrolls and rising
unemployment were seen as delaying Federal Reserve tightening, and improving prospects for more fiscal
stimulus. Meanwhile, company news suggested the re-opening is still under way, if perhaps delayed. Stocks rose
nearly across the board but growth and mega-caps outperformed as high-multiple companies have been seen
as vulnerable to rising interest rates.
The US economy added 266,000 jobs in April, far below Econoday's consensus for a 998,000 gain, with the
lowest forecast at 755,000. The disappointment was reinforced by the downward revision to March's estimate
now at 770,000 from 916,000. The unemployment rate edged up 0.1 percentage point to 6.1 percent, while the
consensus had expected a decline to 5.8 percent.
Among outperforming sectors, energy stocks added to the week’s gains, with oil services best. Airlines,
transports, and building products paced industrials. Consumer discretionary saw strength in homebuilders, travel
& leisure, and restaurants. Industrial metals ended another winning week to boost materials. Health care had a
good day, with support from McKesson, the medical supplier, up 6.8 percent on an earnings beat. Tech stocks
rose as some traders saw bargains after the sector's recent weakness. Consumer staples lagged.
Among companies reporting, Expedia, the online travel broker, rose 5.2 percent as its bookings revived.
Microchip Technology rose 2.1 percent after topping earnings and revenues forecasts. On the downside, Shake
Shack, the fast food chain, fell 15 percent after a revenues miss, while Beyond Meat, the food product maker,
lost 7 percent after disappointing results.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 11 cents to US$68.09
while spot gold rose US$17.28 to US$1,831.96. The US dollar fell vs. most major currencies. The US Treasury
30-year bond yield rose 4 basis points to 2.29 percent and the 10-year note yield was unchanged at 1.57 percent.
European markets
European data and company earnings news gave European equities a lift Friday. The Europe-wide STOXX 600
rose 0.9 percent, the German DAX gained 1.3 percent, the French CAC firmed 0.4 percent, and the UK FTSE 100
rose 0.8 percent.
In macro news, focus was on strong Chinese trade data as the session began, a positive for European exporters,
which helped Germany outperform, followed by a big beat in German industrial production figures. Next, the big
miss in US jobs data left risk appetite unfazed as many investors reasoned that it keeps Fed tightening far off.
Among sectors, technology, travel & leisure, basic resources, utilities, and industrials fared best, while lagging
were food & beverage, construction & materials, chemicals, banks, and real estate.
Among companies reporting, Siemens, the German industrial conglomerate, rose 2.5 percent after an earnings
and revenues beat and improved guidance linked to Chinese demand. Adidas, the sportswear leader, rose 8.6
percent after topping quarterly expectations and better guidance. On the downside, Medcap, the Swedish medical
equipment maker, fell 8 percent on an earnings miss. Akwel, the auto parts maker, fell 6 percent on a
disappointing quarter and analyst downgrade.
Among travel stocks in focus, Norwegian Air Shuttle jumped 20 percent after a refinancing and private placement
of stock. Europcar, the rental agency, rose 15 percent on an earnings beat and analyst upgrade.
In economic news, German industrial production rose 2.5 percent, well above the market consensus and the
sharpest rise since last October. With base effects supportive, annual growth jumped from minus 6.6 percent to
4.9 percent. However, production was still 4.3 percent below its pre-pandemic level in February 2020.
Asia Pacific Markets
Asian equities markets were mixed Friday with Japan firmer for a second straight day and China weaker despite strong economic reports, while Australia edged up ahead of the US monthly jobs report. Japanese markets gave up most of their early gains as the market turned its focus to negative Covid news and expectations for new restrictions on commerce and mobility. The Nikkei ended up a marginal 0.1 percent and the broader Topix up 0.3 percent. Among companies in focus, Nippon Steel rose 5.7 percent after raising its annual profits guidance. Tokyo Electron, the chipmaker, rose 2.4 percent. On the downside, Nintendo fell 2 percent on gloomy profits guidance. For Chinese markets, worries about tensions between China and the West, and concerns about the pandemic in Asia, ex-China, weighed on risk assets Friday, despite economic data showing ongoing recovery. The Shanghai composite slipped 0.7 percent and the CSI 300 fell 1.3 percent. Chinese sectors were mixed; consumer discretionary and health care shares lagged while materials and energy outperformed. Vaccine makers rebounded from Thursday’s selloff after Germany appeared to oppose the US proposal to ease trademark protection for Covid-19 vaccines. Shanghai Fosun, a vaccine maker, rose 4.8 percent. Hong Kong’s Hang Seng eased 0.1 percent with tech stocks lagging amid concerns over US-China disputes after Bloomberg reported the Biden administration is likely to keep the Trump administration sanctions against Chinese companies linked to the military. A mixed sector performance left Australia flat to higher with the All Ordinaries up 0.3 percent. Strength in commodities lifted miners, offset by declines in technology and health care. Biotechs dragged down health care while buy-now-pay-later stocks again hurt tech. News Corp. was among the day’s winners, up 5.5 percent on an earnings beat, while Afterpay, the buy-now-pay-later leader, fell 4.1 percent as its recent selloff continued. India’s markets firmed Friday with the Sensex up 0.5 percent and the Nifty rising 0.7 percent. Metals and bank stocks outperformed as the market focused on the Reserve Bank of India’s provision of liquidity in the face of continued fallout from the pandemic. Tata Steel was the day’s leader, up 7.5 percent after an earnings beat. In economic news, Chinese merchandise trade exports rose 32.3 percent on the year in April, up from 30.6 percent in March and well above the expected 24.1 percent. Imports gained 43.1 percent on the year after increasing 38.1 percent previously, close to the consensus forecast. Separately, the Markit China PMI services index rose from 54.3 in March to 56.3 in April, the fastest pace since December. The manufacturing PMI survey, published last week, also showed its headline index rising, from 50.6 to 51.9. These lifted the composite output index from 53.1 in March to 54.7 in April.
read moreUS Markets
Equities gave back some of their recent gains Friday, with earnings still the focus, and as defensive sectors
outperformed. The Dow Jones industrial average declined 0.5 percent, the S&P 500 fell 0.7 percent, and the
NASDAQ slipped 0.9 percent.
Blowout earnings from Amazon after the close Thursday didn’t inspire follow-through, with the stock ending
down 0.1 percent. Investors appear to have priced lots of good news into the market. Mega-caps Apple, down
1.5 percent, and Alphabet, down 0.8 percent, paced a selloff in growth stocks despite huge earnings beats this
week.
Energy led the way lower as the week’s best performer retreated as oil prices ebbed. Technology stocks lagged,
with chipmakers depressing tech after post-earnings weakness. Losses in internet stocks hurt communications
services, with Twitter down 15 percent after downgrading its guidance.
Banks gave back some of the week’s gains. Health care held up well, along with consumer staples, with a boost
from drug stores. Strength in Tesla, up 4.8 percent on dip-buying, gave consumer discretionary a lift. Best
sectors were defensives -- real estate, and utilities.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.29 to US$67.25
while spot gold fell US$5.80 to US$1,768.15. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield was flat at 2.30 percent and the 10-year note yield was down 1 basis point at 1.63 percent.
European markets
Equities were mostly flat to weaker Friday after gloomy but as-expected Eurozone GDP figures. The Europe-wide
STOXX 600 declined 0.3 percent, the German DAX eased 0.1 percent, the French CAC fell 0.5 percent, and the
FTSE-100 was up 0.1 percent.
In line with expectations, the Eurozone economy slid into a double-dip recession in the first quarter. However, a
0.6 percent quarterly contraction was shallower than expected and with Covid hitting the year ago data harder,
annual growth climbed from minus 4.9 percent to minus 1.8 percent. Still, GDP was still 5.5 percent below its
pre-pandemic level.
UK markets outperformed, with a boost from better-than-expected quarterly results from AstraZeneca, up 4.3
percent, from paper packaging maker Smurfit Kappa, up 4.2 percent, and British American Tobacco, up 2.1
percent.
Among sectors, best performers included banks, travel & leisure, telecom, and real estate. Banco de Sabadell
was among the day’s leaders, up 5.8 percent, and Swiss Re rose 2.9 percent after reporting earnings beats.
Lagging were autos & parts, utilities, technology, chemicals, and basic resources. Svenska Cellulosa, the Swedish
paper giant, fell 4.8 percent, and Ring Metall, the German metals manufacturer, fell 4.1 percent after reporting
weaker than expected results.
Asia Pacific Markets
Weaker Chinese data and regulatory concerns undercut Asian equities markets Friday, while disappointing guidance from tech stocks and chip shortages hurt Japanese markets. Among Chinese markets, the Shanghai composite and the CSI 300 both slipped by 0.8 percent, and Hong Kong’s Hang Seng index dropped 2.0 percent. A lower-than-expected Chinese official PMI manufacturing report hurt risk appetite, along with the latest episode in the Chinese regulatory crackdown on big internet/fintech players. Top Chinese regulators summoned Tencent (down 1.4 percent), JD.com (down 2.7 percent), and ByteDance, among other tech giants for more warnings about the firms’ online finance businesses. Growth stocks led Japan’s markets lower with the Nikkei down 0.8 percent and the broader Topix off 0.6 percent. Sector performance was mixed, with marine transportation, iron & steel, and materials faring best. Weakest were transportation equipment, electric appliances, precision instruments, and banks. Among companies in the news, Apple suppliers Sony, down 7.7 percent, and Murata, down 3.6 percent, came off after Apple warned that chip shortages could hurt iPhone production. Korean markets tracked Chinese markets lower, with the KOSPI down 0.8 percent, paced by a selloff in tech heavyweights, including SK Hynix, down 1.5 percent, and chemicals maker LG Chemical, down 2 percent. Australian equities slipped Friday with the All Ordinaries index down 0.8 percent. Losses were nearly across the board, with commodities-linked stocks down the most. Beach Energy, the oil & gas producer, dropped 24 percent after announcing lower-than-expected oil reserves and downgrading its guidance. Miners lagged as industrial and precious metals prices declined. Industrials and utilities managed small gains. India’s markets gapped lower on profit-taking Friday after rising all week, and as pandemic worries brought markets back to earth. The Sensex fell 2 percent and the Nifty declined 1.8 percent, with banks leading the selloff. In economic data, official Chinese PMI survey data suggest that growth slowed in both the manufacturing and the non-manufacturing sectors in April. The CFLP manufacturing PMI fell from 51.9 in March to 51.1 in April, below the consensus forecast of 51.7, while the non-manufacturing PMI, also published today, fell from 56.3 to 54.9. Separately, Japan's industrial production index rose 2.2 on the month in March, rebounding sharply from a fall of 1.3 percent recorded in February and much stronger than the consensus forecast for a drop of 2.0 percent.
read moreUS Markets
Investors bought the dip Friday after Thursday’s reflexive move down on reports the Biden administration would
push for higher capital gains taxes on the wealthy. The Dow Jones industrial average rose 0.7 percent, the S&P
500 gained 1.1 percent, and the NASDAQ gained 1.4 percent.
Stock sectors recovered nearly across the board as the market calmed down about the prospective tax rise, as
many analysts said actual tax increases are likely to be smaller than the administration’s initial proposal, and
that wealthy investors would find ways to avoid paying. Markets also reacted favorably to more US economic
data suggesting the rebound is gathering momentum.
Financials led the way higher after some upbeat earnings and M&A news from regional banks, including Meridian
Bancorp, which surged by 23 percent after agreeing to be acquired by Independent Bank Corp., which rose 3
percent. Materials advanced on gains in industrial metals. Energy stocks rose with crude oil prices. Tech stocks
popped up in spite of an earnings disappointment at Intel, down 5.3 percent. Airlines led industrials higher on
dip-buying. Communications services lagged as Netflix flagged by 0.6 percent. Health care and defensive stocks
lagged, with consumer staples hurt by an earnings disappointment at paper goods leader Kimberly Clark, down
5.8 percent.
In US macro news, higher mortgage rates in March did not hold down new home sales much, as sales surged a
monthly 20.7 percent to a 1.021 million annual rate to far exceed Econoday's consensus range. Separately,
monthly PMI flash reports all posted records and all exceeded Econoday's consensus estimates: April's composite
up 2.5 points to 62.2, manufacturing up 2.5 points to 60.6, and services up 2.7 points to 63.1.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 55 cents to US$66.09
while spot gold fell US$7.22 to US$1,776.17. The US dollar fell vs. most major currencies. The US Treasury 30-
year bond yield rose 1 basis point to 2.24 percent and the 10-year note yield was up 1 basis point at 1.56
percent.
European markets
Pandemic worries and Thursday’s weakness on Wall Street dampened sentiment but major indexes recovered
from early lows to end marginally weaker Friday. The Europe-wide STOXX 600 eased 0.1 percent, the German
DAX declined 0.3 percent, the French CAC declined 0.2 percent, and the FTSE-100 was flat.
More positive earnings reports and better European economic data provided support, including strong UK retail
sales results and European PMI composite flash figures for April. On the negative side, rising global coronavirus
cases, especially in Asia, underlined worries that the recovery will falter.
In economic news, UK retail sales were robust in March. Boosted by a partial lifting of the third nationwide
lockdown, sales jumped by 5.4 percent on the month, well above the market consensus and their best
performance since June last year. Separately, purchasing managers index data showed Eurozone business
activity had a surprisingly good April. At 53.7, the flash PMI composite output index was nearly a full point above
the market consensus and up from March's final 53.2. April's unexpected improvement reflected improved
performances by both manufacturing and services.
Among stock sectors, best performers were basic resources, travel & leisure, technology, media, industrials,
construction, and banks. Lagging were defensive sectors including real estate, health care, personal & household
goods, utilities, telecom, plus oil & gas.
Among stocks in the news, Swedish automaker Saab rose 6.4 percent on an earnings beat. Ipsos, the French
market research firm, rose 5.9 percent after announcing a revenues beat, and raising its guidance. Vivendi, the
French media group, rose 2.8 percent after reporting better-than-expected organic growth.
Asia Pacific Markets
Major Asian equities markets mostly edged up Friday though Japan ended lower on new anti-virus lockdowns, and some carry-over from Thursday’s selloff on Wall Street over tax increase fears. Focus on accelerating Covid-19 cases across much of Asia gave Chinese health care stocks a boost, and clean energy stocks rallied after Chinese President Xi Jinping’s latest pledge to make China carbon neutral. The Shanghai composite rose 0.3 percent and the CSI 300 advanced 0.9 percent. Hong Kong’s Hang Seng index outperformed with a gain of 1.1 percent Friday, paced by gains in health care and tech stocks, as inflows from the mainland perked up. Among companies in the news, Ping An Insurance Group, the insurance company, rose 1 percent after an earnings beat. Australia ended slightly higher with the All Ordinaries index up 0.1 percent. Sectors were mixed with retailers very weak, along with gold miners and airlines, while financials outperformed as banks, fund managers and insurers outperformed. Among companies in focus, Nidec, the Japanese electric motor maker, fell 5.1 percent after its CEO and founder stepped down following a downgrade to its profits guidance for the year. Xinyi Solar, the Chinese solar power engineering company, rose 8.6 percent after China’s green pledge.
read moreUS Markets
Equities ended up Friday on positive US economic data and supportive earnings reports to hold onto another
week of gains. Value/cyclicals outperformed Friday after a better showing for growth stocks this week. The Dow
Jones industrial average rose 0.5 percent while the S&P 500 firmed 0.4 percent and the NASDAQ firmed 0.1
percent.
In US economic news, housing starts and permits both recovered more than expected in March, by 19.4 percent
and 2.7 percent on the month, respectively, to annual rates of 1.739 million for starts and 1.766 million for
permits. Meanwhile, consumer sentiment rose 1.6 points but the 86.5 level came in below Econoday's consensus
range.
Among stock sectors, materials rose with help from an earnings beat at PPG, the paint company, up 8.7 percent;
paint rival Sherwin Williams rose 3.8 percent in sympathy with PPG. Alcoa was another winner, up 8.4 percent
after an earnings beat. Financials and utilities outperformed, with PNC Bank up 2.3 percent on an earnings beat,
and utility Consolidated Edison up 1.3 percent.
On the downside, information technology and energy stocks lagged, with chipmakers giving back some of
Thursday’s rally, while declining oil prices weighed on drillers, including Haliburton, down 1.9 percent. Morgan
Stanley fell 2.8 percent as its losses in the Archegos Capital fiasco obscured an otherwise remarkably positive
quarter.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 14 cents to US$66.72
while spot gold rose US$10.73 to US$1,775.67. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield rose 4 basis points to 2.28 percent and the 10-year note yield rose 3 basis points to 1.58
percent.
European markets
Positive Chinese and US economic reports boosted European markets Friday, with German markets
outperforming after strong auto earnings. The Europe-wide STOXX 600 gained 0.9 percent, the German DAX 1.3
percent, the French CAC rose 0.9 percent, and the FTSE-100 gained 0.5 percent.
A batch of Chinese data releases confirming the recovery remains under way, and more strong US housing sector
figures bolstered risk appetite. News that Italy would loosen anti-virus restrictions was another positive.
Separately, earnings beats from Daimler, up 2.9 percent and from Renault, up 2.3 percent, helped autos
outperform, along with upbeat auto registration data.
Among other sectors, outperforming were banks, industrials, construction, retail, basic resources, and chemicals.
Lagging were oil & gas, health care, utilities, food & beverage, and travel & leisure.
Among stocks in focus, Bank of Ireland rallied 8.2 percent on news it will buy KBC’s Irish loan portfolio. L-Oreal,
the French cosmetics leader, fell 1.8 percent as the market disliked its quarterly sales results.
Asia Pacific Markets
Major equities markets mostly gained Friday on carry-over from Thursday’s rally on Wall Street and with support from Chinese economic reports that were seen as generally positive. Chinese markets perked up after publication of Chinese GDP figures. China’s Shanghai composite rose 0.8 percent, and the CSI 300 firmed 0.4 percent while Hong Kong’s Hang Seng rose 0.6 percent. Value stocks topped growth led by telecom and energy sectors. Japanese markets edged up with a boost from a strong showing Thursday in US growth and momentum stocks. The Nikkei and the broader Topix index both rose 0.1 percent. Chip stocks outperformed, with Renesas up 2.5 percent. Trading was limited by caution ahead of a summit meeting Friday between President Biden and Japanese Premier Yoshihide Suga. Investors have viewed the meeting in a negative light as Biden is expected to press Japan to adopt the US hard line against China, a big negative for Japanese capital goods makers who rely heavily on the Chinese market. Australian equities were flat to better with the All Ordinaries index up 0.1 percent as the market held onto the week’s gains. The reopening narrative remained dominant after a series of upbeat Australian economic indicators this week. On the negative side, vaccine worries continued as authorities probed the death of a woman who developed a blood clot after getting the AstraZeneca vaccine. Sectors were mixed, with real estate, technology, and gold producers better while financials, energy, and utilities lagged. In economic data, China's economy expanded 18.3 percent on the year in the three months to March, picking up from growth of 6.5 in the three months to December and matching the consensus forecast. Separately, Chinese industrial production rose 14.1 percent on the year in March after surging 35.1 percent on the year for January and February combined. This is below the consensus forecast for growth of 17.2 percent.
read moreUS Markets
Equities gained Friday with support from mega-caps and as recovery plays ticked up headed into the close. The
Dow Jones industrial average rose 0.9 percent while the S&P 500 gained 0.8 percent, and the NASDAQ was up
0.5 percent.
Sentiment remains supported by confidence the recovery is unfolding and that the Federal Reserve and other
central banks are in no rush to pull back on stimulus even as economic readings top expectations. Central
bankers have repeated they expect a transitory spike in inflation as the economy reopens. Markets also focused
on reports that White House talks with Republican leaders on infrastructure plans are not going well.
Risk appetite was hemmed in much of Friday by inflation worries and an associated uptick in bond yields after
an upside surprise in Chinese producer prices overnight followed by another surprisingly big increase in US
producer price figures.
Among sectors, retailers helped consumer discretionary stocks outperform, with Amazon up 2.2 percent. Tech
stocks rose, with Apple up 2.0 percent and Microsoft up 1.0 percent. Rail stocks and building products helped
industrials beat the market. Lagging were materials, communications, consumer staples, and energy.
Cruise lines rose on the reopening trade, with Carnival up 2.6 percent. and General Electric up 1.1 percent after
analyst upgrades.
Among companies in the news, Johnson & Johnson declined 1.0 percent after some mass vaccination sites
suspended use of its Covid-19 vaccine after some adverse reactions.
In US economic news, producer prices surged 1.0 percent in March to exceed Econoday's consensus range and
double Econoday's consensus. The year-over-year rate rose 1.4 percentage points to 4.2 percent for a nearly
10-year high. Core readings likewise exceeded all expectations: up 0.7 percent on the month and 3.1 percent
on the year when excluding food and energy.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 27 cents to US$63.06
while spot gold fell US$16.92 to US$1,742.99. The US dollar rose vs. most major currencies but declined vs. the
Canadian dollar. The US Treasury 30-year bond yield rose 1 basis point to 2.33 percent and the 10-year note
yield rose 2 basis points to 1.66 percent.
European markets
Equities were nearly unchanged Friday in subdued trading as markets held onto recent gains, reflecting
supportive Fed and ECB policy and expectations for recovery. The Europe-wide STOXX 600 firmed 0.1 percent,
the German DAX rose 0.2 percent, the French CAC firmed 0.1 percent, and the FTSE-100 eased 0.4 percent.
In macro news, ECB officials downplayed inflation risks Friday while warning against delays in the EU recovery
fund. Meanwhile, Italian Premier Mario Draghi said his government would introduce additional stimulus. Corona
virus news was mixed, as Italy and the UK appeared ready to ease more restrictions while Germany prepared to
step up its federal control, and France reported faster progress on vaccinations.
Among sectors, best were health care, construction, retail, industrials, and financial services, while lagging were
telecom, oil & gas, basic resources, real estate, autos, travel & leisure, banks, and insurance.
In economic data, German industrial production continued to surprise on the downside in February. The 1.6
percent mid-quarter fall was made for the first back-to-back decline since March/April last year, and annual
growth dropped from minus 3.9 percent to minus 6.1 percent. Separately, French industrial production was also
much weaker than expected in February. A monthly slump of some 4.7 percent easily more than reversed
January's marginally smaller revised 3.2 percent spurt and left output at its lowest level since August last year.
Among stocks in the news, British American Tobacco fell 2.5 percent after a downgrade at JP Morgan. Norwegian
Air Shuttle fell 5.7 percent on disappointing March air traffic. Pandora, the Danish jeweler, fell 3.1 percent on an
earnings miss. On the positive side, Catena Media rallied 20 percent on blowout earnings. Hilton Food Group
rose 3.2 percent on an analyst upgrade, and Deutsche Post rose 1.8 percent after raising its guidance.
Asia Pacific Markets
Major Asian equities markets were mixed Friday with Chinese markets off on inflation and tightening worries, while Japanese markets edged up on a better showing for growth stocks, and Australia was flat. Bond yields rose during the Asian hours after Chinese inflation figures surprised to the upside. This renewed concerns about rising inflation as more countries bounce back from pandemic weakness. Chinese equities declined nearly across the board with the Shanghai composite off 0.9 percent and the CSI composite down 1.5 percent. Markets reacted poorly to news that Chinese producer prices jumped 1.6 percent on the month in March. Year-over-year the PPI was up 4.4 percent in March to more than double February's 1.7 percent showing. Risk appetite also suffered from news that Chinese authorities were telling banks to limit debt growth, and to clamp down on shady practices. Finally, US-China discord remained in focus after the US added Chinese supercomputer companies to its restricted list, and US Senate leaders pressed legislation targeting China over human rights and other concerns. Hong Kong tracked other Chinese markets lower, with the Hang Seng off 1.1 percent on inflation worries. Tech stocks led the selloff as interest rates ticked up. Wuxi Biologics, the biotech, fell 4.9 percent. Beigene, the pharma, fell 4.0 percent on disappointing results in its trials of its Covid-19 drug. Japanese markets managed modest gains as growth stocks beat value. The Nikkei firmed 0.2 percent and the Topix rose 0.4 percent. Analysts noted the Nikkei faced profit-taking whenever it approaches 30,000, and worries about the impact of new anti-Covid lockdowns limited the market’s upside too. Best performing sectors included marine transportation, machinery, and finance, while lagging were mining and metals. Australia’s All Ordinaries index was unchanged as it held at record highs. Markets have been bolstered by US stimulus that supports global recovery hopes, signs the Reserve Bank of Australia is joining the Fed in maintaining a dovish stance, and signs of the pandemic easing its grip. Australian sectors were divided on the day with consumer staples and health care lagging and miners and travel retreating from recent highs. Retailers outperformed with Kogan.com up 5.9 percent, and buy now pay later stocks boosting tech. Among other Asian companies in focus, Aluminum Corp. of China rose 3.6 percent on positive guidance, and Sony, the Japanese conglomerate, rose 2.8 percent on a distribution deal with Netflix. On the downside, heavilyweighted Japanese retailer Fast Retailing fell 3.4 percent after its better guidance still disappointed the market.
read moreUS Markets
US Treasury yields rose Friday on much stronger-than-expected US employment figures. US equities markets
were shut for the Easter holiday.
In economic data, nonfarm payrolls soared 916,000 in March, surpassing Econoday's consensus for a 658,000
increase. The February reading was revised up to 468,000 from 379,000. The unemployment rate eased to 6.0
percent, the lowest in a year, as expected, although it remains 2.5 percentage points higher than its February
2020 pre-pandemic level. The participation rate edged up to 61.5 percent from 61.4 percent.
Also encouraging was the increase in the average workweek to 34.9 hours from 34.6 hours. Average hourly
earnings, however, were down 0.1 percent on the month, while Econoday's consensus has anticipated a 0.2
percent increase. On a 12-month basis, earnings growth slowed to 4.2 percent from 5.2 percent the previous
month, also below expectations of a 4.6 percent gain.
Separately, fiscal stimulus fed a 12.0 percent surge in unit vehicle sales in March to a 17.7 million rate that far
surpassed Econoday's consensus range. This rate was last matched in late 2017.
These price data reflect observations at 12 noon US ET: Spot gold declined 32 cents to US$1,728.87. The US
dollar rose vs. most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.36 percent
and the 10-year note yield rose 4 basis points to 1.72 percent. Dated Brent spot crude oil did not trade due to
the holiday.
European markets
European markets were on holiday Friday.
Asia Pacific Markets
Global recovery hopes spurred by generous US fiscal spending plans continued to support Asia/Pacific equities markets Friday. Recovery hopes and strength in tech stocks lifted Chinese markets. The Shanghai composite rose 0.5 percent and the CSI300 gained 1.0 percent. Korean stocks got a boost from expected strong growth linked to the US infrastructure spending plan and additional expected US fiscal stimulus. The KOSPI rose 0.8 percent, with big tech stocks leading, including Samsung Electronics, up 2.3 percent. Growth stocks, especially tech, lifted Japanese markets, with chipmakers leading. Chipmakers got an extra lift from a Nikkei report on joint US-Japanese efforts to address global semiconductor shortages. The Nikkei 225 index gained 1.6 percent and the Topix rose 0.7 percent. Automakers were also strong, with Mazda up 3.2 percent, and Suzuki up 3.1 percent. Hong Kong and Australian markets were closed for the Easter holiday.
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Cyclicals plus information technology paced gains Friday, with bank stocks leading after the Federal Reserve
announced plans to ease limits on bank stock buybacks and dividends. The Dow Jones industrial average rose
1.4 percent, the S&P 500 gained 1.7 percent, and the NASDAQ was up 1.2 percent.
Rising bond yields gave banks another boost, while energy stocks outperformed as oil prices advanced. Materials
rose with an uptick in commodities, and information technology rose too, with Microsoft up 1.8 percent after
announcing it will buy Discord, the videogame maker. Semiconductors extended recent gains after Intel said it
would manufacture chips for other chip designers.
Lagging were communications services, with Discovery Communications and ViacomCBS both dropping 27
percent to extend a hideous week amid new analyst downgrades and heavy shorting.
Among companies in focus, MagnaChip Semiconductor rose 27 percent after agreeing to be taken private. Telos,
the cybersecurity company, rallied 23 percent after blowout quarterly results. Olin, the materials company, rose
6.9 percent after an upgrade at RBC.
In US economic news, personal income fell 7.1 percent in February, in line with Econoday's consensus
expectation of a 7.2 percent decline, following a 10.1 percent surge in January tied to federal stimulus. Spending
contracted 1.0 percent in February, weaker than the 0.7 percent decrease expected by Econoday's consensus.
However, January's estimate was revised up by a full point to 3.4 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.70 to US$64.46
while spot gold rose US$5.41 to US$1,732.04. The US dollar rose vs. most major currencies but weakened vs.
the Japanese yen. The US Treasury 30-year bond yield rose 3 basis points to 2.38 percent and the 10-year note
yield rose 5 basis point to 1.68 percent.
European markets
Recovery hopes lifted equities Friday, with miners, energy, and tech stocks leading. The Stoxx 600 pan-European
index rose 0.9 percent, the French CAC gained 0.6 percent, the German Dax advanced 0.9 percent, and the UK
FTSE 100 was up 1.0 percent.
Investors focused on positive aspects of the Covid vaccine rollout and reopenings even as France, Germany, and
Italy imposed new restrictions, and worries over Covid variants persisted.
UK markets outperformed on strength in miners and energy as commodities prices perked up. Technology, travel
& leisure, construction, industrials, telecom, retail, and banks also beat the market. Lagging though still higher
were health care, media, personal & household, utilities, food & beverage, chemicals, and insurance.
Among companies in the news, Smiths Group, the UK engineering business, jumped 6.9 percent on an earnings
beat and better guidance. Oxford Instruments, the UK toolmaker, rose 12 percent after raising its guidance for
the fiscal year. AP Moller Maersk, the Danish shipper, rebounded 5.1 percent after dropping earlier in the week
on fallout from the disruption as the Suez Canal remains blocked for a fourth day. Air France was flat after news
France has reached agreement with the European Commission on terms for state aid to the ailing airline.
In economic data, the March German Ifo survey found a second consecutive healthy improvement in overall
business sentiment. The headline climate indicator rose from an upwardly revised 92.7 in February to 96.6, only
its second increase since last September but its largest gain since July and its highest level since June 2019.
Asia Pacific Markets
Major Asian equities markets popped up Friday with technology stocks leading the advance in China, Japan, and Korea after a strong close on Wall Street Thursday, and financials and energy stocks leading Australia higher. China’s Shanghai composite index gained 1.6 percent, the broader Chinese CSI300 rose 2.3 percent, and the Hong Kong Hang Seng index gained 1.6 percent. Sectors saw gains across the board with information technology and health care faring best; utilities and energy lagged. More harsh rhetoric between the US and China limited gains even as risk appetite improved. Japanese shares saw advances across the board though growth beat value, led by banks, transports, transportation equipment, and machinery. The Nikkei 225 Index rose 1.6 percent and the broader Topix was up 1.5 percent. Investors reacted favorably to the faster pace of vaccinations in the US, which is spurring expectations for a more rapid global recovery. Australian shares tracked other Asian markets higher, with the All Ordinaries index up 0.6 percent, and most sectors advancing. Energy was paced by a recovery in oil prices, with rising commodities prices lifting miners. Big banks and fund managers rose to bolster financials. Health care lagged, with CSL, the big biotech, off 0.9 percent to give back some of its recent gains. Among companies in focus, Xiaomi, the Chinese smartphone maker, rose 6.3 percent, along with Chinese automaker Great Wall Motor, up 10.4 percent, on news the two firms would build electric vehicles in GWM factories. On the downside, Ryohin Keikaku, the Japanese retailer, fell 3.3 percent after expressing concern about human rights abuses in China’s cotton-producing Xinjiang district, which raised the threat of Chinese boycotts.
read moreUS Markets
Equities were mixed Friday with growth stocks outperforming value. The Dow Jones industrial average declined
0.7 percent, the S&P 500 eased 0.1 percent, and the NASDAQ rose 0.8 percent.
Among sectors, holding up best were communications services, consumer staples, energy, and health care.
Lagging were financials, industrials, and materials. Among financials, banks sold off along with US Treasuries
after the Federal Reserve altered its supplementary leverage ratio (SLR), which had allowed banks to leave out
holdings of US Treasuries in calculating their SLR. This leaves bank with an unpleasant choice of cutting
Treasuries or needing to raise capital.
Among companies in focus, Facebook rose 4 percent after CEO Mark Zuckerberg downplayed concerns over its
differences over privacy with Apple. Meanwhile, JP Morgan fell 1.6 percent on the SLR switch, and Nike dropped
4 percent on disappointing sales results reflecting supply disruptions. Visa fell 6 percent on a report the
Department of Justice is probing its business. On the positive side, Fedex rose 6 percent on an earnings beat.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$2.41 to US$64.60
while spot gold rose US$7.84 to US$1,742.81. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield declined 2 basis points to 2.44 percent while the 10-year note yield rose 1 basis point to 1.72
percent.
European markets
Covid worries and falling commodities prices depressed equities Friday, and European bond yields retreated. The
Europe-wide STOXX 600 declined 0.8 percent, and the German DAX, the French CAC, and the FTSE-100 all fell
1.1 percent.
News that France would reimpose lockdowns in several regions hurt risk appetite, along with the ongoing slow
pace of vaccinations in Europe.
Among sectors, worst off were banks, basic resources, retail, autos, telecom, industrials, construction, chemicals,
travel, oil & gas, and personal & household goods. Holding up best were defensives – utilities and real estate –
along with technology and health care.
Among companies in the news, Enel, the Italian electric utility, rose 3 percent, after affirming its dividend plans.
Poste Italiane, the postal service, fell 1.1 percent on a poor reaction to its new strategic plan. Investec, the
investment advisor, fell 9.3 percent on its annual trading update.
Asia Pacific Markets
Rising US bond yields and a bad start to US-China diplomatic talks depressed Asian markets Friday along with another drop in commodities prices, plus follow-through from Wall Street’s selloff in tech and other growth stocks. China’s Shanghai composite declined 1.7 percent while the CSI300 dropped 2.6 percent, with technology, real estate, consumer staples, and financials leading the selloff. Chinese investors are confronting tighter financing conditions and rising corporate defaults, especially in real estate, mining, and local government financing vehicles. Hong Kong stocks tracked Mainland Chinese markets lower with the Hang Seng off 1.4 percent. Energy shares fell the most, followed by materials, and health care. Risk appetite suffered after US and Chinese officials quarreled openly, and after the US 10-year note yield jumped to 1.75 percent during the US hours. Japanese stocks were mostly weaker on the tech-led US selloff, plus fallout from the Bank of Japan’s decision to cap its ETF purchases and limit them to stocks traded on the Topix. The Nikkei fell 1.4 percent and the Topix firmed 0.2 percent. Big tech sold off, with Fanuc down 2.9 percent, and Tokyo Electron off 2.6 percent, while Softbank fell 2.5 percent and Fast Retailing, the heavily-weighted retailer, declined 6.1 percent. Australian markets slipped on risk aversion and the drop in commodities prices, with the All Ordinaries index down 0.6 percent. Miners and energy stocks led the declines, with Woodside Petroleum off 3.3 percent. Markets also reacted poorly to unexpectedly weak Australian retail sales figures, with sales down 1.1 percent on the month in February, on lockdown effects, after increasing 0.6 percent in January, much weaker than the consensus forecast for an increase of 0.5 percent.
read moreUS Markets
Rising US bond yields kept growth stocks under pressure Friday while cyclicals/value stocks were better bid on
recovery hopes. The Dow Jones industrial average rose 0.9 percent while the S&P 500 firmed 0.1 percent, and
the NASDAQ declined 0.6 percent.
The recovery hopes and heavy new US Treasury supply pushed US market rates higher Friday, with another
boost from a somewhat stronger-than-expected US producer price report.
The steeper US yield curve helped bank stocks outperform, while other cyclicals advanced, led by energy and
industrials. On the downside, the broader market was depressed by a selloff in mega-caps and growth stocks on
rising bond yields and the rotation into value. Communications services lagged, with Facebook down 2 percent
and Google off 2.5 percent. Consumer discretionary suffered from weakness in Amazon, down 0.8 percent. Tech
stocks were a big loser, with chipmakers and software suffering.
Among value stocks, Boeing rose 6.8 percent on news of a big order, GM gained 5.2 percent, and Caterpillar
gained 4.2 percent. Old-fashioned cyclicals remained in favor after President Biden signed the $1.9 trillion
stimulus package, on the president’s pledge to accelerate vaccinations, and other positive vaccine news.
Among companies in the news, Novavax, the US vaccine maker, rose 8.1 percent on positive efficacy news in
its UK vaccine trials. Vail Resorts, up 3 percent, was another winner on an earnings and revenues beat, and
better guidance. Nordstrom, the retailer, rose 10.6 percent on an upgrade at Jefferies.
In US economic news, annual rates of producer-price inflation came in high, boosted by weak prices a year ago
during the great lockdown, while monthly rates of growth are less severe. Total producer prices rose 0.5 percent
in February which is a strong rise that beats Econoday's consensus by 1 tenth as does the annual rate of 2.8
percent which is a 2-year high and beats the consensus by 2 tenths. But core readings show less pressure,
especially monthly ones at 0.2 percent both when excluding food and energy and when further excluding trade
services.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 46 cents to US$69.24
while spot gold firmed 58 cents to US$1,724.08. The US dollar rose vs. most major currencies, except the
Canadian dollar. The US Treasury 30-year bond yield rose 8 basis points to 2.38 percent while the 10-year note
yield jumped 9 basis points to 1.63 percent.
European markets
Equities were mixed to weaker Friday with a split showing among sectors, and rising bond yields in focus. The
Europe-wide STOXX 600 eased 0.3 percent, the German DAX declined 0.5 percent, the French CAC firmed 0.2
percent, and the FTSE-100 was up 0.4 percent.
Bond yields rose despite the ECB announcement Thursday that it would accelerate asset purchases, as investors
focused on US fiscal stimulus and progress on rolling out vaccines. A Bloomberg story reported the ECB did not
intend its announcement to show much of a shift in its policy stance.
Among sectors, best performers were banks, retail, construction, insurance, telecom, and oil & gas. Lagging
were technology, health care, media, autos, utilities, chemicals, real estate, and travel & leisure.
Among companies in the news, UK clothier Burberry rose 6.9 percent on better trading results, Deutsche Bank
rose 1.6 percent after issuing 2021 guidance, and Deutsche Telekom rose 1.8 percent as the market liked its 5G
plans. On the downside, Daimler fell 1.9 percent on a share placement, and Berkeley Group, the UK property
business, fell 5.8 percent on disappointing guidance.
In economic news, UK goods production was significantly weaker than expected in January. A 1.5 percent
monthly decline was the first fall of any size since last April and left output 5.0 percent below its pre-pandemic
level in February 2020. Separately, the Eurozone goods producing sector made a solid start to 2021. Output (exconstruction) rose a steeper than expected 0.8 percent on the month and that after a sharply shallower revised
0.1 percent dip in December. On the positive side, UK GDP figures topped expectations for January.
Asia Pacific Markets
A better showing on Wall Street Thursday and hopes for a stronger global recovery helped most major Asian equity markets rise Friday but US and Chinese policy news limited risk appetite. China’s Shanghai composite rose 0.5 percent while the CSI300 edged up 0.4 percent with beaten-down infrastructure stocks leading the advance. Gains were capped as investors focused on perceptions that China’s government wants to assert its control and limit risk-taking. After annual government meetings ended Thursday, Chinese Premier Li Keqiang said the government’s 6 percent growth target was “not low,” and the government would not ease policy to pursue faster growth. He also pledged to expand oversight of fintech firms and curb monopolies. Separately, several leading fintechs and tech firms were hit by Chinese government fines for making acquisitions and investments that displeased Chinese regulators. China announced antitrust fines against Tencent, Baidu, ByteDance, and Didi Chuxing, which appear to have joined Alibaba as targets for a government crackdown. Hong Kong stocks weakened, with the Hang Seng down 2.2 percent, paced by a selloff in Tencent, down 4.4 percent, and Baidu, down 4.1 percent. US-China tensions added to the negative sentiment after the US condemned Chinese moves to limit Hong Kong’s independence, and after the US imposed new limits on sales of 5G goods to Huawei, the Chinese telecom champion. Japanese equities outperformed, with the Nikkei share average up 1.7 percent and the Topix up 1.4 percent, on carry-over from Thursday’s Wall Street rally in tech and growth stocks, with investors focused also on the impact of US fiscal stimulus on the global recovery. Tech and energy shares led the winners in Tokyo while financials and real estate lagged. Among companies in focus. Rakuten, the consumer-facing tech giant, rose 8.6 percent on news of big investments from the Japanese Post, Tencent, and others. Australian markets advanced on global recovery hopes, with the All Ordinaries index up 0.9 percent, after the US enacted its latest fiscal spending package. Tech stocks and miners led the winners, with Afterpay, the fintech, up 2.2 percent, and BHP, the iron miner, up 2.5 percent.
read moreUS Markets
Equities seesawed higher Friday, propelled by a big beat in the US jobs report, which fed the recovery narrative,
and boosted cyclicals. The Dow Jones industrial average rose 1.9 percent while the S&P 500 rallied 2.0 percent
and the NASDAQ gained 1.6 percent.
Some speculative stocks remained under heavy selling pressure on rising market interest rates after news that
US payrolls surged by 379,000 in February. Tesla, the momentum favorite, dropped 3.8 percent. Other megacaps recovered to end higher after dip-buying, with Apple up 1.1 percent, Microsoft up 2.2 percent, and Facebook
up 2.6 percent.
Leading sectors were energy, communications services, financials, materials, and consumer staples, while
consumer discretionary lagged. Among energy stocks, Chevron gained 4.3 percent as oil prices rose for a second
day after OPEC+ surprised by keeping output levels steady.
Among companies in focus, Boeing eased 0.5 percent after the US suspended tariffs on Airbus imports in a bid
to resolve the US-EU dispute over airplane subsidies. Costco fell 0.5 percent after an earnings miss, though it
recovered from the day’s lows. On the positive side, Cisco rose 3.8 percent on an upgrade at JP Morgan. Fifth
Third, the regional bank, gained 3.4 percent on an upgrade at Goldman.
In economic data, nonfarm payrolls soared in February, surpassing Econoday's consensus for a 175,000 increase.
The January reading was revised sharply up to 166,000 from 49,000. The unemployment rate edged down to
6.2 percent, slightly below expectations of 6.3 percent, but still far exceeding the pre-pandemic rate of 3.5
percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped $2.44 to US$69.56
while spot gold eased 9 cents to US$1,698.32. The US dollar rose vs. most major currencies. The US Treasury
30-year bond yield was off 2 basis points at 2.28 percent while the 10-year note yield was up 1 basis point to
1.55 percent.
European markets
European markets weakened again Friday on rising market interest rates, with growth stocks lagging. The
Europe-wide STOXX 600 fell 0.8 percent, as did the French CAC, while the German DAX fell 1.0 percent, and the
FTSE-100 eased 0.3 percent.
News that France had tightened regional Covid restrictions weighed on risk appetite, which hit travel & leisure
stocks. On the positive side, banks rose with rising interest rates while energy stocks gained on rising oil prices.
Among sectors, outperforming were banks, oil & gas, food & beverage, while lagging were travel & leisure,
financial services, real estate, technology, industrials, and media.
Among companies in the news, VW gained 3.6 percent on news it will accelerate its electric vehicles. On the
downside, Corbion, the chemicals maker, fell 5.8 percent on an earnings miss. London Stock Exchange fell 14
percent on an analyst downgrade after it issued in-line quarterly results.
German manufacturers' orders rebounded in January but still only reversed a portion of December's steeper
revised decline. Following a 2.2 percent monthly fall at year-end, orders rose a larger than expected 1.4 percent.
Asia Pacific Markets
Weakness on Wall Street and disappointment over China’s modest 2021 growth target undercut Asian shares Friday, with Japan's Nikkei down 0.2 percent and Hong Kong’s Hang Seng off 0.5 percent. Australia’s All Ordinaries declined 0.8 percent and China’s Shanghai composite recovered to end flat. Fed Chair Jerome Powell’s statements Thursday dampened Asian markets after the Fed chief suggested the Fed was unlikely to intervene to rein in rising long-term interest rates, but follow-through selling was limited. Technology and other highly-valued growth stocks across Asia have lagged in response to rising long-term rates, which continued rising after the Powell comments. Markets reacted negatively to news Friday that China was setting a relatively low above-6 percent growth target for 2021, including a tighter fiscal stance. Real estate stocks were hit by the Chinese government’s warning against speculation in real estate. Later, Chinese technology stocks trimmed losses on news China would step up research and development. In Japan, value stocks beat growth, with mining shares faring best, followed by utilities, transportation equipment, and banks, while real estate and services lagged. Chipmakers sold off, with Tokyo Electron down 2.5 percent. On the plus side, Toshiba, the industrial conglomerate, rose 6.1 percent on news Mizuho and Blackrock had taken a stake. Growth/tech names led the selloff in Australian equities on rising bond yields. Liquified natural gas producers offset some of the declines elsewhere as they advanced with rising oil prices after OPEC+ left output unchanged.
read moreUS Markets
Equities ended a volatile session mixed with losses in energy and financials hitting value stocks, and growth
stocks mostly bouncing back as investors shifted out of cyclicals at month end. The Dow Jones industrial average
fell 1.5 percent, the S&P 500 slipped 0.5 percent and the NASDAQ composite gained 0.6 percent.
Financials, energy, and materials lagged the most as investors shifted back out of these into growth stocks.
Technology, which has been hit lately by valuation concerns, were back in favor as buyers appeared at the lows
and as bond yields fell back sharply from recent highs.
Energy was hit hardest, along with banks, as oil prices fell back and the yield curve flattened. Tobacco and
beverages dragged down consumer staples, and materials were hurt by a retreat in metals prices. Industrials
lagged, along with health care. Holding up well were consumer discretionary, including homebuilders. Tech led
the winners, with Apple, up 0.2 percent, back on top. Mega-caps helped communications services outperform.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 81 cents to US$66.13
while spot gold fell US$39.43 to US$1,732.51. The US dollar was mostly higher vs. major currencies. The US
Treasury 30-year bond yield dropped 16 basis points at 2.14 percent while the 10-year note yield fell 9 basis
points to 1.43 percent.
European markets
Equities slipped Friday as sectors that rallied lately on recovery hopes led the selloff, while bond yields fell back.
The Europe-wide STOXX 600 fell 1.6 percent, the German DAX fell 0.7 percent, the French CAC lost 1.4 percent,
and the FTSE 100 was down 2.5 percent.
Among sectors, energy and basic resources lagged, along with banks, industrials, food & beverage, personal &
household goods, and real estate. Holding up best though mostly weaker were autos & parts, chemicals, health
care, utilities, retail, and travel.
UK stocks lagged as a selloff in energy and commodity-linked sectors weighed on the market, with oil supermajor
Royal Dutch Shell down 3.3 percent and Anglo American, the miner, down 6.1 percent.
Among companies, Proximus, the Belgian telecom, fell 10.9 percent on disappointing quarterly results. On the
positive side, Compagnie Saint Gobain, the French materials giant, rose 3.1 percent on an earnings beat.
Asia Pacific Markets
Global equities extended their Wall Street selloff into the Asian hours Friday as investors appeared rattled by the speed of the rise in bond yields and growth stocks were hit hardest. China’s Shanghai Composite Index dropped 2.1 percent and the CSI300 index fell 2.4 percent on the rise in interest rates, with technology and other growth sectors hit hardest. These highly-valued sectors appeared most vulnerable to valuation concerns, though the selloff was across the board. Risk appetite was also hurt by worries over US-China relations as US Trade Representative Katherine Tai pressed China to deliver on its phase one trade commitments and appeared to signal continued support for steep tariffs on Chinese goods. Hong Kong tracked other markets lower, with the Hang Seng index down 3.6 percent, as tech and property sectors lagged. Japanese stocks saw similar losses with the Nikkei down 4 percent and the broader Topix off 3.2 percent. SoftBank was a notable loser, off 4.5 percent. The Korean KOSPI dropped 2.8 percent with tech heavyweights Samsung Electronics and SK Hynix off 3.3 percent and 4.7 percent, respectively. Australian stocks ended sharply lower with the All Ordinaries off 2.3 percent on the bond market rout, with the Reserve Bank of Australia intervening to buy Australian 3-year notes in a bid to steady the market. All sectors lost at least 1 percent. Worst off were tech, retail, health care, and materials. Iron ore miners lagged as BHP fell 2.6 percent.
read moreUS Markets
Cyclicals improved Friday on reopening hopes while growth stocks lagged amid concern over rising interest rates.
The Dow Jones industrial average ended flat, the S&P 500 eased 0.2 percent and the NASDAQ composite firmed
0.1 percent.
Among sectors, materials, financials, energy, and industrials outperformed while lagging were communications
services, consumer staples, health care, and utilities.
Interest rates continued their recent rise Friday and the yield curve steepened amid optimism over economic
recovery, with new impetus from Treasury Secretary Janet Yellen’s latest endorsement of big fiscal stimulus. The
Yellen comments gave investors another excuse to rotate out of growth stocks with high multiples, including the
FAANGs, into cheaper cyclicals expected to benefit most from the recovery.
Facebook was down 2.9 percent, Amazon down 2.4 percent, and Google down 0.8 percent. On the positive side,
Deere, the machinery maker, rallied 9.9 percent after topping earnings expectations. Caterpillar rose 5 percent,
and JP Morgan gained 1.7 percent on the steeper yield curve. Novovax was another winner, up 4.8 percent, on
news it would sell more vaccines to Covax, the global vaccine effort.
Markets were somewhat soothed by comment from Fed officials, including New York Fed President John Williams,
who downplayed concern over rising yields, and said the recovery has a long way to go.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 70 cents to US$62.68
while spot gold rose US$6.90 to US$1,781.40. The US dollar was mostly weaker vs. major currencies but gained
vs. the Swiss franc. The US Treasury 30-year bond yield was up 5 basis points at 2.13 percent while the 10-year
note yield was up 4 basis points at 1.34 percent.
European markets
Renewed recovery hopes and positive company earnings helped equities gain Friday despite angst over rising
bond yields. The Europe-wide STOXX 600 rose 0.5 percent, the German DAX and the French CAC both gained
0.8 percent, and the UK FTSE-100 firmed 0.1 percent.
Cyclicals improved on positive news on the impact of vaccines in cutting transmission rates, and better news on
vaccine distribution bolstered recovery hopes, along with moderately better economic data.
Among sectors, the best performers were banks and basic resources, while energy declined as oil prices retreated
as supply disruptions eased from Texas. Health care, media and real estate lagged the broader move.
Among companies reporting, Lundin Mining rose 8.3 percent, Moncler, the retailer, gained 6 percent, and
Hermes, the luxury clothier, rose 3.3 percent on earnings beats. On the downside, Renault declined 4.9 percent
despite in-line results. BW Offshore declined 3.5 percent on an earnings miss.
In economic news, German business activity continued to grow in February and at a slightly faster rate than in
January. However, while a 51.3 flash composite output index was up from January's final 50.8, it still showed
sluggish growth. Separately, Eurozone business activity struggled in February with the flash composite output
index at 48.1, a tick above the market consensus and up from January's final 47.8.
Separately, UK retailers saw demand collapse in January. Following a 0.4 percent monthly rise in December,
sales volumes slumped by 8.2 percent, their worst performance since last April during the first wave of the virus.
Annual growth dropped from 3.1 percent to minus 5.9 percent.
Asia Pacific Markets
Equities were mixed Friday with Japan and Australia off on weakness in banks and commodities, and on carryover from declines on Wall Street. Chinese markets improved, but concerns lingered over higher bond yields and the prospect of less supportive economic policy. Chinese equity indexes recovered initial losses in a mixed showing with energy and utilities rising while materials and industrials lagged. The Shanghai Composite Index gained 0.6 percent while the CSI300 index edged up 0.2 percent. Concerns lingered over the prospect of tighter central bank policy and worries that the Chinese government wants to tamp down market speculation. Hong Kong shares tracked Mainland Chinese markets slightly higher, with the Hang Seng up 0.2 percent, paced by gains in materials stocks. Tech stocks faced continued selling pressure on valuation concerns following their recent steep gains, with Tencent off 0.9 percent. South Korea recovered early declines to end higher with the KOSPI up 0.7 percent. Hyundai Motors gained 2.8 percent, and chipmaker Samsung Electronics firmed 0.6 percent to lead winners. On the downside, Japan’s Nikkei 225 dropped 0.7 percent and the Topix fell 0.7 percent as investors continued taking profits on recent strength. Fast Retailing, owner of Uniqlo stores, fell 2.4 percent amid concern the retail juggernaut is overdue for correction and is now over-weighted in the Nikkei 225. Australian shares retreated to give up the week’s gains, with the All Ordinaries index off 1.3 percent. Most sectors declined, led by energy as oil prices fell. Health care suffered from weakness in CSL, down 5.0 percent, after a downgrade at Credit Suisse. Materials declined on a selloff in iron prices. In economic news, Australian retail sales rose a solid 0.6 percent on the month in January after a 4.1 percent drop in December. Year-over-year sales were up a very sizable 10.7 percent, near the best pace of the Covid recovery.
read moreUS Markets
Equities ended flat to better Friday with value/cyclical stocks outperforming growth as earnings remained in
focus. The Dow Jones industrial average firmed 0.1 percent, and the S&P 500 and NASDAQ composite were both
up 0.5 percent.
Heading into the weekend, major indexes held near record highs as sentiment remained bolstered by declining
US Covid-19 case counts, ongoing rollout of vaccinations, fiscal stimulus hopes, and mostly strong earnings. On
the negative side, concerns continue over high valuations and speculative froth.
Best performing were materials, financials, industrials, health care, and energy. Lagging were real estate,
utilities, and consumer discretionary.
Among companies in focus, Illumina, the biotech, surged by 12 percent on an earnings beat. Paypal, the online
payments leader, rose 4.7 percent after an upbeat management presentation. On the downside, Disney fell 1.7
percent, despite a surprise earnings beat, to depress communications services. Survey Monkey dropped 13
percent, and Datadog, the cloud computing security company, fell 4 percent on disappointing guidance for both
firms.
In US economic data, a sharp 2.8-point drop pulled the consumer sentiment index to its lowest point since
August, a loss the report attributed to falling expectations among households with incomes below $75,000.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.79 to US$62.60,
while spot gold fell US$5.23 to US$1,821.16. The US dollar was mixed vs. major currencies. The US Treasury
30-year bond yield was up 7 basis points at 2.01 percent while the 10-year note yield was up 4 basis points at
1.21 percent.
European markets
Equities edged up Friday with support from earnings and a decent showing on Wall Street. The Europe-wide
STOXX 600 gained 0.6 percent, the German DAX firmed 0.1 percent, the French CAC also rose 0.6 percent, and
the UK FTSE-100 advanced 0.9 percent.
UK markets outperformed after UK GDP figures surprised to the upside. Weakness in Volkswagen held back
German markets. Italy’s FT-MIB rose 0.4 percent after Italy’s 5Stars party backed the incoming government of
former ECB President Mario Draghi.
On the negative side were concerns about new more highly transmissible forms of the coronavirus, and news
that Germany would reinstate border controls to control the pandemic. Investors also faced persistent worries
that equity valuations remain stretched.
Among sectors, health care, media, and technology outperformed. Lagging were retail, auto and parts, and real
estate.
Among companies in focus, Dutch bank ING Groep gained 6.7 percent on an earnings beat. Eutelsat
Communications rose 6.1 percent on a revenues beat and improved guidance. L'Oreal, the French cosmetics
firm, rose 3 percent after topping revenues expectations. On the downside, Danone, the French food company,
fell 1.1 percent after an activist investor raised management concerns. Automaker Volkswagen fell 1.7 percent
on disappointing January sales.
Asia Pacific Markets
Asian markets were mixed in light trading Friday with Australia lagging on weakness in commodities prices, while China, Korea, and Hong Kong were on holiday. Japan’s market was mixed as the market consolidated after four consecutive daily gains, with the Nikkei 225 down 0.1 percent and the broader Topix up 0.2 percent. Japanese advancers included Toyota Motors, up 3.5 percent, and Renesas Electronics, up 3.4 percent on earnings beats, and Nintendo, up 3.1 percent on optimism over its launch of new video games. On the downside, Tokyu Corp., the Japanese conglomerate, slipped 1.7 percent after cutting its guidance and dividend, while Toshiba declined 0.7 percent after announcing cost cuts. Meanwhile, a selloff in commodities and new Covid-19 lockdowns weakened Australian markets, with major indexes extending declines as the day progressed. The All Ordinaries index declined 0.6 percent, paced by miners BHP, down 1.7 percent, and Rio Tinto, down 1.2 percent. India’s NSE Nifty 50 index eased 0.1 percent while the S&P BSE Sensex was unchanged as a mixed showing by major stocks left the averages nearly flat. Software giants Infosys rose 1.3 percent and Wipro rose 1.1 percent on bargain-hunting, while ITC, the cigarettes and hotels conglomerate, fell 1 percent on disappointing quarterly results.
read moreUS Markets
Value/cyclicals kept major equity indexes in positive territory Friday to end another strong week as investors
focused on expectations for recovery and on corporate results. The Dow Jones industrial average rose 0.3
percent, the S&P 500 gained 0.4 percent, and NASDAQ 100 was up 0.6 percent.
Investors expect Congress will soon approve the $1.9 trillion spending package requested by the Biden
administration, and hope for more progress combating the pandemic. A somewhat disappointing US jobs report
only bolstered expectations for fiscal stimulus.
Among sectors, energy, materials, and industrials fared best while technology lagged, with Apple down 0.3
percent. Another rise in oil prices underpinned energy stocks, with Exxon Mobil up 3.4 percent.
Among companies reporting, Snap rose 9 percent, Columbia Sportswear rallied 15 percent, Estee Lauder rose
7.8 percent, and News Corp. rose 4.5 percent on positive results. On the downside, Gopro fell 19 percent, Cboe
Markets lost 5.4 percent, and Peloton fell 5.9 percent after missing market expectations.
In US economic data, nonfarm payrolls rose 49,000 in January, roughly as expected by Econoday's consensus
for a 50,000 increase, but below market expectations that centered on a figure closer to 100,000. The December
reading was revised sharply down, as the economy shed 227,000 jobs compared to the previous estimate of
140,000. The unemployment rate fell to 6.3 percent from 6.7 percent, below expectations, but remained well
above the February pre-pandemic level of 3.5 percent, while the participation rate edged down to 61.4 percent
from 61.5 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 59 cents to US$59.45
while spot gold rose US$16.22 to US$1,810.61. The US dollar fell against most major currencies. The US Treasury
30-year bond yield was up 4 basis points at 1.98 percent while the 10-year note yield rose 3 basis points to 1.17
percent.
European markets
Equities were narrowly mixed Friday with France and Italy outperforming and Germany and the UK lagging. The
Europe-wide STOXX 600 and the German DAX were both unchanged, the French CAC rose 0.9 percent, and the
UK FTSE-100 slipped 0.2 percent.
The Italian FTSE-MIB rose 0.8 percent as former ECB President Mario Draghi moved toward forming an
emergency government. German shares suffered from weaker-then-expected manufacturers’ orders data, while
UK markets were hurt by sterling’s strength, which hit exporters.
A mixed batch of earnings news led to mixed showing among sectors. Holding up best were travel & leisure,
retail, basic resources, banks, construction, autos, and technology. Lagging were telecom, industrials, utilities,
financial services, health care, media, and real estate.
French markets got a boost from Vinci, the builder, up 5.8 percent on strong quarterly results, along with Renault,
up 5.2 percent, and Societe Generale, up 3.1 percent.
Among other companies reporting, Beazley, the UK insurer, rose 12 percent on strong underwriting results.
French pharma Sanofi SA rose 2 percent on an earnings beat and improved guidance. Carlsberg, the brewer,
rose 3.5 percent on an earnings beat.
On the downside, Neste, the Finnish oil refiner, fell 6.4 percent on a revenues miss and weaker guidance. Alstom,
the French railway builder, fell 5.5 percent after backing out of a plan to build a new commuter line in Paris.
Skanska, the Swedish builder, fell 5 percent on a revenues miss.
In economic news, German manufacturers' orders saw their first decline in eight months in December. A 1.9
percent monthly fall was somewhat steeper than expected and following a sharper revised 2.7 percent gain in
November, reduced annual growth from 6.8 percent to 6.4 percent. The drop put orders 2.6 percent above their
pre-lockdown level in February.
Asia Pacific Markets
Risk-on sentiment propelled most markets higher Friday, with Japanese cyclicals leading after a rally on Wall Street spurred by stimulus hopes and expectations for recovery. Japan’s Nikkei 225 rose 1.5 percent and the broader Topix gained 1.4 percent after the US Congress appeared poised to approve a $1.9 trillion stimulus package. Automakers led the advance, with Mazda Motors rallying 19 percent after improving its guidance. Mitsubishi Motors was up 8 percent. Australia’s All Ordinaries index rose 1.1 percent with financials continuing their advance after supportive policy news from the Reserve Bank of Australia earlier in the week. Industrials and consumer discretionary shares also outperformed on hopes for an easing in restrictions with the rollout of vaccines in the first half. South Korea’s KOSPI gained 1.1 percent, with technology shares leading, including big chipmakers Samsung, up 1.2 percent, and SK Hynix, up 2.0 percent. Hong Kong’s Hang Seng index rose 0.6 percent as inflows from Mainland China remained strong. Chinese shares lagged, with the Shanghai composite off 0.3 percent as profit-taking set in after the market failed to extend initial gains following the rally on Wall Street. Sector performance was mixed with health care and financials strong while technology and materials were weak. Indian shares edged up again Friday to end a very strong week. The NSE Nifty 50 index and the S&P BSE Sensex both firmed 0.2 percent, led by State Bank of India, which surged 15 percent on an earnings beat.
read moreUS Markets
Disappointing earnings and de-risking hit equities Friday amid fallout from frenzied speculative trading in selected
US stocks. The Dow Jones industrial average lost 2.0 percent, the S&P 500 fell 1.9 percent and NASDAQ 100
was also down 2.0 percent.
Concerns continued over forced selling by hedge funds after they suffered big losses on short positions in
GameStop, AMC, and other stocks driven higher by retail traders. The turbulence around the short squeeze
played into concerns that valuations were already overextended. Liquidations at month-end added to the selling
pressure.
Most sectors weakened, with energy worst off on poor Chevron earnings. Technology shares lagged, as Apple
was down 3.7 percent for a second straight day of losses despite blowout quarterly results. Communications
services lagged, with Charter Communications down 7.2 percent after it reported slowing customer growth.
Industrials were hit by weakness in transports. Financials lagged on weakness in insurers and credit cards.
Among Dow stocks, Johnson & Johnson was off 3.4 percent amid disappointment over its vaccine trial results.
Chevron fell 4.3 percent, and 3M ended down 4.2 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 39 cents to US$55.88
while spot gold rose 90 cents to US$1,842.87. The US dollar was mixed against major currencies. The US
Treasury 30-year bond yield rose 4 basis points to 1.84 percent while the 10-year note rose 4 basis points to
1.09 percent. Short-end Treasury yields were flat to down in the flight from risk.
European markets
Risk-off sentiment swamped European equities Friday as markets reacted to a frenzied short squeeze in selected
US stocks driven by online retail traders. The Europe-wide STOXX 600 fell 1.9 percent, the German DAX lost 1.7
percent, the French CAC dropped 2.0 percent, and the UK FTSE-100 was down 1.8 percent.
Concerns about the slow rollout of Covid-19 vaccines in Europe added to the market’s sour mood. Markets also
reacted badly to news that Johnson & Johnson’s new vaccine showed an efficacy rate of 66 percent, lower than
existing vaccines, and the J&J vaccine showed varied effectiveness with different Covid strains.
Among sectors, worst off were retail, personal and household goods, and insurance. Holding up best were autos
and telecom. Among companies reporting, Daimler firmed 0.7 percent and Ericsson, the Swedish telecom, surged
by 7.6 percent on earnings beats. On the downside, H&M, the Swedish apparel retailer, fell 5 percent after a
profits warning.
Asia Pacific Markets
Fallout from US market turbulence and worries about tighter Chinese financial conditions hurt major Asia/Pacific markets Friday with Japanese and Korean markets hit hardest at month end. Japan’s Nikkei 225 gave back early gains to end down 1.9 percent while the broader Topix fell 1.6 percent. Investors took profits at month end and fretted about de-risking and forced selling by large investment funds caught in short squeezes by US retail investors. South Korea’s Kospi index fell 3 percent, in the biggest one-day drop in five months, as confidence was shaken by continued market turbulence. Hong Kong’s Hang Seng index fell 0.9 percent while China’s Shanghai composite lost 0.6 percent as investors focused on tighter financing conditions and rising short-term interest rates, which have spurred talk of policy tightening by the Chinese monetary authorities. Australian shares also ended down, paced by a selloff in energy and mining shares on weakness in commodities prices. The All Ordinaries fell 0.7 percent, with Rio Tinto down 3.0 percent, and BHP down 1.6 percent. In economic news, Japan's industrial production index fell 1.6 percent on the month in December, weakening from no change in November but in line with the consensus forecast for a drop of 1.5 percent. In year-on-year terms, the index fell 3.2 percent after dropping 3.4 percent previously. Separately, Japanese labor market data for December show ongoing weakness. The seasonally adjusted unemployment rate was unchanged at 2.9 percent, holding below the recent peak of 3.1 percent but still above pre-pandemic levels below 2.5 percent.
read moreUS Markets
Broad-based selling weakened equities Friday amid worries over fallout from the pandemic, and profit-taking
after the S&P 500 set a record high Thursday. The Dow Jones industrial average declined 0.6 percent, the S&P
500 eased 0.3 percent, and the NASDAQ 100 firmed 0.1 percent.
In a muted return of the pandemic trade, cyclicals lagged the most, led by energy, financials, and industrials,
while mega-cap tech shares and communication services held up relatively well.
Investors focused on the prospect of longer lockdowns in Europe, worries over new strains of the virus, and slow
rollout of vaccines. Some analysts warned that US stimulus efforts were likely to be limited by Republican
objections.
On the positive side, the day’s US economic reports came in strong, while fourth-quarter earnings have been
mostly better than expected, though reaction has been muted, which suggests the market has already priced in
a lot of good news.
Among winners, Apple was up 1.6 percent, and Microsoft edged up 0.4 percent, while Google gained 0.5 percent,
and Facebook rose 0.6 percent. Among decliners, IBM was off 10 percent after disappointing guidance. Intel fell
9.3 percent after delaying its guidance, and after releasing its earnings early due to a hack of its results.
In US economic data, existing home sales easily beat expectations, rising 0.7 percent in December to a 6.760
million annual rate that exceeds Econoday's highest estimate. Separately, purchasing managers data for January
showed much stronger-than-expected growth this month, led by manufacturing at 59.1 and including services
at 57.5, both multi-year highs.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 83 cents to US$55.19
while spot gold fell US$15.80 to US$1,854.72 The US dollar rose against most major currencies but ended flat
vs. the euro. The US Treasury 30-year bond yield declined 2 basis points to 1.85 percent while the 10-year note
fell 2 basis points to 1.08 percent.
European markets
Equities edged down Friday with concerns over rising infection numbers and economic fallout from lengthening
lockdowns in focus. The Europe-wide STOXX 600 fell 0.6 percent, the German DAX eased 0.2 percent, the French
CAC declined 0.6 percent, and the UK FTSE-100 eased 0.3 percent.
Weak European purchasing managers figures contributed to downbeat sentiment as they pointed to a faster
decline in overall private business activity in January. The flash Eurozone composite output index weighed in at
47.5, down from December's final 49.1, with weakness centered in services. UK PMI data for January showed
an even steeper contraction, reflecting the national lockdown.
Equity sector losses were nearly across the board, with travel & leisure, banks, and basic resources worst off,
and media and health care the only gainers.
Among companies reporting results, Volkswagen rose 2.2 percent after an earnings beat led by sales in China.
Siemens, the German industrial giant, gained 4.6 percent after topping earnings expectations. On the downside,
Kalray, the French chipmaker, fell 13 percent after an earnings miss. DBV, a French biotech, lost 8 percent on a
downgrade at Societe Generale.
Asia Pacific Markets
Major Asian markets closed lower Friday as concerns about rising Covid-19 cases in China continued to weigh on investor sentiment, though most finished the week with solid gains. Japan’s Nikkei and Topix indices closed down 0.4 percent and 0.2 percent on the day and rose 0.4 percent and was unchanged respectively on the week. The Shanghai Composite index and Australia’s All Ordinaries index both closed down 0.4 percent on the day and posted similar increases of 1.1 percent and 1.3 percent respectively on the week. Hong Kong’s Hang Seng index underperformed on the day, closing down 1.6 percent after shares of Chinese energy producer CNOOC plunged in response to its removal from major indices. The Hang Seng index nevertheless still advanced 1.1 percent on the week. Flash PMI survey data for Japan published Friday indicate renewed weakness in the domestic economy in January, with a recent surge in new Covid-19 cases weighing on activity and sentiment. The flash estimate for the headline manufacturing index for January is 49.7, down from the final estimate of 50.0, while the flash estimate for the service sector business activity index is 45.7, also down from the final estimate of 47.7 for December. Together these give a flash estimate for the composite output index for January of 46.7, down from the final estimate of 48.5 for December. Japanese inflation data showed weaker price pressures in December. The headline consumer price index declined 1.2 percent on the year in December after falling 0.9 percent in November. largely reflecting a bigger drop in food prices. Core CPI, which excludes fresh food prices, fell 1.0 percent on the year in December, down from a decline of 0.9 percent in November, while Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, fell 0.4 percent on the year after dropping 0.3 percent previously. Preliminary data show retail sales in Australia fell 4.2 percent on the month in December after increasing 7.1 percent in November, with year-on-year growth also weakening from 13.3 percent to 9.4 percent. Public health restrictions and border closures were tightened again in December after an outbreak of Covid-19 cases in New South Wales, with sales there falling 5.0 percent on the month. New Zealand's consumer prices rose 1.4 percent on the year in the three months to December, unchanged from the rate recorded in the three months to September, and below the mid-point of the Reserve Bank of New Zealand's target range of 1.0 percent to 3.0 percent. The index advanced 0.5 percent on the quarter after increasing 0.7 percent previously.
read moreUS Markets
Profit-taking centered in cyclicals weakened equities Friday while defensive sectors and growth stocks held up
best. The Dow Jones industrial index was off 0.6 percent, the S&P 500 fell 0.7 percent, and the NASDAQ 100
lost 0.9 percent.
Energy stocks lagged the most Friday, a partial reversal of their gains earlier in the week. Other cyclical laggards
included financials, industrials, consumer discretionary, and materials, which have soared since the fall as
positive vaccine news powered the recovery trade.
President-elect Biden’s unveiling of his economic stimulus plan and pledge to step up pandemic control efforts
mostly matched expectations. Investors remained focused on concerns about delays and shortages of vaccines
while Covid cases and deaths continue to accelerate. Separately, some investors expressed fears about the
prospect of higher corporate taxes, another market negative.
Several big banks kicked off earnings season with powerful beats but their stocks sold off briskly. Citigroup, for
example, fell 6.9 percent as investors evidently were disappointed that credit losses did not decline more, and
JP Morgan declined 1.8 percent despite a huge earnings beat as a large release of credit reserves lifted its
earnings.
Holding up best among sectors were utilities, real estate, health care, and communications services.
Among companies in focus, Exxon Mobil fell 4.8 percent on a report the Securities and Exchange Commission is
investigating the oil giant. Spotify, the audio streaming service, fell 6.6 percent on a downgrade at Citibank.
Wells Fargo was the day’s featured loser among financials as it fell 7.8 percent after reporting losses of $321
million on customer refunds.
In a day of mixed US economic reports, retail sales stood out with a 0.7 percent decline, the third consecutive
monthly drop, and near the bottom of Econoday's consensus range. Meanwhile, industrial production jumped
1.6 percent in December with manufacturing volumes (which make up the great bulk of the report) up 0.9
percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.48 to US$54.88
while spot gold declined US$22.12 to US$1,825.72. The US dollar rose against most major currencies. The US
Treasury 30-year bond yield dipped 2 basis points to 1.85 percent while the 10-year note fell 3 basis points to
1.10 percent.
European markets
Renewed virus worries hit equities Friday as cases continued to surge in Europe and China imposed new
lockdowns. The Europe-wide STOXX 600 dipped 1.0 percent, the German DAX fell 1.4 percent, the French CAC
lost 1.2 percent, and the UK FTSE-100 was down 1.0 percent.
Equity indexes appeared overextended to the upside after recent gains on the recovery trade, and susceptible
to corrective downward pressure headed into the weekend.
Among sectors, lagging were basic resources, oil & gas, autos & parts, banks, chemicals, technology, retail,
construction, industrials, and real estate. Holding up best were health care, food & beverage, media, insurance,
utilities, telecom, and travel & leisure.
Among companies in focus, Babcock International, the UK defense contractor, dropped 17 percent on a quarterly
miss and bleak guidance. Akasol, the German battery maker, fell 7.5 percent on a downgrade at Stifel. Scandic
Hotels fell 3.9 percent on disappointing quarterly results. Renault declined 3.8 percent on a downgrade at
Goldman Sachs.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with performance on the week also diverging across the region. Data published Friday provided limited guidance to trading, with Covid developments and US fiscal stimulus plans still the major focus for regional investors. Japan’s Nikkei and Topix indices underperformed Friday, closing down 0.6 percent and 0.9 percent respectively, but still finished the week with solid gains of 3.7 percent and 1.6 percent respectively. Hong Kong’s Hang Seng index closed up 0.3 percent on the day and also performed well on the week with a gain of 2.6 percent, despite the ongoing impact of sanctions by US authorities on firms deemed to be linked to the Chinese military. The Shanghai Composite index closed flat on the day and was also little changed on the week, down just 0.1 percent. Australia’s All Ordinaries index posted a small increase of 0.1 percent on the day and a fall of 0.5 percent on the week. Japan's index of tertiary industry activity contracted 0.7 percent on the month in November after advancing 1.0 percent in October, and fell 3.7 percent on the year after dropping 1.9 percent previously. Weaker output was recorded in six of the eleven industry components of the main index, including retail trade and wholesale trade. Previously published Markit PMI survey data for the Japanese services sector indicated that activity in the sector contracted in both November and December but at a much more moderate pace than during the initial impact of the Covid-19 pandemic. China's residential property prices advanced 3.8 percent on the year in December, based on a calculation using officially published data. This is down from an increase of 4.0 percent recorded in November using the same calculation and continues the trend of slowing growth in house prices seen since mid-2019.
read moreUS Markets
Hopes for heavy US fiscal stimulus under the incoming Biden administration gave equities a lift Friday as markets
looked past a weak US jobs report. The Dow Jones industrial index gained 0.2 percent, the S&P 500 rose 0.6
percent, and the NASDAQ 100 was up 1 percent.
Markets seesawed through the day on headlines suggesting more or less spending under Biden. Reports that the
Biden administration would introduce a $3 trillion spending package gave markets a boost in the morning but
equities retreated from the best levels amid concern that some Democrats would not support such an aggressive
stimulus effort.
Among sectors, best performers were technology, consumer discretionary, utilities, and real estate. Among tech
stocks, Apple was up 0.9 percent, and Microsoft gained 0.6 percent. Cyclicals, including materials, industrials,
and financials lagged, with materials hit by a drop in precious metals prices. Communications services were hurt
by relative weakness in Facebook, down 0.4 percent.
Among companies in the news, Union Pacific, the railroad, gained 2.8 percent after raising its guidance. Tesla
continued its remarkable run, rising 7.8 percent, with a new tailwind from expectations for subsidies for electric
vehicles with Democratic control of Congress and the White House.
In US economic news, nonfarm payrolls fell 140,000 in December, ending a seven-month streak of gains. After
three months of declines, the unemployment rate remained steady at 6.7 percent, with the participation rate
stabilizing at 61.5 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.72 to US$56.23
while spot gold plunged US$67.78 to US$1,846.50. The US dollar rose against major currencies. The US Treasury
30-year bond yield gained 2 basis points to 1.87 percent while the 10-year note rose 3 basis points to 1.12
percent.
European markets
Positive expectations for 2021 linked to vaccine hopes and market-supportive policies from the incoming Biden
administration underpinned equities again Friday. The Europe-wide STOXX 600 rose 0.5 percent, the German
DAX gained 0.6 percent, the French CAC rose 0.7 percent, and the UK FTSE-100 edged up 0.2 percent.
On the week, the conclusion of the Brexit process took away a huge overhang for markets, and UK markets in
particular outperformed on the week. On the negative side, Covid-19 concerns remained in focus as case
numbers remained high and lockdowns continued.
Among sectors, technology, travel & leisure, and utilities were the best performers while lagging were banks,
telecom and autos.
Among companies in the news, Sodexo, the French food services company, rose 10 percent after raising its
guidance. Marston’s, the UK pub company, rose 7 percent on news of a joint venture with Carlsberg, the brewer.
On the downside, Credit Suisse fell 3.7 percent after issuing an earnings warning. Marks & Spencer, the UK
retailer, fell 2.3 percent after a disappointing trading update.
Asia Pacific Markets
Most major Asian markets closed higher Friday, with markets across the region also recording strong gains on the week as Wall Street rose to new highs. Regional sentiment was supported by indications that Covid-19 vaccines will be effective against new strains of the disease and hopes that US political turmoil will soon abate. Japan’s government declared late Thursday a state of emergency for Tokyo and surrounding areas for the next month to in an attempt to curb a recent spike in Covid-19 cases, but this decision was already well anticipated by markets. The South China Morning Post reported Friday that Hong Kong authorities have released all but one of the 53 opposition politicians and activists arrested earlier in the week under national security laws. Japan’s Nikkei and Topix indices rose 2.4 and 1.6 percent respectively on the day and 2.5 percent and 2.4 percent respectively on the week, while Australia’s All Ordinaries index advanced 0.6 percent on the day and 2.5 percent on the week. Hong Kong’s Hang Seng index also posted solid gains, up 1.2 percent on the day and 2.4 percent on the week, with the gain Friday coming despite further falls in shares of Chinese telecom firms that are being delisted on the New York Stock Exchange. The Shanghai Composite index underperformed on the day, closing down 0.2 percent, but finished the week up 2.8 percent. Household spending in Japan fell 1.8 percent on the month in November after increasing 2.1 percent in October, with year-on-year growth moderating from 1.9 percent to 1.1 percent. Weaker year-on-year growth in November was largely driven by the impact of an increase in consumption tax rates in October 2019 which resulted in a sharp decline in spending that month and an associated spike in year-on-year growth 12 months later. Retail sales data published last week also showed a month-on-month decline and weaker year-on-year growth in November. Rising 4.0 percent on the day and 9.7 percent on the week for its best weekly gain in 13 years, South Korea’s Kospi got a a lift from strong earnings at Samsung and buying in Hyundai on reports it's in talks with Apple to work together on electric cars and batteries.
read moreUS Markets
Equities edged up and ended at their best levels of the day Thursday, with defensive sectors faring best in mostly
convictionless trading. The Dow Jones industrial index rose 0.7 percent, the S&P 500 gained 0.6 percent, and
the NASDAQ 100 firmed 0.1 percent.
Among sectors, leading were defensives -- utilities and real estate -- plus financials, health care, and
communications services, with Netflix up 3.1 percent and Google up 0.7 percent as they rebounded from declines
on Wednesday. Lagging were energy, consumer discretionary, technology.
Among companies in focus, Tribune Publishing gained 7 percent on news it would be acquired by a shareholder.
ELF Beauty, the cosmetics brand, rose 7.3 percent, and Celsius Holdings, the beverage company, gained 13
percent on news they both would join the S&P SmallCap 600 index.
On the downside, Fubo TV fell 16 percent on an analyst downgrade. WPX Energy, the natural gas driller, fell 2.3
percent, and Devon Energy fell 2 percent on news they would merge.
In US economic news, jobless claims decreased by 19,000 to 787,000 in the week ended December 26, below
Econoday's consensus forecast of 830,000. It is unclear whether the Christmas holiday delayed applications to
the following week. The unexpected decline was not enough to bring down the four-week moving average, which
rose 17,750 to 836,750, its fourth consecutive increase and the highest since the October 3 week.
European markets
Tightening UK lockdowns and expectations for an extension to lockdowns in Germany weighed on equities
Thursday. The Europe-wide STOXX 600 eased 0.3 percent, the French CAC fell 0.9 percent, and the UK FTSE100 was off 1.5 percent. Germany was on holiday.
On the positive side for markets: the rollout of new vaccines in the UK. Additionally, news that the EU and China
had agreed on a trade pact suggested new export opportunities for EU producers.
Among sectors, lagging most were travel and leisure plus food and beverage stocks underperformed. Holding up
best were financial services, retail, and health care
Among companies in focus, Airbus fell 1.2 percent after US trade officials raised tariffs on several EU exports,
including aircraft and wine.
Asia Pacific Markets
The Shanghai Composite index closed up 1.7 percent Thursday, with sentiment supported by an investment deal between China and the EU, and PMI survey data showing Chinese economic conditions remain strong. The CFLP manufacturing PMI index fell from 52.1 in November to 51.9 in December, above the consensus forecast of 51.5 and indicating that the sector is continuing to grow at a pace stronger than that seen before the Covid-19 pandemic. The non-manufacturing PMI index fell from 56.4 to 55.7, also indicating that the sector is expanding at a pace well above the average seen in recent years. Hong Kong’s Hang Seng index advanced 0.3 percent, while Australia’s All Ordinaries index fell 1.3 percent, with trading closing early in both markets ahead of new year holidays. Japanese markets were closed Thursday.
read moreUS Markets
Value/cyclicals rose Monday on recovery hopes spurred by the weekend news that President Trump would sign
the US fiscal stimulus package after all, while mega-cap growth stocks got a lift on year-end flows. The Dow
Jones industrial index rose 0.7 percent, the S&P 500 gained 0.9 percent, and the NASDAQ 100 was up 0.7
percent.
Among sectors, leading were information technology, consumer discretionary, and communications services,
led by gains in Apple, up 3.6 percent, Facebook, up 3.6 percent, Alphabet, up 2.1 percent, and Amazon, up 3.5
percent. Other winners included Disney, up 3.0 percent, and Visa, up 1.9 percent. Lagging were energy and
materials.
Among decliners was Salesforce, the software company, down 0.5 percent. Weibo, the social media giant, fell
13.5 percent despite earnings and revenues beats as markets disliked its slowing user growth and weaker
guidance.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 37 cents to US$50.94
while spot gold fell US$6.48 to US$1,872.97. The US dollar was mostly higher against most major currencies.
The US Treasury 30-year bond yield was unchanged at 1.66 percent while the 10-year note fell 1 basis point to
0.92 percent.
European markets
Equities rose Monday after President Trump approved a US fiscal stimulus package and progress on rolling out
vaccines in Europe. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX rose 1.5 percent and the
French CAC gained 1.2 percent. UK markets were closed for a public holiday.
Markets reacted favorably to the start of a Europe-wide vaccination program over the weekend in addition to
news that Trump would go along with US relief package. Both bolstered expectations for a recovery in 2021.
Among sectors, best were utilities, construction, chemicals, oil & gas, health care. Underperforming were
banks, basic resources, media, real estate, telecom, and autos.
Among companies in focus, Delivery Hero, the German food delivery company, jumped 9.3 percent after news
it will acquire another delivery service. Lufthansa rose 6 percent after news it will not sell Austrian Airlines.
Unicaja Banco, the Spanish insurer, rose 2.6 percent on word it will complete a merger with Liberbank, a
Spanish financial services firm.
Asia Pacific Markets
Major Asian markets closed higher Monday, with regional sentiment supported by President Trump’s decision to approve fiscal stimulus and the Brexit agreement. Japan’s Nikkei and Topix indices closed up 0.7 percent and 0.5 percent, while the Shanghai Composite index was flat on the day. Hong Kong’s Hang Seng index underperformed, dropping 0.3 percent, with shares of major online retailer Alibaba dropping sharply after Chinese authorities imposed compliance measures on its affiliate, finance technology firm Ant Group. Markets in Australia were closed for a public holiday. Japan's industrial production index was flat on the month in November, slowing from growth of 4.0 percent in October and well below expectations for an increase of 2.1 percent. Output of production machinery and devices as well as general-purpose and business-oriented machinery declined, offset only in part by increases for vehicles, electrical machinery, and information and communication electronics equipment. Officials expect industrial output to fall 1.1 percent in December and then rebound with strong growth of 7.1 percent in January. Chinese industrial profits rose 15.5 percent in year-on-year terms in November, slowing from an increase of 28.2 percent in October, with year-to-date growth improving from 0.7 percent to 2.4 percent. This is broadly in line with other data suggesting that the Chinese manufacturing sector is continuing to recover, with both the PMI manufacturing survey and official industrial production data showing the sector expanded in November. Hong Kong's merchandise trade deficit narrowed from HK$36.8 billion in October to HK$25.6 billion in November. Exports rose 5.6 percent on the year after falling 1.1 percent previously, while imports rose 5.1 percent after increasing 0.6 percent previously. Exports to both mainland China and the US rose on the year after declines in October, with exports to Japan and German also up on the year. Officials continue to expect the recovery of the Chinese economy to support Hong Kong's exports in the near term, but cite Covid-19 developments, Brexit uncertainty, and US-China tensions as potential risks.
read moreUS Markets
Major equities indexes ended flat to weaker Friday in mixed trading linked to portfolio rebalancing and options
expiry, along with uncertainty over an expected US fiscal stimulus package. The Dow Jones industrial index and
the S&P 500 both eased 0.4 percent, and the NASDAQ 100 declined 0.1 percent.
Lack of a conclusion in US fiscal talks and the prospect of a US government shutdown, plus apparent stalemate
in Brexit talks added to market concerns. On the virus front, investors remain focused on the rollout of the
vaccines but they also faced frightening pandemic numbers and wider lockdowns.
The scheduled addition of Tesla to the S&P 500 after Friday’s close hurt S&P stocks, along with Friday’s quadruple
witching options expiration. Sectors were mixed, with energy the weakest group despite an uptick in oil prices.
Among other sectors, REITs were hit by losses in retail properties. Banks lagged, along with consumer
discretionary, and health care. On the positive side, communications services beat the market, along with
industrials, technology, and consumer staples. Materials fared best, paced by Dupont, up 2.7 percent, after it
spun off its nutrition business.
Among S&P losers, Vornado Realty was off 4.4 percent and Cigna, the insurer, declined 2.7 percent after an
analyst downgrade. Weakness in Apple, down 1.6 percent, weighed, along with Intel, down 6.3 percent, and
Nike, down 2.3 percent ahead of its earnings report due after the close.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 59 cents to US$52.12
while spot gold declined US$2.78 to US$1,880.86. The US dollar rose against most major currencies but declined
vs. the Swiss franc. The US Treasury 30-year bond yield rose 1 basis point to 1.69 percent while the 10-year
note rose 1 basis point to 0.95 percent.
European markets
Equities ended flat to lower Friday as Brexit talks and US fiscal stimulus remained in doubt while Europe faced
tightening anti-Covid restrictions headed into year end. The Europe-wide STOXX 600 eased 0.4 percent, the
German DAX was off 0.3 percent, the French CAC slipped 0.4 percent, and the UK FTSE-100 was also off 0.3
percent.
Brexit talks dragged on with UK and EU officials warning the two sides remain deadlocked, largely over the
fisheries issue. In Washington, D.C., talks on Covid-19 relief package headed into the weekend with no certainty
on the outcome.
Among sectors, weakest performers were real estate, retail, travel & leisure, banks, financial services, insurance,
and basic resources. Holding up best were industrials, telecom, health care, autos, and chemicals.
Travel & leisure shares were depressed by a decline in IAG, owner of British Airways, down 2.1 percent after a
report that it will buy Air Europa, the Spanish carrier. Norwegian Air dropped 23 percent after news it will issue
more shares as its restructuring continues.
On the positive side, Zehnder, the Swiss heating and ventilation manufacturer, rose 6 percent on improved
guidance. Photocure, the Norwegian pharma, rose 10 percent after an analyst upgrade.
Asia Pacific Markets
Most major Asian markets closed lower on the day Friday but finished the week higher, with global Covid-19 developments still the main focus for regional investors. Japan’s Nikkei and Topix indices closed down 0.2 percent and flat on the day respectively and advanced 0.4 percent and 0.6 percent on the week respectively. The Shanghai Composite index closed down 0.3 percent on the day and outperformed on the week with an increase of 1.4 percent, while Hong Kong’s Hang Seng index fell 0.7 percent on the day and was flat on the week. Australia’s All Ordinaries index fell 1.1 percent on the day, eroding its gain on the week to 0.5 percent. The Bank of Japan left policy settings on hold at the conclusion of its December meeting, keeping its main policy rate at minus 0.1 percent. Officials have also extended the operation of a special lending facility established as part of its response to the Covid-19 pandemic and authorization for purchases of a broader range of assets as part of their asset purchase program. Officials continue to expect policy rates to stay at or below current levels for the foreseeable future but have reiterated that they will not hesitate to lower them further if considered necessary. Japanese inflation data released Friday showed price pressures continued to weaken in November, with both headline and underlying measures of inflation moving further into negative territory. The headline consumer price index fell 0.9 percent on the year in November after dropping 0.4 percent in October, while core CPI, which excludes fresh food prices, fell 0.9 percent in after dropping 0.7 percent previously. New Zealand's merchandise trade balance shifted from a revised deficit of NZ$472 million in October to a surplus of NZ$252 million in November. Exports rose 4.3 percent on the month in November while imports fell 2.9 percent.
read moreUS Markets
Equities recovered from their worst levels to end flat to slightly lower Friday as buyers emerged on the morning
dip. The Dow Jones industrial index rose 0.2 percent, the S&P 500 was off 0.1 percent, and the NASDAQ 100
was off 0.2 percent.
Among sectors, financials and energy fared worst while holding up best were industrials and consumer staples.
Communications services outperformed with Disney up 14 percent on very positive results in its streaming
entertainment business.
Sentiment remained somewhat downbeat on perceptions that the market remains overextended to the upside.
Lack of headway on US fiscal stimulus talks gave sellers an excuse in the morning.
Vaccine news was mixed as Sanofi and GlaxoSmithKline delayed rollout of their vaccine candidate while Pfizer
and BioNTech received US approval to proceed with their vaccine. Concerns about the impact of a no-deal Brexit
weighed on market sentiment after EU and UK officials warned that last-minute talks were stalemated.
In US data, producer prices rose 0.1 percent in November, in line with Econoday's consensus forecast.
Separately, consumer sentiment rebounded in December from a November slump but remains considerably
lower than where it was early in the year.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 31 cents to US$50.02
while spot gold rose US$3.50 to US$1,839.00. The US dollar was mixed against major currencies. The US
Treasury 30-year bond yield fell 1 basis points to 1.62 percent while the 10-year note fell 2 basis points to 0.89
percent.
European markets
Worries about Brexit and rising Covid-19 cases hit equities Friday. The Europe-wide STOXX 600 declined 0.8
percent, the German DAX lost 1.4 percent, the French CAC fell 0.8 percent, and the UK FTSE-100 was also off
0.8 percent.
Brexit negotiations were facing a Sunday deadline and comments from UK and EU officials suggested the talks
remained deadlocked, which suggested rising chances for a no-deal Brexit. Meanwhile, EU officials appeared set
to move ahead with a European fiscal stimulus package but US efforts to agree on a new virus relief deal faltered.
In virus news, rising cases in France and German raised the prospect of extended restrictions.
Among sectors, banks suffered from concerns regulators will extend bans on dividend payments. Other cyclicals
suffered, including autos, oil & gas, and retail.
Health care stocks were among the day’s worst performers, with French pharma Sanofi off 4 percent after its
vaccine candidate showed a disappointing immune response. Among other companies in focus, Rolls Royce fell
8 percent after reporting its recovery from the pandemic downturn had stalled. Telecom stocks suffered as
Ericsson fell 4 percent as it filed suit against Samsung over royalty payments and a patent dispute.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with performance also diverging on the week. The regional data calendar was light Friday, keeping the focus on Brexit and US fiscal negotiations and the rollout of Covid19 vaccines. The Shanghai Composite index underperformed on both the day and on the week with declines of 0.8 percent and 2.8 percent respectively, while Hong Kong’s Hang Seng index closed up 0.4 percent on the day and fell 1.2 percent on the week. Japan’s Nikkei index fell 0.4 percent on the day and on the week, while the Topix index rose 0.3 percent on the day and on the week. Australia’s All Ordinaries index closed down 0.4 percent on the day and advanced 0.3 percent on the week. India's index of industrial production rose 3.6 percent on the year in October after increasing 0.2 percent in September. Manufacturing output rose 3.5 percent on the year after a decline of 0.6 percent previously. More up-to-date PMI survey data indicate that conditions in the Indian manufacturing sector have improved significantly in the last few months, with the survey's headline index showing a strong increase in output in both October and November.
read moreUS Markets
Expectations for Covid-19 vaccines and US fiscal stimulus kept equities firm Friday, with energy stocks leading
value stocks higher, and weakness in mega-caps restraining the gains. The Dow Jones industrial index rose 0.8
percent, the S&P 500 gained 0.9 percent, and the NASDAQ 100 rose 0.7 percent.
Investor sentiment remained underpinned by expectations for multiple vaccines to start rolling out this month.
Markets anticipate a fiscal package to bolster the flagging recovery, and saw the weak US jobs report as likely
to spur Republicans and Democrats to reach a long-delayed compromise agreement.
Among sectors, energy stocks outperformed the most as oil prices remained buoyant in the wake of the OPEC+
output pact, and on hopes for an end to the pandemic and wider economic recovery. Exploration and production
stocks led the winners, with Halliburton up 7.8 percent.
Other winners included financials, industrials, and real estate. Communication services and consumer
discretionary lagged, and mega-caps were distinctly weaker, with Apple down 0.6 percent, Facebook down 0.8
percent, and Amazon down 0.8 percent. Among Dow stocks, Intel gained 2.0 percent while Caterpillar was up
4.3 percent. Boeing fell 1.9 percent as it gave up some recent gains.
Among companies in focus, Genesco, the footwear retailer, rose 4.4 percent, and Docusign, the electronic
agreements company, gained 5.3 on big earnings beats.
In US economic news, nonfarm payrolls rose 245,000 in November which is less than half of Econoday's
consensus for 500,000 though better, but not by much, than the low estimate of 200,000. Weakness is broad
with government showing the most, falling 99,000 as federal payrolls fell 86,000 mostly due to the loss of
temporary Census workers.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 42 cents to US$49.01
while spot gold fell US$5.75 to US$1,836.20. The US dollar was mostly better against major currencies, though
weaker vs. Canadian dollar. The US Treasury 30-year bond yield rose 8 basis points to 1.74 percent while the
10-year note rose 6 basis points to 0.97 percent.
European markets
Ongoing expectations for rollout of Covid-19 vaccines and more fiscal stimulus kept equities firm Friday. The
Europe-wide STOXX 600 gained 0.6, the German DAX rose 0.4 percent, the French CAC rose 0.6 percent, and
the UK FTSE-100 was up 0.9 percent.
Markets saw a weak US employment report bolstering prospects for US fiscal support. In general, investors see
more aggressive efforts to spur the economy under the incoming Biden administration.
In Brexit news, negotiations appear stalled, with disputes over fishing rights and possible French objections to a
deal attracting attention. Oil & gas was the best-performing sector, with oil prices continuing to rise after this
week’s OPEC+ production pact. BP, up 3.9 percent, and Royal Dutch Shell, up 3.4 percent, were among the
day’s leaders.
Other sectors beating the market included travel & leisure, basic resources, technology, banks, health care, food
& beverage, and telecom. Lagging were retail, financial services, utilities, chemicals, personal & household goods,
and industrials.
Among companies in focus, Dassault Aviation rose 5.3 percent on news of a large aircraft order. Glencore, the
UK/Swiss miner, rose 1.9 percent on a management change. On the downside, Berkeley Group, the UK property
developer, fell 1.8 percent on an earnings miss.
Asia Pacific Markets
Major Asian markets were little changed on the day Friday, with moves on the week mixed but generally moderate. Japan’s Nikkei and Topix indices fell 0.2 percent and was flat on the day respectively, and advanced 0.4 percent and fell 0.6 percent respectively on the week. Australia’s All Ordinaries index rose 0.3 percent on the day and 0.7 percent on the week. The Shanghai Composite index rose 0.1 percent on the day and outperformed on the week with an increase of 1.1 percent, while Hong Kong’s Hang Seng index rose 0.4 percent on the day and fell 0.3 percent on the week. Shares of major Chinese firms, including the chipmaker SMIC and the energy producer CNOOC, fell sharply Friday after the US Department of Defense designated them as controlled by the Chinese military, subjecting them to various export restrictions. The Reserve Bank of India's Monetary Policy Committee has left the benchmark repurchase rate unchanged at 4.00 percent at its policy review held Friday. Officials noted that the Indian economy's recovery from the initial impact of the Covid-19 pandemic is "gaining traction” but also expressed concerns that headline inflation has moved further above RBI's target range of 2.0 percent to 6.0 percent since their last policy meeting. Officials attribute this recent strength in inflation to a range of factors, including supply chain disruptions, excessive margins, and indirect taxes and argue that further efforts are required to mitigate these factors. In the meantime, however, officials concluded that high inflation constrains their ability to cut policy rates further, but also affirmed that policy will be kept accommodative in coming months. Retail sales in Australia rose 1.4 percent on the month in October after falling 1.1 percent in September, with year-on-year growth also picking up from 5.6 percent to 7.1 percent, broadly in line with preliminary estimates. Public health restrictions and border closures have continued to weigh on consumer spending but have eased in recent weeks and are set to be eased further. The rebound in retail sales in October was largely driven by strong growth in Victoria, with spending there up 5.1 percent after authorities lifted a tight lockdown late September. Sales growth was mixed in other states and territories.
read moreUS Markets
Growth stocks helped equities edge up Friday in defensive trading, as cyclicals gave back some recent gains.
The Dow Jones industrial index firmed 0.1 percent, the S&P 500 was up 0.2 percent, and the NASDAQ 100
outperformed with a gain of 0.9 percent.
On a quiet-holiday-thinned day, technology, information services, and health care stocks outperformed. Negative
US Covid-19 headlines helped keep cyclicals in check, with energy and financials lagging the most. Driller
National Oilwell Varco declined 3.3 percent, and ExxonMobil was off 1.5 percent as energy stocks corrected
lower. Regional bank stocks suffered, with Comerica off 3.4 percent, and Keycorp off 1.1 percent.
Among companies in the news, Moderna, the US vaccine maker, jumped 16 percent as it appeared to benefit
from its strong growth prospects and concerns over the Covid-19 vaccine clinical trials for its rival, AstraZeneca,
which reported dosage errors in its vaccine trial. Other growth stocks advanced, with Tesla up 2.1 percent,
Google up 1.3 percent, and Facebook up 0.8 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 48 cents to US$48.18
while spot gold fell US$18.73 to US$1,787.79. The US dollar fell against most major currencies but gained vs.
sterling. The US Treasury 30-year bond yield fell 5 basis points to 1.58 percent while the 10-year note fell 4
basis points to 0.85 percent.
European markets
Equities edged up Friday in quiet trading to end the week higher with hopes for slowing in Covid-19 cases in
Europe in focus. The Europe-wide STOXX 600 and the German DAX both rose 0.4 percent, the French CAC gained
0.6 percent, and the UK FTSE-100 edged up 0.1 percent.
Reports suggesting some stabilizing in European infection growth helped underpin market sentiment. On the
negative side, there was mixed news on the vaccine front, with AstraZeneca expected to conduct another trial
of its Covid-19 vaccine after questions were raised about a dosing error in its last round of trials.
Sector performance was mixed, with energy, chemicals, and technology shares outperforming and personal &
household goods, real estate, and insurance lagging.
In economic news, the European Commission's measure of economic sentiment (ESI) lost fresh ground in
November. However, at 87.6, down from an upwardly revised 91.1 in October, the headline index was on the
strong side of expectations. This was the first decline since April and made for a 3-month low.
Among companies in the news, Banco Bilbao Vizcaya rose 3.8 percent after it broke off merger talks with Banco
Sabadell, which dropped 18 percent on the news. Vestas Wind Systems, the Danish wind turbine leader, rose
3.9 percent on news of a big order from Australia. On the downside, Tungsten, the UK IT services company, fell
8.9 percent on a profits warning.
Asia Pacific Markets
Most major Asian markets closed Friday higher on the day, with broad-based gains on the week across the region. Australia’s All Ordinaries index underperformed, closing down 0.5 percent on the day and rising 1.1 percent on the week, with sentiment impacted by concerns about ongoing political tensions between Australia and China after Chinese authorities announced severe tariffs on Australian wine exports. The Shanghai Composite index outperformed on the day with an increase of 1.1 percent after the release of strong industrial profits, taking the gain on the week to 0.9 percent. Japan’s Nikkei and Topix indices rose 0.4 percent and 0.5 percent respectively on the day and gained 4.4 percent and 3.4 percent on the week, Hong Kong’s Hang Seng index rose 0.4 percent on the day and 1.8 percent on the week. Chinese industrial profits rose 28.2 percent in year-on-year terms in October, accelerating from an increase of 10.1 percent in September, with year-to-date growth improving from a drop of 2.4 percent previously to an increase of 0.7 percent. This is broadly in line with other data suggesting that the Chinese manufacturing sector is continuing to recover, with both the PMI manufacturing survey and official industrial production data showing the sector expanded in October. India's gross domestic product fell 7.5 percent on the year in the three months to September, picking up from a drop of 23.9 percent in the three months to June and broadly in line with monthly data showing economic conditions have improved after the initial impact of the Covid-19 pandemic. After cutting policy rates by a cumulative 115 basis points earlier in the year, the Reserve Bank of India left the benchmark repurchase rate unchanged at 4.00 percent at its most recent policy review held early October. Officials expressed confidence that growth is poised to resume its pre-pandemic trajectory and also argued that recent increases in Indian inflation mainly reflected temporary factors. The RBI’s next policy meeting is scheduled to take place next week.
read moreUS Markets
Pandemic worries hurt risk appetite Friday as investors eyed local shutdowns and the prospect of layoffs as state
and local governments confront a budget crunch. The Dow Jones industrial index slipped 0.8 percent, the S&P
500 eased 0.7 percent, and the NASDAQ 100 was off 0.4 percent.
Anxiety rose after the Centers for Disease Control warned against Thanksgiving travel. Losses were across the
board, with utilities, the defensive play, holding up best. Airlines and building materials led industrials lower on
the virus effect. A selloff in credit card companies and banks depressed financials. Energy was off, with oil
servicers leading the way down. Weakness in mega-caps hurt communications services, with Facebook off 1.2
percent and Google down 1.3 percent.
Consumer staples sagged on declines in tobacco and food stocks. Entertainment held up best in communications
services, with Netflix, the stay-at-home play, up 0.8 percent. Health care held up relatively well, with vaccine
makers Pfizer, up 1.3 percent, and Moderna up 5.2 percent.
Among companies in focus, Zoom Video, another stay-at-home play, rose 6.1 percent, and Williams Sonoma,
the home goods retailer, was up 6.4 percent, after a huge earnings beat.
Dow heavyweight Boeing declined 2.9 percent as it corrected some of its recent gains. Norwegian Cruise Line
dropped 4.9 percent on the virus effect. Intuit, the software company, declined 3.8 percent despite strong
quarterly results.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 29 cents to US$44.06
while spot gold rose US$5.42 to US$1872.27. The US dollar was mixed against major currencies. The US Treasury
30-year bond yield fell 2 basis points to 1.53 percent while the 10-year note declined 1 basis point to 0.83
percent.
European markets
Rising commodities prices supported equities Friday, with mining and oil & gas shares leading. The Europe-wide
STOXX 600 rose 0.5 percent, the German DAX firmed 0.4 percent, the French CAC gained 0.4 percent, and the
UK FTSE-100 was up 0.3 percent.
More good news on Covid-19 vaccine trials bolstered oil prices, with Royal Dutch Shell up 1.5 percent and BP up
0.5 percent Miner Glencore rose 2.4 percent and Rio Tinto gained 1.2 percent. Concerns about surging Covid-19
cases and the prospect of longer European lockdowns limited market gains.
Market sentiment was also hurt by reports suggesting EU-UK Brexit talks remain deadlocked, while EU leaders
are struggling to break their impasse over a proposed European recovery package.
Lagging sectors were real estate, food & beverage, and media. Among companies in focus, Sage Group, the UK
software company, fell 13 percent after warning new investments will cut its operating profits next year. Smurfit
Kappa, the packaging company, declined 2.3 percent as it announced a new placement of shares.
Asia Pacific Markets
Major Asian markets posted mixed results Friday but closed the week higher as confidence about the prospects for a Covid-19 vaccine outweighed concerns about the recent spike in cases around the world. The Shanghai Composite index and Hong Kong’s Hang Seng index both rose 0.4 percent on the day and advanced 2.0 percent and 1.1 percent respectively on the week, while Australia’s All Ordinaries index was flat on the day and advanced 2.0 percent on the week. Japan’s Nikkei and Topix indices underperformed on the day, closing down 0.4 percent and up 0.1 percent respectively, closing the week up 0.6 percent and 1.4 percent respectively, with currency gains weighing on the shares of major exporters. Flash PMI survey data for Japan published Friday indicate that the ongoing impact of the Covid-19 pandemic on the domestic economy has remained substantial during November, with aggregate activity contracting at a pace greater than that recorded in October. The flash estimate for the headline manufacturing index for November is 48.3, down from the final estimate of 48.7 for October, while the flash estimate for the service sector business activity index is 46.7, also down from the final estimate of 47.7 previously. Together these give a flash estimate for the composite output index for November of 47.0, down from the final estimate of 48.0 for October. Japanese inflation data showed price pressures weakened in October, with price changes moderating across most major categories of spending. The headline consumer price index fell 0.4 percent on the year in October after no change in September, largely reflecting weaker growth in food prices and transportation and communication prices. Core CPI, which excludes fresh food prices, fell 0.7 percent in October after dropping 0.3 percent in September, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, declined 0.2 percent on the year after no change previously. Hong Kong's headline consumer price index fell 0.2 percent on the year in October after dropping 2.2 percent in September. Stronger growth in the headline index in October largely reflects the impact of measures introduced in September that were aimed at providing support to households to offset the impact of the Covid-19 pandemic, particularly public housing rental waivers. Excluding the impact of various government measures, Hong Kong's underlying inflation rate moderated from 0.5 percent in September to 0.4 percent in October. The People's Bank of China left the one-year loan prime rate unchanged at 3.85 percent at its monthly review Friday, with the equivalent five-year rate also unchanged at 4.65 percent. These rates have been on hold since they were reduced by 20 basis points and 10 basis points respectively in April. This suggests that officials remain comfortable for now with the degree to which monetary policy is supporting domestic activity.
read moreUS Markets
Cyclical/value stocks returned to favor Friday to lead equity indexes higher, with energy stocks leading, as
vaccine hopes outweighed near-term virus fears. The Dow Jones industrial index and the S&P 500 both rose 1.4
percent, and the NASDAQ 100 gained 1.0 percent.
The rotation from momentum/growth stocks into cyclicals/value resumed Friday after news at the start of the
week that Pfizer/BioNTech’s vaccine was showing a high 90 percent efficacy rate.
Earnings also supported markets Friday, with Dow component Walt Disney up 2.2 percent after beating earnings
and subscriber expectations for its new streaming service. Cisco, another Dow stock, gained 7.1 percent on a
positive earnings surprise and much better than expected guidance. Applied Materials rose 4.3 percent on an
earnings beat and improved guidance.
Growth shares lagged, with weakness in mega-cap names depressing communications services and technology.
Strength in cyclicals reflected a rally in energy despite lower oil prices. Trucking and airlines boosted industrials.
Other outperformers included financials, materials, and health care.
In US economic data, producer prices rose 0.3 percent in October for a subdued year-over-year increase of 0.5
percent, both 1 tenth over Econoday's consensus forecasts. Separately, falling expectations pulled the consumer
sentiment index sharply lower in the preliminary reading for November, to 77.0 and 3 points below Econoday's
consensus.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 66 cents to US$42.74
while spot gold rose US$11.59 to US$1,886.96. The US dollar declined against most major currencies, but not
the Canadian dollar. The US Treasury 30-year bond yield was down 1 basis point at 1.64 percent while the 10-
year note rose 1 basis point to 0.89 percent.
European markets
Equities ended narrowly mixed Friday as markets weighed vaccine prospects against near-term worries about
surging Covid-19 cases and widening lockdowns. The Europe-wide STOXX 600 firmed 0.1 percent, the German
DAX edged up 0.2 percent, the French CAC gained 0.3 percent, and the UK FTSE-100 dipped 0.4 percent.
In addition to vaccine hopes, markets were bolstered by comments from European Central Bank officials
suggesting more monetary support is coming. ECB Executive Board member Isabel Schnabel said the board
would reassess how it meets its policy objectives and stressed the flexibility of its asset purchase program. On
the negative side for risk assets, German Chancellor Angela Merkel raised the prospect of extending coronavirus
restrictions for longer, as cases remain too high.
UK markets lagged as sterling perked up after the resignation of UK Prime Minister Boris Johnson’s advisor
Dominic Cummings, as some saw the departure signaling a less militant Brexit stance. Weakness in UK energy
stocks also weighed on the FTSE-100, with index heavy-weight Royal Dutch Shell off 0.8 percent.
Among sectors, insurance, banks, autos, construction technology, oil & gas, and utilities outperformed while
lagging were media, personal & household goods, telecom, food, health care, chemicals, and real estate. Among
companies reporting, Engie, the French electric utility, rose 3.2 percent on a positive earnings surprise and
announcement that it may sell some of its stake in GTT, the German engineering company. Ageas, the Belgian
insurer, rose 2.7 percent on upbeat quarterly results.
Asia Pacific Markets
Most major Asian markets closed lower on the day Friday on renewed concerns about rising Covid-19 cases in the United States, but in most cases held onto solid gains over the week. Japan’s Nikkei and Topix indices fell 0.5 percent and 1.3 percent respectively on the day and advanced 4.4 percent and 2.7 percent respectively on the week, while Australia’s All Ordinaries index fell 0.2 percent on the day and rose 3.4 percent on the week. Hong Kong’s Hang Seng index closed down 0.1 percent on the day and up 1.7 percent on the week, with strong gains for tech firm Tencent after it reported strong profits on Thursday. The Shanghai Composite index closed down 0.9 percent on the day and underperformed with a small 0.1 percent decline on the week. Revised Hong Kong GDP data showed headline growth rates for the three months to September were little changed from initial estimates published late last month, confirming a strong rebound in activity from the initial impact of the Covid-19 pandemic. GDP grew 2.8 percent on the quarter, down from the advance estimate of 3.0 percent, but up strongly from a drop of 0.1 percent in the three months to June. In year-on-year terms, GDP fell 3.5 percent on the year, slightly weaker than the initial estimate for a fall of 3.4 percent, but again improving significantly from a decline of 9.0 percent previously. Officials also released updated and more precise growth forecasts, with the economy now expected to contract by 6.1 percent in 2020, compared with the previous forecast for it to contract by between 6.0 percent and 8.0 percent.
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Equities were flat to lower Friday on mixed corporate results and profit-taking pressures after the week’s big
gains. The Dow Jones industrial index eased 0.2 percent and the S&P 500 and NASDAQ 100 were flat.
The week’s run-up in stock prices faded before the weekend as buyers stepped back and uncertainty remained
over the election outcome. Vote counting continued in key states, and investors were bracing for turbulence as
President Trump pursues challenges to the outcome.
Among sectors, weakness in consumer discretionary stocks weighed on the market, with Amazon off 0.3 percent,
and homebuilders off, including KB Home, down 3.6 percent, and Pulte, down 4.2 percent. Energy stocks lagged
as oil prices fell, with Apache, the driller, down 4.9 percent, and ConocoPhilips off 3.1 percent.
With mega-caps retreating from recent sharp gains, communications services and technology lagged. Industrials
lagged with airlines hurt by renewed virus worries, and truckers falling back. Holding up best were materials,
health care, and consumer staples. Among consumer staples, drug stores gained, with CVS up 5.8 percent after
topping earnings and revenues expectations.
Among companies reporting, T-Mobile advanced 5.4 percent after an earnings beat. On the downside, Peloton
slipped 0.9 percent despite surging profits and revenues as the home exercise business warned it was having
trouble meeting customer demand. Electronic Arts, the video game company, dropped 7.1 percent after missing
revenues expectations and guiding lower.
In economic news, the US jobs report was better than expected in October, led by a 638,000 rise in nonfarm
payrolls that beat expectations for 575,000. The unemployment rate also did better than expected, falling a full
percentage point to 6.9 percent.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 96 cents to US$39.73
while spot gold rose 71 cents to US$1,951.52. The US dollar dropped against most major currencies but rose
vs. the Australian dollar. The US Treasury 30-year bond yield rose 7 basis points to 1.60 percent while the 10-
year note yield rose 5 basis points to 0.82 percent.
European markets
Equities gave up some of the week’s big gains Friday as virus worries came back into focus. The Europe-wide
STOXX 600 eased 0.2 percent, the German DAX declined 0.7 percent, the French CAC fell 0.5 percent, and the
UK FTSE-100 firmed 0.1 percent.
Airlines suffered, with EasyJet down 2.6 percent after announcing more cutbacks in flights in response to
lockdowns in UK, France, and Germany. Lufthansa fell 6.2 percent on concerns about travel restrictions.
Automakers gave back some of the week’s gains on hopes for better trade relations under a Biden presidency.
Daimler fell 1.2 percent and Peugeot fell 1.7 percent.
On the plus side, miners outperformed as commodities prices have perked up on recent dollar weakness.
Glencore rose 3.6 percent, Arcelor Mittal rose 4.3 percent, and Rio Tinto rose 2.9 percent. Insurance stocks
gained on a surprisingly positive earnings report from Allianz, up 1.3 percent.
Among other companies reporting, Rheinmetall, the technology business, fell 3.1 percent on an earnings beat
while Richemont, the luxury goods maker, rose 10.6 percent on an earnings beat and news of a partnership with
Alibaba, the online Chinese marketplace.
Asia Pacific Markets
Most major Asian markets closed higher Friday after Wall Street advanced further Thursday, with strong gains recorded across the region over the week. The regional data calendar was light Friday, with investor focus still on US election results and the FOMC decision. Japan’s Nikkei and Topix indices rose 0.9 percent and 0.5 percent respectively on the day and 4.3 percent and 5.0 percent respectively on the week. Hong Kong’s Hang Seng index was little changed on the day, up just 0.1 percent, but outperformed on the week with a 6.7 percent gain, while Australia’s All Ordinaries index rose 0.8 percent on the day and 4.3 percent on the week. The Shanghai Composite index underperformed on both the day and the week with a fall of 0.2 percent and an increase of 2.7 percent respectively. The Reserve Bank of Australia published its quarterly Statement on Monetary Policy Friday, updating growth and inflation forecasts after policy rates were cut by 15 basis points to a new record low of 0.10 percent at its monthly meeting earlier in the week. Officials now expect Australia's economy will contract in the second half of 2020 to a lesser extent than previously forecast and expand in the first half of 2021 at a slightly faster pace. Price pressures are now forecast to be weaker than previously expected until mid-2021, with CPI inflation still expected to be below the RBA's target range of 2.0 percent to 3.0 percent at the end of 2022. Today’s statement reaffirms that officials do not expect to raise rate for at least another three years but also makes explicit their view that rates should not be lowered further into negative territory, with officials instead advising that they will prefer to adjust the level of government bond purchases as their main policy tool in the period ahead. Household spending in Japan rose 3.8 percent on the month in September, picking up from an increase of 1.7 percent in August. Year-on-year growth, however, weakened from a drop of 6.9 percent to a fall of 10.2 percent, worse than the consensus forecast for a decline of 8.5 percent. The strong month-on-month increase in spending in September was largely driven by stronger spending on food and utilities but contrasts with retail sales data published last week which showed a small month-on-month decline, though both indicators show bigger yearon-year declines.
read moreUS Markets
Equities sold off across the board Friday amid pandemic worries, with mega-caps leading the decline after
disappointing quarterly results. The Dow Jones industrial index declined 0.6 percent, the S&P 500 fell 1.2 percent,
and the NASDAQ dropped 2.5 percent.
Apple fell 5.6 percent after reporting weaker-than-expected iPhone sales. Netflix dropped 5.7 percent after
announcing slower growth and warning about ad spending.
Other momentum leaders declined, with Tesla off 5.6 percent, Facebook down 6.3 percent, and Microsoft down
1.1 percent. Amazon dropped 5.5 percent on big fourth-quarter cost increases. Google managed to rise 3.4
percent as the market focused on better ad spending.
Among sectors, holding up best but still weaker were financials, materials, and consumer staples. Worst off were
tech, communications services, and consumer discretionary.
In US economic data, personal income rose 0.9 percent to come in near the top of Econoday's consensus range.
Personal consumption expenditures were also at the top of the range, up 1.4 percent reflecting strong gains for
apparel and new vehicles.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 44 cents to US$37.46
while spot gold rose US$16.99 to US$1,878.16. The US dollar was mixed against major currencies. The US
Treasury 30-year bond yield rose 6 basis points to 1.66 percent while the 10-year note yield rose 4 basis points
to 0.87 percent.
European markets
Surprisingly positive corporate earnings and positive economic data bolstered equities Friday but European
lockdowns kept the market in check. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX declined
0.4 percent, while the French CAC gained 0.5 percent, and the UK FTSE-100 eased 0.1 percent.
On the data front, Eurozone GDP beat expectations in the third quarter but reaction was modest as markets
focused on the slowdown under way in the fourth quarter, and expected to be exacerbated by lockdowns in
Germany, France, and elsewhere as Europe retakes its position as epicenter of the pandemic. On the positive
side, investors noted reports that UK authorities are accelerating reviews of Covid-19 vaccines from Pfizer and
AstraZeneca-Oxford.
On the earnings front, financials were winners, with NatWest Group up 6.0 percent after reporting loan
impairments far below expectations. Banco Bilbao Vizcaya gained 4.0 percent and Banco de Sabadell gained 2.9
percent after earnings beats. Swiss Re, the insurer, rose 3.5 percent, as the market approved its reserve plans
against pandemic-related claims.
Energy stocks outperformed, with Total SE rising 2.8 percent after an earnings beat, and Royal Dutch Shell up
3.9 percent after Thursday’s promise to boost dividends. IAG, owner of British Airways, rose on the company’s
quarterly results and new cost cuts. Saint-Gobain, the French materials giant, rose 4.7 percent after a revenues
beat.
In economic data, Eurozone GDP rose 12.7 percent in third-quarter flash, well above expectations and fully
reversing second-quarter virus contraction of 11.8 percent. But the quarterly jump couldn't pull the year-overyear rate, at minus 4.3 percent, into the positive column, though here too the result was better than expected.
Asia Pacific Markets
Major Asian markets closed lower Friday, extending losses on the week, with rising global Covid-19 cases and uncertainty about the outcome of next week’s US elections likely the main factors weighing on regional investor sentiment. Australia’s All Ordinaries index outperformed on the day with a decline of 0.6 percent but was among the weaker regional performers on the week, closing down 3.8 percent. Japan’s Nikkei and Topix indices fell 1.5 percent and 2.0 percent respectively on the day and dropped 2.3 percent and 2.8 percent respectively on the week. Hong Kong’s Hang Seng index fell 2.0 percent on the day and 3.3 percent on the week, while the Shanghai Composite index dropped 1.5 percent on the day and 1.6 percent on the week. Japan's industrial production index rose 4.0 percent on the month in September, the fourth consecutive increase after revised growth of 1.0 in August and well above the consensus forecast for an increase of 3.1 percent. Output of motor vehicles and production machinery increased, partly offset by declines in the output of generalpurpose and business-oriented machinery. In year-on-year terms, the index fell 9.0 percent after dropping a revised 13.8 percent in August. Japanese labor market data for September, however, showed ongoing weakness as the economic impact of the Covid-19 pandemic continued. The seasonally-adjusted unemployment rate was unchanged at 3.0 percent in September, its highest level since May 2017, while the number of unemployed persons rose by 420,000 on the year after increasing 490,000 previously. The number of employed persons fell by 790,000 on the year in September after dropping 750,000 in August.
read moreUS Markets
Equities were narrowly mixed in uncertain trading Friday, with weakness in energy and technology stocks
offsetting a better showing in financials, materials, health care, and consumer discretionary. The Dow Jones
industrial index eased 0.1 percent, the S&P 500 firmed 0.3 percent, and the NASDAQ rose 0.4 percent.
Intel, off 11 percent, led tech stocks down after issuing weaker guidance. Energy stocks fell on a selloff in crude
oil prices, with Chevron off 1.1 percent and driller Apache down 1.7 percent.
Among financials, Capital One, up 1.6 percent, and KeyBank, up 2.8 percent, benefited from lower provisioning
for credit losses, while SVB Financial, up 4.0 percent, saw improved fee income. On the negative side, market
heavyweight American Express fell 3.6 percent on an unusual earnings miss reflecting low spending on travel
and entertainment.
On the positive side, health care outperformed, with United Health up 1.5 percent. Google, up 1.6 percent, and
Facebook, up 2.4 percent, led communications services higher as the market is anticipating strong earnings
despite regulatory worries.
Among companies in the news, Boston Brewing surged 18 percent on blowout quarterly earnings, with growth
led by sales of alcoholic seltzer. Mattel, the toymaker, rallied 9.6 percent as the pandemic evidently boosted
demand for toys.
Macroeconomic news provided minimal direction Friday as US fiscal stimulus talks appeared stalled. Thursday's
presidential election debate was considered a draw. Markets generally expect a strong Democratic showing to
be followed by aggressive spending to boost the economy in the first quarter.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 85 cents to US$41.65
while spot gold fell US$1.01 to US$1903.51. The US dollar declined against most major currencies but rose vs.
sterling. The US Treasury 30-year bond yield fell 4 basis points to 1.64 percent while the 10-year note yield was
down 3 basis points at 0.84 percent.
European markets
Upbeat earnings and hopes for a Brexit compromise gave equities a boost Friday. The Europe-wide STOXX 600
rose 0.6 percent, the German DAX gained 0.8 percent, the French CAC gained 1.2 percent, and the UK FTSE100 was up 1.3 percent.
In Brexit news, comments from French President Emmanuel Macron suggested scope for agreement on a Brexit
pact, and talks were to continue over the weekend. Separately, the UK signed a trade accord with Japan. Markets
also drew support from expectations for the European Central Bank to signal more monetary policy stimulus,
following on from the UK’s expansion of its fiscal stimulus program this week. On the negative side, Covid-19
cases in Europe continued to accelerate, with infections more than doubling in the last 10 days.
Among big-name companies reporting positive earnings surprises: Barclays, up 8.7 percent, Nordea, up 1.4
percent, to lead banks higher, while Daimler rose 1.0 percent and Accor, the French hotel chain, rose 3.6 percent
after topping expectations. L’Oreal, the French cosmetics giant, rose 1.2 percent, and Norsk Hydro, the energy
and commodities company, rose 6.6 percent. Airbus rose 5.5 percent after projecting a post-pandemic recovery.
On the downside, ABB, the Swiss engineering firm, fell 1.7 percent after warning of ongoing weakness. Luxury
goods conglomerate Kering declined 0.9 percent on news of disappointing sales in its Gucci unit.
Asia Pacific Markets
Moves in major Asian markets were mixed on the day Friday, with performance also diverging on the week. Global Covid-19 developments and prospects for US fiscal stimulus remain the main near-term focus for regional investors. The Shanghai Composite index underperformed on both the day and on the week with declines of 1.0 percent and 1.7 percent respectively, while Hong Kong’s Hang Seng index outperformed with gains of 0.5 percent and 2.2 percent respectively. Moves elsewhere were relatively subdued. Japan’s Nikkei and Topix indices rose 0.2 percent and 0.3 percent respectively on the day and both closed the week up 0.5 percent. Australia’s All Ordinaries index fell 0.2 percent on both the day and on the week. Flash PMI survey data for Japan published Friday indicate that the ongoing impact of the Covid-19 pandemic on the domestic economy has remained substantial during October, with aggregate activity still contracting at a significant pace that was little different to that recorded in September. The flash estimate for the headline manufacturing index for October is 48.0, up slightly from the final estimate of 47.7 for September, while the flash estimate for the manufacturing output index is 47.0, down from 46.0 previously. The flash estimate for the service sector business activity index is 46.6, down from the final estimate of 46.9 for September. Together these give a flash estimate for the composite output index for October of 46.7, up only slightly the final estimate of 46.6 for September. Japanese inflation data released today showed price pressures remained subdued in September and suggest that progress towards the Bank of Japan’s 2.0 inflation target remains slow. The headline consumer price index was unchanged on the year in September, weakening from an increase of 0.2 percent in August, many reflecting a moderation in food priced inflation. Core CPI, which excludes fresh food prices, fell 0.3 percent in September after dropping 0.4 percent in August, close to the consensus forecast for a decline of 0.4 percent, while the BoJ's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, was also unchanged on the year in September after falling 0.1 percent in August. Singapore's headline consumer price index was unchanged on the year in September after falling 0.4 percent in August, and rose 0.3 percent on the month after advancing 0.6 percent previously. The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, showed slightly stronger underlying price pressures, with this index falling 0.1 percent on the year after dropping 0.3 percent in August and increasing 0.2 percent on the month after rising 0.1 percent previously.
read moreUS Markets
Health care stocks led equities mostly higher Friday after Pfizer said it may ask for permission next month to
start using its Covid-19 vaccine, but a late selloff in megacaps dampened or reversed the earlier gains. The Dow
Jones industrial index rose 0.4 percent, the S&P 500 ended flat on the day, and the NASDAQ declined 0.4 percent.
Positive US retail sales and consumer sentiment data contributed to a better mood in the morning, as markets
looked past surprisingly weak industrial production figures. Mega-caps initially gave markets a boost, but selling
pressures appeared late in the day, with Amazon off 2.0 percent, and Apple off 1.4 percent. Weakness in energy
stocks also restrained gains, with oil services leader Schlumberger off 8.8 percent on disappointing quarterly
results.
Other company news helped. Boeing rose 1.9 percent after EU regulators approved its 737 Max to fly again.
Another Dow heavyweight, Caterpillar, advanced 2.3 percent after an upgrade at Wells Fargo. Navistar jumped
23 percent on a report it may be acquired by Traton, and CIT Group rallied 27 percent on news it will be acquired
by First Citizens BancShares.
Among sectors, industrials and materials joined health care in leading the gains, while energy and real estate
lagged.
Among companies, health care winners included Vertex Pharma, which bounced back 1.3 percent after dropping
Thursday. Regeneron, maker of Covid treatments, rose 2.5 percent, and Pfizer was up 3.8 percent. On the
downside, railway Kansas City Southern declined 2.7 percent despite an earnings beat, and trucker JB Hunt fell
9.7 percent after an earnings miss.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 35 cents to US$42.80
while spot gold fell US$6.92 to US$1,899.74. The US dollar was mixed against major currencies. The US Treasury
30-year bond yield rose 1 basis point to 1.53 percent while the 10-year note yield was up 1 basis point at 0.74
percent.
European markets
Positive earnings news and vaccine hopes helped equities bounce back Friday despite expectations for more
restrictions in Europe to slow the pandemic. The Europe-wide STOXX 600 rose 1.3 percent, the German DAX
gained 1.6 percent, the French CAC rallied 2.0 percent, and the export-heavy UK FTSE-100 rose 1.5 percent.
Risk sentiment improved after Pfizer and its German partner BioNTech said they may apply in late November for
permission to start using their Covid-19 vaccine, and that it would be able to deliver promised vaccines widely.
Markets have been shaken recently by pauses in competing vaccine trials at Johnson & Johnson and at
AstraZeneca.
Separately, UK stocks were volatile in response to Brexit news, with UK Prime Minister Boris Johnson appearing
to say the UK would proceed with a no-deal Brexit unless the EU altered its stance, and EU leaders suggesting
talks would continue.
An earnings beat from Daimler, up 6.1 percent, paced an outperforming auto sector, and French luxury goods
conglomerate LVMH rose 2.8 percent after reporting better than expected results. In M&A news, Thyssenkrupp,
the German industrial conglomerate, rose 1.7 percent on a report it may sell its troubled steel business.
Outperforming sectors included autos, personal & household goods, banks, financial services, media, retail,
industrials, and health care. Lagging were travel & leisure, food & beverage, real estate, telecom, utilities, and
oil & gas.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with moves on the week also varied across the region. With the regional data calendar light Friday, investors remained focused on external developments, including further weakness on Wall Street Thursday and rising Covid-19 cases in Europe. Japan’s Nikkei and Topix indices fell 0.4 percent and 0.9 percent respectively on the day and also underperformed on the week with declines of 0.9 percent and 1.8 percent respectively. Australia’s All Ordinaries index also fell Friday, closing down 0.5 percent, but rose 1.1 percent on the week. Hong Kong’s Hang Seng index rose 0.9 percent on the day and 0.8 percent on the week, while the Shanghai Composite index rose 0.1 percent on the day and 2.0 percent on the week. Singapore's non-oil domestic exports rose 5.9 percent on the year in September after increasing 7.7 percent in August. The fall in headline exports growth in September was largely driven by weaker demand from China and the United States and weaker growth in non-electronics exports. Total imports fell 1.6 percent on the year, after falling a revised 11.0 percent previously.
read moreUS Markets
President Trump’s call for a bigger fiscal relief package gave equities a boost Friday but stocks trimmed gains
headed into the close. The Dow Jones industrial index rose 0.6 percent, the S&P 500 gained 0.9 percent, and
the NASDAQ rose 1.4 percent.
Trump said he favored a fiscal package larger than Republicans or Democrats are now considering, and said
negotiations were “moving along.” Senate Majority Leader Mitch McConnell, on the other hand, said no deal was
likely before the November elections. News of rising Covid-19 cases weighed on sentiment but investors reacted
favorably to more news from Gilead, up 0.8 percent, that its remdesivir medication speeded recovery from Covid19.
M&A gave technology shares a lift, with chipmaker Xilinx up 14 percent on a report it may be acquired by
Advanced Micro Devices, down 3.9 percent. Other chipmakers, including Qualcomm, up 2.1 percent, and
Teradyne, up 4.4 percent, tracked Xilinx higher. Other tech leaders included Apple, up 1.7 percent, and software
companies Microsoft, up 2.5 percent, and Salesforce.com, up 2.2 percent.
Amazon, up 3.0 percent, led consumer discretionary shares higher, with strength also evident in homebuilders
and some retailers. Google, up 2.0 percent, and Netflix, up 1.4 percent, gave communications services a lift.
Weakness in airlines and in aerospace and defense weighed on industrials. Financials lagged, and energy was
off the most on a pullback in oil services and oil supermajors. Among Dow stocks, IBM, down 2.8 percent, gave
back some of its recent gains, and Amgen, the biotech, fell 1.4 percent.
European markets
Positive comments on US fiscal relief from President Trump helped equities edge up Friday but gains were limited
by concerns over the economic recovery. The Europe-wide STOXX 600 gained 0.6 percent, the German DAX
firmed 0.1 percent, the French CAC rose 0.7 percent, and the export-heavy UK FTSE-100 also rose 0.7 percent.
Downbeat UK economic data and worrisome news on rising coronavirus infections in Europe and elsewhere
remained in focus, and several European countries have imposed new restrictions in response.
On the positive side was a report that remdesivir, the anti-viral drug, was shown to cut recovery times in a new
clinical study. In macro news, Bank of England Governor Andrew Bailey signaled willingness to implement new
monetary stimulus if the pandemic hits the economy again.
Among European stock sectors, out-performing were travel & leisure, basic resources, technology, health care,
and media. Lagging were autos, banks, construction, chemicals, utilities, and insurance.
Among companies in focus, Pandora A/S, the Danish jewelry-maker, rallied 17 percent after raising its guidance.
Pricer, the Swedish price labeling business, rose 24 percent on upbeat quarterly results. Novo Nordisk, the Danish
pharma, rose 3.3 percent on improved guidance.
In economic data, UK GDP expanded by a much weaker than expected 2.1 percent in August. This was the
smallest rise since the recovery began back in May. Separately, UK goods producers had a weaker-than-expected
August with overall industrial output rising just 0.3 percent on the month. Following an unrevised 5.2 percent
jump in July, the weaker than expected mid-quarter increase only boosted annual growth from minus 7.4 percent
to minus 6.4 percent.
Asia Pacific Markets
Moves in major Asian markets were mixed but generally small Friday, though most finished with strong gains
over the week. Australia’s All Ordinaries index closed up 0.1 percent on the day but outperformed on the week
with a 5.5 percent gain, while Hong Kong’s Hang Seng index fell 0.3 percent on the day and rose 2.8 percent
the week. Japan’s Nikkei and Topix indices closed down 0.1 percent and 0.5 percent respectively on the day but
advanced 2.6 percent and 2.4 percent respectively open the week. The Shanghai Composite index closed up 1.7
percent on Friday as trading resumed after more than a week of national holidays.
The Reserve Bank of India left its main policy rate unchanged at 4.00 percent at its policy review held Friday.
Officials noted some signs of recovery in economic activity from the initial impact of the Covid-19 pandemic but
also consider there to be both downside and upside risks to the growth outlook. They also noted that inflation
has picked up above their target range of 2.0 percent to 6.0 percent in recent months but attributed this to
supply shocks associated with the impact of the pandemic and expressed confidence that price pressures will
begin to ease in coming months. Reflecting this assessment, officials re-affirmed that supporting economic
recovery from the pandemic remains their immediate priority and reiterated that they consider a fall in inflation
would provide an opportunity to reduce rates further.
The Markit China PMI survey's business activity index for the services sector increased from 54.0 in August to
54.8 in September, indicating that activity in the sector expanded for the fifth consecutive month and at the
fastest pace since June. With the manufacturing PMI survey, published last week, showing a small decline in its
headline index from 53.1 to 53.0, but a somewhat bigger drop in its output index, together these resulted in the
composite output index falling from 55.1 in August to a still-strong level of 54.5 in September. These surveys,
along with official PMI surveys also published last week, suggest that the Chinese economy is continuing to stage
a solid recovery from the initial impact of the Covid-19 pandemic.
Household spending in Japan rose 1.7 percent on the month in August, rebounding from a decline of 6.5 percent
in July. while year-on-year growth picked up from a drop of 7.6 percent to a fall of 6.9 percent, close to the
consensus forecast for a decline of 6.7 percent. The month-on-month fall in spending in July reflected the impact
of a re-tightening of public health restrictions after new Covid-19 cases picked up in parts of the country, with
some of these restrictions subsequently eased in August. Retail sales data released last week also showed a
rebound in month-on-month growth in August.
US Markets
Renewed hopes for a US fiscal package helped equities recover from their worst levels Friday but weakness in
mega-caps kept the major indexes in negative territory. The Dow Jones industrial index declined 0.5 percent,
the S&P 500 slipped 1.0 percent, and the NASDAQ fell 2.2 percent.
Major equity indexes dropped initially after word overnight that President Trump had tested positive for Covid19, as the news raised uncertainty headed into the elections. Traders appeared to buy the dip in cyclicals and
hopes for a deal revived as
House Speaker Nancy Pelosi said Trump’s illness had altered the dynamics of the talks in favor of a deal. Pelosi
also raised the possibility of a standalone measure to allow US airlines to avoid massive pending staff furloughs.
Among sectors, best performers were industrials, energy, materials, financials, consumer staples, real estate,
health care, and utilities. Among industrials, leaders included truckers and machinery. Airlines rebounded on the
Pelosi comments, with American Airlines up 3.3 percent. Tobacco and grocery stocks boosted consumer staples.
Lagging were growth stocks including the FAANGs -- technology, communications services and consumer
discretionary, with Amazon off 3.0 percent, Apple off 3.2 percent, and Google down 2.2 percent.
In US economic data, nonfarm payrolls rose 661,000 in September, on the low end of expectations. This is by
far the smallest increase of the reopening and roughly 1/7 of the peak gain in June. But revisions added 145,000
to prior months. Also positive was the unemployment rate, which fell 5 tenths to 7.9 percent, slightly better than
expected.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.72 to US$39.14
while spot gold fell US$1.68 to US$1,902.76. The US dollar was stronger against most major currencies though
weaker vs. the Japanese yen and UK sterling. The US Treasury 30-year bond yield rose 2 basis points to 1.48
percent while the 10-year note yield rose 1 basis point to 0.69 percent.
European markets
Equities recovered from early losses to end mixed to slightly better Friday. The Europe-wide STOXX 600 gained
0.3 percent, the German DAX percent declined 0.3 percent, the French CAC was unchanged, and the UK FTSE100 rose 0.4 percent.
Markets fell in the morning on news President Trump had tested positive for Covid-19. A soft US employment
report helped risk appetite recover as some investors reasoned that it would raise the likelihood of new US fiscal
stimulus, and positive comments from top congressional Democrats added to hopes for a deal. Similarly, markets
saw the weak Eurozone HICP report as raising the likelihood of ECB stimulus. Meanwhile, in Brexit news, investors
appeared to welcome news that UK Prime Minister Boris Johnson would meet EU officials on Saturday.
Among sectors, outperforming were construction, media, utilities, basic resources, and financial services.
Laggards included retail, technology, autos, oil & gas, industrials, and personal & household goods.
In economic data, Eurozone inflation unexpectedly decelerated last month. September's flash minus 0.3 percent
annual rate was down from August's final minus 0.2 percent and equaled its weakest since January 2015. This
was only the second sub-zero print since May 2016.
Asia Pacific Markets
Markets were closed for holidays in many parts of Asia Friday, including China, Hong Kong, Taiwan, Korea, and India. Elsewhere in the region, markets fell on the news that President Trump has tested positive for Covid-19. After trading was halted Thursday due to a computer system malfunction, Japan’s Nikkei and Topix indices fell 0.7 percent and 1.0 percent respectively Friday, taking weekly losses to 0.8 percent and 1.5 percent respectively. Australia’s All Ordinaries index fell 1.4 percent on the day and 2.6 percent on the week, with shares of major energy producers selling off sharply Friday. Before holidays earlier in the week, Hong Kong’s Hang Seng index and the Shanghai Composite index closed down 1.0 percent and unchanged respectively compared with their closing levels at the end of last week. Japanese labor market data for August show further weakness as the economic impact of the Covid-19 pandemic continued. The seasonally-adjusted unemployment rate rose from 2.9 percent in July to 3.0 percent in August, its highest level since May 2017, while the number of unemployed persons rose by 490,000 on the year, up from an increase of 410,000 previously. The number of employed persons fell by 750,000 on the year in August after dropping 760,000 in July. Retail sales in Australia fell on the month in August after increasing in each of the three previous months as public health and travel restrictions were re-tightened in parts of the country in response to an increase in new Covid-19 cases. Sales fell 4.0 percent on the month after increasing 3.2 percent in July, with year-on-year growth also weakening from 12.8 percent to 7.1 percent, broadly in line with preliminary estimates. Sales fell in most states and territories but most sharply in Victoria, Australia's second most populous state and location of almost 25 percent of national economic activity, reflecting the impact of a strict lockdown put in place by authorities there in response to a spike in Covid-19 cases. Weakness in sales was also broad-based across major categories of spending but particularly pronounced for clothing, department stores, and cafes and restaurants.
read moreUS Markets
Renewed demand for heavily weighted mega-caps and tech shares led equity indexes higher Friday. The Dow
Jones industrial index rose 1.3 percent, the S&P 500 rose 1.6 percent, and the NASDAQ advanced 2.3 percent.
Facebook, up 2.1 percent, Apple, up 3.8 percent, Microsoft, up 2.3 percent, Alphabet, up 1.2 percent, Amazon,
up 2.5 percent, and chipmaker Nvidia, up 4.3 percent, led the way higher.
Most sectors were higher, with tech, health care, and real estate among the best performers. Energy shares
lagged.
Among companies in focus, Novovax, the biotech, popped up 11 percent after announcing it has begun its phasethree trial of its Covid-19 vaccine in the UK and will begin a similar large-scale trial in the US in October. Endo
International, the pharma, rose 8.4 percent after announcing it will manufacture the Novovax Covid vaccine.
Bristol-Myers Squibb rose 2.1 percent on positive clinical trial results for its cancer treatment.
On the downside, Costco fell 1.3 percent as costs offset strong sales driven by consumer demand for bulk home
goods during the pandemic.
In US economic data, durable goods orders rose a modest 0.4 percent in August to pull within 5.4 percent of
where they were in February. This is a slight improvement from 5.8 percent in July. More positive: core capital
goods orders rose 1.8 percent and are now 1.9 percent over February. This reading will favorably shift the
discussion and outlook for business investment.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 11 cents to US$41.93,
while spot gold fell US$4.19 to US$1,863.89. The US dollar rose against most major currencies. The US Treasury
30-year bond yield was unchanged at 1.40 percent while the 10-year note yield declined 1 basis point to 0.65
percent.
European markets
Equities were mixed to down Friday and the Europe-wide STOXX 600 lost almost 4 percent on the week as rising
virus counts in Europe and the prospect of renewed lockdowns raised worries over the recovery. On the day, the
STOXX 600 declined 0.1 percent, the German DAX percent lost 1.1 percent, the French CAC declined 0.7 percent,
and the UK FTSE-100 rose 0.3 percent.
Among sectors, best performers included travel & leisure, media, utilities, food & beverage, and health care.
Lagging the most were autos & parts, oil & gas, industrials, retail, and financial services.
Among companies in focus, boohoo Group, the UK online retailer, rose 15 percent after releasing plans to address
concerns about poor working conditions at its clothing factories. Aviva, the UK insurance company, rose 0.3
percent on reports it may be acquired. Shaftesbury, the UK real estate investment trust, rose 3.5 percent after
it announced plans to support the recovery of restaurants and other businesses renting its properties.
Notable decliners included Julius Baer, the Swiss bank, down 1.4 percent on a court ruling that it must repay
$160 million stolen by an East German agent after the collapse of the Berlin Wall. Wizz Air fell 1.4 percent after
announcing it will operate at half capacity.
Asia Pacific Markets
Major Asian markets posted mixed results on the day Friday but generally closed the week lower. Hong Kong’s Hang Seng index underperformed on both the day and the week with declines of 0.3 percent and 5.0 percent respectively, while the Shanghai Composite index fell slightly on the day, down 0.1 percent, but also recorded a sizeable decline on the week of 3.6 percent. Japan’s Nikkei and Topix indices both rose 0.5 percent on the day and both fell 0.7 percent on the week. Australia’s All Ordinaries index rose 1.4 percent on both the day and on the week, led by strong gains in shares of major banks after the Australian government announced an easing of consumer lending rules. Singapore industrial production data for August published Friday showed strong improvement, with the level of activity back to around pre-pandemic levels. Output fell 13.7 percent on the year in August after falling a revised 7.6 percent in July and rose 13.9 percent on the month after increasing a revised 2.3 percent previously. This improvement was largely driven by the two largest parts of the sector, the electronics and biomedical industries, but contrasts with PMI survey data which indicate that the overall economic activity contracted at a sharper pace in August.
read moreUS Markets
Another selloff in FAANGs and mega-cap momentum stocks kept equities under pressure Friday. The Dow Jones
industrial index declined 0.9 percent, the S&P 500 fell 1.1 percent, and the NASDAQ declined 1.1 percent.
Tech stocks suffered from news that the US will block downloads of Chinese social media firms’ TikTok and
WeChat apps, which raised worries about Chinese retaliation against US firms. Chipmakers, a high-beta sector,
were hit hard, with Advanced Micro Devices down 2.1 percent, and Nvidia down 2.2 percent. Tech bellwether
Apple fell 3.2 percent and Microsoft was off 1.2 percent.
Cyclicals including industrials and financials outperformed as money appears to be rotating out of growth sectors
into value stocks. Health care also outperformed, with pharma leading. On the downside, real estate and
consumer discretionary trailed the market, with Amazon off 1.8 percent.
In US economic data, the consumer sentiment index rose nearly 6 points in the preliminary September reading
to 78.9. This compares with April's virus low of 71.8 but is far short of 101.0 back in February.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 24 cents to US$43.06,
while spot gold rose US$2.62 to US$1950.91. The US dollar was mixed against major currencies. The US Treasury
30-year bond yield rose 1 basis point to 1.45 percent while the 10-year note yield was unchanged at 0.69
percent.
European markets
Stocks pegged to the reopening trade slipped Friday on rebounding coronavirus cases across Europe. The Europewide STOXX 600 and the German DAX percent both declined 0.7 percent, the French CAC fell 1.2 percent, and
the UK FTSE-100 was off 0.7 percent.
France and the UK showed an uptick in virus cases this week, following Italy and Spain. Reports suggested the
UK was considering re-imposing broader lockdowns. On the positive side, Brexit news appeared more supportive
as EU officials reportedly said a deal was still possible.
Cyclicals including autos, banking, and especially travel stocks were hit, with UK cruise ship operator Carnival
off 7.9 percent and UK airline EasyJet off 9.1 percent. Among automakers, Volkswagen shares lost 3.4 percent
and Peugeot declined 4.4 percent.
Asia Pacific Markets
Most Asian markets closed higher on the day Friday, with moves on the week generally moderate. The regional data calendar was light Friday, with the outlook for the global tech sector still a major focus for regional investors. The Shanghai Composite index posted the largest gains on both the day and on the week, advancing 2.1 percent and 2.4 percent respectively after solid currency gains in recent sessions. Japan’s Nikkei and Topix indices rose 0.2 percent and 0.5 percent respectively on the day and posted a fall of 0.2 percent and an increase of 0.6 percent respectively on the week. Australia’s All Ordinaries index was little changed on both the day and the week, down 0.2 percent and up 0.3 percent respectively, as was Hong Kong’s Hang Seng index, up 0.5 percent and down 0.3 percent respectively. Japanese inflation data released Friday showed price pressures remained subdued in August. The headline consumer price index advanced 0.2 percent on the year in August, down slightly from an increase of 0.3 percent in July, with food price inflation picking up but price changes in other major categories relatively steady. Core CPI, which excludes fresh food prices, fell 0.4 percent in August after no change in July, matching the consensus forecast, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, fell 0.1 percent on the year after increasing 0.4 percent previously. These declines in core measures of inflation were largely driven by weaker price changes for furniture and household utensils, culture and recreation, and medical care. At their policy meeting held earlier in the week, BoJ officials noted that inflation is expected to remain weak in the near-term and increase only gradually. Officials also reaffirmed their commitment to keep policy rates at or below current levels until they are confident that inflation will be sustainably above their 2.0 percent target level. Looking forward
read moreUS Markets
Equities were mixed Friday with the FAANGs and growth stocks lagging cyclicals. The Dow Jones industrial index
rose 0.5 percent, the S&P 500 firmed 0.1 percent, and the NASDAQ slipped 0.6 percent.
Value sectors including financials, industrials, and materials outperformed while mega-cap growth stocks
weakened, with technology, communications services, and consumer staples off. Among mega-caps, Apple was
down 1.3 percent, Amazon was off 1.9 percent, Alphabet was down 0.7 percent, and Facebook fell 0.6 percent.
The market continued to wrestle with valuation worries, and some analysts said heightened volatility for these
mega-caps is signaling a volatile autumn.
Among companies in focus, chemicals maker LyonDellBasell rose 4.8 percent on an analyst upgrade, and Rio
Tinto, the miner, rose 5.0 percent on a management change.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 4 cents to US$39.93,
while spot gold fell 68 cents to US$1942.30. The US dollar was weaker against most major currencies though it
rose vs. sterling. The US Treasury 30-year bond yield was down 1 basis point to 1.42 percent while the 10-year
note yield eased 1 basis point to 0.67 percent.
European markets
M&A activity helped European equity indexes edge up Friday though most sectors slipped amid ongoing Brexit
concerns. The Europe-wide STOXX 600 and the German DAX percent both fell 0.1 percent, the French CAC rose
0.2 percent, and the UK FTSE-100 rose 0.5 percent.
In M&A, Altice Europe surged 25 percent on news it will be acquired by its founder. Some saw the deal as a sign
of more such takeovers to come. Meanwhile, markets reacted badly to uncertainty over Brexit and the UK
government’s plan to renege on some of its Brexit treaty requirements. UK Prime Minister Boris Johnson
appeared to harden his position by setting a Oct. 15 deadline for reaching a Brexit deal.
UK stocks received a boost from the announcement of a UK-Japan trade agreement.
Among sectors, banks, travel & leisure, oil & gas, industrials, and real estate lagged while basic resources,
personal & household goods, and health care held up best.
Among companies in focus, Rio Tinto rose 4.4 percent after announcing the departure of its CEO. French luxury
giant LVMH rose 3.0 percent after announcing it would sue Tiffany after the collapse of its planned acquisition of
the US luxury icon.
On the downside, German auto parts maker Knorr-Bremse declined 3.5 percent after a large investor announced
a big sale of stock.
Asia Pacific Markets
Most major Asian markets closed higher Friday, though moves on the week diverged widely. The regional data calendar was light Friday, keeping investors' focus on developments elsewhere, including US tech sector performance, the US fiscal stimulus bill, and Brexit negotiations. Japan’s Nikkei and Topix indices both closed up 0.7 percent Friday and were among the stronger regional performers on the week with gains of 0.9 percent and 1.2 percent respectively. Hong Kong’s Hang Seng index and the Shanghai Composite index also closed higher Friday, both up 0.8 percent, but dropped 0.7 percent and 2.8 percent respectively on the week. Australia’s All Ordinaries index fell 0.8 percent on the day and 1.1 percent on the week, with mining shares among the weaker performers on Friday. Japan's producer price index fell 0.5 percent on the year in August after dropping 0.9 percent in July. This is the sixth consecutive year-on-year decline in producer prices but the smallest since March. The index rose 0.2 percent on the month after advancing 0.6 percent previously. The smaller year-on-year decline in headline producer prices in August was mainly driven by a less pronounced - though still large - fall in energy prices, with price changes steady for other major categories. Total new yuan loans made by Chinese banks in August amounted to CNY1,280.7 billion, up from CNY992.7 billion in July. Total outstanding loans rose by 13.0 percent on the year in August, unchanged from the growth recorded in July. India's index of industrial production fell 10.4 percent on the year in July after dropping 16.6 percent in June, suggesting that conditions remain weak but to a lesser extent than in the initial few months of the national lockdown put in place late March to curb the spread of Covid-19 . Manufacturing output fell 11.1 percent on the year after a decline of 17.1 percent previously. Recent PMI survey data also indicate that the contraction in the manufacturing sector has moderated in recent months but remains substantial.
read moreUS Markets
Mega-cap momentum stocks recovered from their worst levels to help major indexes end slightly weaker Friday
in volatile trading. The Dow Jones industrial index declined 0.6 percent, the S&P 500 fell 0.8 percent, and the
NASDAQ dropped 1.3 percent.
Tech shares including Apple (up 0.1 percent), Alphabet (down 3.0 percent), Microsoft (down 1.4 percent), plus
Amazon (down 2.2 percent) and Facebook (down 2.9 percent) faced heavy selling pressure early Friday after
Thursday’s rout, but they recovered as buyers emerged in the afternoon.
Investors favored cyclical stocks, with banks bolstered by rising interest rates and a steepening yield curve.
Industrials, materials, insurance, autos, aerospace & defense, airlines, and beverages outperformed. Boeing rose
1.4 percent. JP Morgan rose 2.1 percent. BankAmerica rose 3.4 percent. Cruise operator Carnival rose 5.3
percent.
Among companies in the news, Wayfair, the online furniture retailer, fell 5.3 percent, and Lululemon, the sports
clothier, fell 4.4 percent after analyst downgrades. Oxford Industries, the clothing retailer, dropped 14 percent
amid disappointment over its quarter.
In US economic news, nonfarm payrolls rose 1.371 million August, just shy of Econoday's consensus, but private
payrolls (which exclude government) came in more than 300,000 below the consensus, at 1.027 million.
Employment in government increased by 344,000 in August, accounting for 1/4 of the monthly gain in total
payrolls and reflecting the hiring of 238,000 temporary 2020 Census workers.
The unemployment rate did better than expectations, at 8.4 for a 1.8 percentage point decline from July and
just below Econoday's consensus range. The improvement reflects both a rise in the number of employed and
also a decline in the number of unemployed actively looking for work.
European markets
Fallout from Thursday’s rout in US tech and momentum shares hit Europe Friday while banks and value stocks
fared better. The Europe-wide STOXX 600 declined 1.1 percent, the German DAX fell 1.7 percent, the French
CAC was off 0.9 percent, and the UK FTSE-100 was also down 0.9 percent.
European markets also suffered from talk about downside risks for the Eurozone amid worries that the pandemic
will linger and delay recovery, with the rising euro hurting exporters and increasing deflation risks.
Among sectors, banks held up better on news that Spanish banks Bankia (up 33 percent) and Caixabank (up 12
percent) were in merger talks. Miners and autos/parts also outperformed. Among stocks in focus, miner Glencore
rose 2.8 percent and steel giant Arcelor Mittal rose 2 percent. On the downside, worst off were technology, real
estate, and utilities. SAP, the German software leader, fell 2.1 percent, and ASML, the Dutch chipmaker, fell 4.1
percent.
In economic data, German manufacturers' orders continued their recovery in July but at a sharply weaker pace
than in June. A smaller than expected 2.8 percent monthly increase followed an upwardly revised 28.8 percent
jump in June. However, orders were still more than 10 percent below their pre-lockdown level in February.
Asia Pacific Markets
Major Asian markets sold off Friday after sharp losses on Wall Street Thursday, though moves on the week were mixed. Australia’s All Ordinaries index was among the weakest performers both on the day and on the week, closing down 3.1 percent and 2.4 percent respectively. Declines were more modest for Hong Kong’s Hang Seng index and the Shanghai Composite index, closing down 1.3 percent and 0.9 percent respectively on the day, but both also recorded substantial declines on the week of 2.4 percent and 1.4 percent respectively. Japan’s Nikkei and Topix indices fell 1.1 percent and 0.9 percent respectively on the day but outperformed on the week with gains of 1.4 percent and 0.7 percent respectively. Retail sales in Australia increased on the month for the third consecutive month in July as Covid-19 cases stabilized or fell in most of the country, allowing some restrictions to be eased. Sales rose 3.2 percent on the month in July after increasing 2.7 percent in June, with year-on-year growth picking up from 8.6 percent to 12.8 percent. Stronger month-on-month growth reflects positive growth in all major categories of spending and in all but one state and territory, the exception being Victoria, Australia's second most populous state and location of almost 25 percent of national economic activity. Sales there fell 2.1 percent on the month in July, reflecting the impact of a strict lockdown put in place in response to a spike in Covid-19 cases.
read moreUS Markets
The Federal Reserve’s supportive stance boosted equities Friday, with value stocks benefiting from the reflation
trade, along with positive economic data and company news. The Dow Jones industrial index rose 0.6 percent,
the S&P 500 gained 0.7 percent, and the NASDAQ was up 0.6 percent.
Optimism about coronavirus treatments and vaccines, along with better news on US virus case numbers,
provided support. All sectors advanced, with energy, materials, and technology leading.
Bank stocks benefited as interest rates rose Thursday in response to the Fed’s announced shift toward average
inflation targeting and expectations that it will remain highly accommodative even if growth picks up. Rates were
flat to lower Friday.
ExxonMobil was among the day’s leaders, up 2.4 percent, along with driller Apache, up 3.1 percent. Consumer
discretionary shares were notable outperformers, with Ulta, the beauty store chain, up 5.8 percent on a big
earnings beat. Other consumer discretionary sector winners included Wynn Resorts, up 5.8 percent, and Royal
Caribbean, the cruise line company, up 5.3 percent.
Among companies in the news, Coca-Cola rose 3.3 percent on news of cost cuts. Hewlett Packard gained 6.2
percent on an upside revenues surprise spurred by surging home computer sales. Dell rose 6.1 percent after a
positive earnings surprise. Workday, the human resources and software company, rose 13 percent after beating
expectations.
On the downside, DraftKings fell 7 percent after a downgrade at Morgan Stanley. Big Lots, the retailer, fell 10
percent despite topping sales expectations, as it said low inventories constrained its business.
In US economic news, consumer vital signs, which were scrambled by virus effects beginning in March, continued
to stabilize in July, up 0.4 percent for personal income and up 1.9 percent for personal consumption, above
market expectations.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 4 cents to US$45.05,
while spot gold rose US$34.49 to US$1965.01. The US dollar fell against most major currencies. The US Treasury
30-year bond yield was flat at 1.50 percent while the 10-year note yield declined 2 basis points to 0.74 percent.
European markets
A mixed showing for equities left major stock indexes down slightly Friday with weakness in food & beverage,
health care and technology shares offset in part by gains in banks, basic resources, insurance, and travel &
leisure. The Europe-wide STOXX 600 and the German DAX both fell 0.5 percent, the French CAC declined 0.3
percent, and the UK FTSE-100 was off 0.6 percent.
Markets continued to react to the Federal Reserve’s signal that it would allow higher inflation in a bid to boost
growth, with banks and insurance stocks reacting to rising interest rates. Coronavirus news tended to provide
support as the market focused on progress on testing and treatments, and lower new case rates in the US and
Asia, despite worrisome increases in case numbers in Europe.
News of Japanese Prime Minister Shinzo Abe’s resignation was a negative for equities though observers looked
for his successor to maintain the government’s aggressive reflationary policies. Another negative were reports
that EU and UK negotiators are not making progress on a Brexit deal as another deadline approaches.
Among the day’s winners, Banco Santander rose 3.6 percent and Intesa Sanpaolo rose 1.2 percent. On the
downside, Norwegian Air fell 8.5 percent on bleak guidance. Bayer, the German chemicals and pharma, fell 3
percent on worries over its legal settlement of claims for its Roundup pesticide.
Asia Pacific Markets
Major Asian markets were again mixed Friday, with performance also diverging over the week. A bare regional data calendar Friday kept investors focussed on Fed Chair Powell’s comments Thursday and speculation, confirmed after most regional markets had closed, that Japanese Prime Minister Abe was set to resign. Japan’s Nikkei and Topix indices fell 1.4 percent and 0.7 percent on the day respectively, but were little changed on the week, closing down 0.2 percent and up 0.1 percent respectively. Australia’s All Ordinaries index also fell 0.8 percent on the day and 0.2 percent on the week. The Shanghai Composite index outperformed on the day with a solid increase of 1.6 percent, taking the week’s gains to 0.7 percent, while Hong Kong’s Hang Seng index closed up 0.6 percent on day and 1.2 percent on the week. Prime Minister Abe announced his resignation Friday, citing poor health. Abe, leader of the Liberal Democratic Party, has been prime minister since 2012 and his term was due to expire in 2021. A new leader is expected to be chosen by the LDP and approved by parliament in the next few weeks. Under Abe's leadership, the Japanese government has strongly supported the Bank of Japan's policy of quantitative easing in recent years and has in recent months approved substantial fiscal stimulus in an effort to offset the economic impact of the Covid-19 pandemic.
read moreUS Markets
US economic data and strength in Apple and technology stocks helped equities edge up Friday. The Dow Jones
industrial index rose 0.7 percent, the S&P 500 gained 0.3 percent, and the NASDAQ gained 0.4 percent.
Sentiment was bolstered by hopeful news on the Covid-19 vaccine front, with Pfizer, up 0.4 percent, saying its
vaccine may be ready for regulatory review as soon as October.
Apple rose 5.2 percent, while chipmaker Nvidia, a recent market darling, rose 4.5 percent to lead tech gains.
Consumer discretionary shares outperformed, with help from homebuilders after buoyant US housing resales
data, with Toll Brothers up 3.7 percent. Nike, the sportswear company, rose 1.6 percent. Consumer staples also
beat the tape as discounters gained, with Walmart up 0.8 percent.
Laggards included financials, communications services, materials, and worst off were energy stocks as crude oil
prices sagged.
Among companies in the news, Deere advanced 4.3 percent after topping expectations for earnings and
revenues, and raising its guidance. Foot Locker rose 1.4 percent after an earnings bet, reinstating its dividend
and saying customers are back in force.
In US economic news, existing home sales joined new home sales in posting the best results since the sub-prime
collapse 12 years ago, at an annual rate of 5.860 million in July, to exceed Econoday's consensus range, with
resales up 8.7 percent on the year. Separately, Markit's PMI flash purchasing managers reports, offering early
indications on the ongoing month, moved from the low 50s toward the mid-50s, now at 54.8 for services and
53.6 for manufacturing, which suggested faster growth.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 65 cents to US$44.28,
while spot gold fell US$13.25 to US$1,939.28. The US dollar rose against most major currencies. The US Treasury
30-year bond yield declined 4 basis points to 1.34 percent while the 10-year note yield declined 1 basis point to
0.64 percent.
European markets
Worries about rising Covid-19 cases in parts of Europe and weak Eurozone purchasing managers data undercut
equities Friday. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX declined 0.5 percent, the
French CAC fell 0.3 percent, and the UK FTSE-100 was off 0.2 percent.
Eurozone flash PMI results suggested a slowdown in the pace of economic recovery. At 51.6, the composite index
was down from July's final 54.9, well short of expectations and, while still above the 50-expansion threshold,
showing a loss of momentum. The deceleration was wholly all due to services where the flash sector PMI dropped
from July's final 54.7 to a surprisingly low 50.1. IHS Markit, the source of the PMI data, said weakness in services
reflected rising virus cases in parts of the Euro area.
On the positive side, UK data mostly topped expectations, as a much stronger than expected reading of 60.3 put
the flash UK composite output index up more than 3 points versus July's final 57.0 and at its highest level in 82
months.
Among sectors, worst off were autos, energy, and banks, while construction, travel & leisure, and technology
held up better. Among companies in the news, Danish shipping company Maersk fell 4.1 percent after a
downgrade at JP Morgan. U-Blox Holding, the Swiss chipmaker, dropped 14 percent after an impairment charge
and pulling its guidance. On the plus side, Bachem, the Swiss chemicals company, rose 18 percent after raising
its sales guidance.
Asia Pacific Markets
Most major Asian markets closed moderately higher on the day Friday, though moves on the week were mixed. Japan’s Nikkei and Topix indices rose 0.2 percent and 0.3 percent respectively on the day but were among the weaker performers in the region on the week with declines of 1.6 percent and 1.2 percent respectively. Korea’s Kospi index regained some ground on the day, rising 1.3 percent, but still ended the week down 4.3 percent in response to sharp increases in Covid-19 cases. The Shanghai Composite index posted modest rises of 0.5 percent on the day and 0.6 percent on the week, while Australia’s All Ordinaries index was unchanged on the day and up just 0.1 percent on the week. Hong Kong’s Hang Seng index outperformed on the day with a 1.3 percent gain but closed down 0.2 percent on the week. Japanese inflation data released today showed price pressures remained broadly steady and subdued in July. Headline inflation picked up from 0.1 percent in June to 0.3 percent in July, mainly reflecting a stronger increase in food prices and a smaller decline in transportation and communication prices. Core CPI, which excludes fresh food prices, was flat on the year in July, as it was in June, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, increased 0.4 percent on the year in July, as it did in June. Today's data suggest that progress towards the BoJ’s 2.0 percent inflation target remains stalled and may strengthen the case for additional policy measures. The BoJ's next policy meeting is scheduled to take place mid-September. Flash PMI survey data for Japan published today indicate that the impact of the Covid-19 pandemic on the domestic economy has remained substantial during August, with aggregate activity still contracting at a significant pace. The flash estimate for the manufacturing survey's headline index for August is 46.6, up from the final estimate of 45.2 in July, while the flash estimate for the services sector activity index is 45.0, down from the final estimate of 45.4 in July. Together these resulted in a flash estimate for the composite output index of 44.9, unchanged from July. Respondents to both surveys reported further declines in output, new orders, new export orders, and employment, weak confidence about the outlook, and subdued price pressures.
read moreUS Markets
Weakness in tech and momentum stocks held down equities Friday though cyclicals fared better. The Dow Jones industrial index edged up 0.1 percent, the S&P 500 was flat, and the NASDAQ eased 0.2 percent. Mixed US retail sales figures contributed to the softer market tone along with softer than expected retail sales and industrial production figures from China. Laggards included utilities, health care, and technology, with Amazon’s 0.4 percent decline weighing on consumer discretionary. The FAANGs sagged, with Apple off 0.1 percent, Alphabet off 0.8 percent, and Facebook down 0.1 percent. Among companies in focus, IQIYI, the Chinese video streaming company, fell 11 percent after US regulators accused it of inflating its user numbers and revenues. DraftKings, the fantasy sports company, fell 5.9 percent on an adverse tax ruling. Purple Innovation, the mattress company, fell 11 percent after an earnings and revenues miss. On the plus side, micro-chipmaker Applied Materials rose 3.9 percent after beating street expectations and raising its guidance. In US economic data, July retail sales rose 1.2 percent and though this is toward the lower end of Econoday's consensus range, core readings in the month exceeded expectations. June's gain is revised 9 tenths higher to 8.4 percent with May's gain revised 1 tenth higher to 18.3 percent. Separately, industrial production rose an asexpected 3.0 percent in July. Manufacturing output rose 3.4 percent to moderately exceed Econoday's consensus and benefiting from the resumption of auto production.
European markets
Weakness in energy stocks and travel & leisure on Covid-19 news hurt equities Friday. The Europe-wide STOXX 600 fell 1.2 percent, the German DAX declined 0.7 percent, the French CAC declined 1.6 percent, and the UK FTSE-100 was off 1.6 percent. Cyclicals were hurt by reports of rising Covid-19 cases in Spain, Germany, and Greece, and by lack of progress on US talks on fiscal stimulus, with energy, industrials and construction lagging. As oil prices dropped, BP fell 3.1 percent, and Royal Dutch Shell was off 2.6 percent. Markets also reacted poorly to soft economic data from China, including weaker than expected industrial production and retail sales. Travel stocks were hit by news that the UK will oblige visitors from more countries to quarantine, including France and the Netherlands. IAG, owner of British Airways, fell 4.8 percent, and Air France was off 5.7 percent. TUI, the German travel agency, dropped 8 percent on virus impact.
Asia Pacific Markets
Major Asian markets posted mixed results Friday but in most cases closed higher on the week, with a busy Chinese data calendar and ongoing uncertainty about the near-term outlook for additional US fiscal stimulus among the key areas of focus for investors. The Shanghai Composite index outperformed on the day despite Chinese data providing mixed signals, closing up 1.2 percent, but was among the weaker performers in the region on the week with an increase of just 0.2 percent. Japan's Nikkei and Topix indices in contrast were little changed on the day, up 0.2 percent and 0.1 percent respectively, but outperformed on the weeks with gains of 4.3 percent and 5.0 percent respectively. Australia's All Ordinaries index rose 0.6 percent on the day and 1.9 percent on the week, while Hong Kong's Hang Seng index fell 0.2 percent on the day and rose 2.7 percent on the week. Chinese activity data published Friday suggest that recovery is uneven across the economy with key indicators falling short of expectations and their components diverging to some extent. Chinese industrial production fell 0.4 percent on the month in July after advancing 1.3 percent in June, with year-on-year growth steady at 4.8 percent but falling short of the consensus forecast of 5.1 percent. Growth picked up in the manufacturing sector, offset by weaker growth in the utilities and mining sectors. Chinese retail sales rose 0.85 percent on the month after increasing 1.34 percent previously, with year-on-year growth improving from a decline of 1.8 percent to a fall of 1.1 percent, again weaker than the consensus forecast for an increase of 0.3 percent. Spending on autos picked up but most other major categories recorded weaker growth. Fixed asset investment rose 4.85 percent on the month after increasing 5.06 percent previously, with year-to-date growth also improving from a drop of 3.1 percent to a fall of 1.6 percent. Other data published Friday showed Chinese house price inflation eased from 4.9 percent in June to 4.8 percent in July. India's wholesale price index fell 0.58 percent on the year in July after dropping 1.81 percent in June and rose 1.09 percent on the month after increasing 1.36 percent previously. The smaller year-on-year decline in the wholesale price index in July largely reflects a bigger increase in food prices and a smaller decline in fuel prices. Data published earlier this week showed the consumer price index rose 6.93 percent on the year in July after increasing 6.23 percent in June, well above the Reserve Bank of India's target range of 2.0 percent to 6.0 percent. Revised Hong Kong GDP data showed headline growth rates for the three months to June were unchanged from initial estimates published late last month, confirming conditions remain weak but have stabilized from the initial impact of the Covid-19 pandemic. GDP contracted by 0.1 percent on the quarter and by 9.0 percent on the year, after dropping a record 5.3 percent on the quarter and 9.1 percent on the year in the three months to March. Officials also released updated growth forecasts, with the economy now expected to contract by between 6.0 percent to 8.0 percent in 2020, compared with the previous forecast for it to contract by between 4.0 percent and 7.0 percent.
read moreUS Markets
The widening US-China dispute and lack of a deal on a coronavirus relief bill hurt mega-cap shares Friday while
value shares edged up on better US jobs data. The Dow Jones industrial index rose 0.2 percent, the S&P 500
rose 0.1 percent, and the NASDAQ slipped 0.9 percent.
Markets came into the US hours in risk-off mode on US sanctions on Hong Kong leader Carrie Tam and President
Trump’s order banning US citizens from using TikTok or WeChat. News of a US payrolls beat, while
unemployment declined more than expected, gave cyclicals and value shares a boost, but big tech still came off.
Among sectors, tech lagged with the FAANGs mostly down, and other underperformers included consumer
discretionary and communications services. Outperformers included financials, industrials, and defensive
utilities.
Among companies reporting, Zillow, the real estate broker, rose 12 percent after its results were not as bad as
the market feared. T-Mobile rose 6.5 percent on positive earnings and subscriptions numbers. Biogen rose 10
percent on positive action from the FDA on its Alzheimers drug. On the downside, Tencent Holdings fell 7.3
percent after the US action against WeChat and TikTok. Uber, the ride-sharing company, fell 5.2 percent on an
earnings miss.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 56 cents to US$44.64,
while spot gold fell US$32.37 to US$2,030.79. The US dollar rose against most major currencies. The US Treasury
30-year bond yield rose 3 basis points to 1.23 percent while the 10-year note yield rose 2 basis points to 0.56
percent.
European markets
Equities recovered to end flat to barely higher Friday on supportive economic data and company news. The
Europe-wide STOXX 600 edged up 0.3 percent, the German DAX rose 0.7 percent, and both the French CAC and
the UK FTSE-100 firmed 0.1 percent.
Markets started the day weaker and later gains were limited by negative fallout from the latest escalation of the
US-China dispute after President Trump ordered a ban on transactions with TikTok and WeChat, Chinese firms
he said are hurting US interests. On the upside, US employment figures exceeded expectations, while German
and French industrial production figures suggested the sector is recovering faster than expected.
Among sectors, technology, industrials and media outperformed while energy and basic resources lagged. Hikma
Pharmaceuticals led winners, up 11 percent, after raising its dividend and saying it will manufacture the antiviral
drug remdesivir for Gilead Laboratories. Rightmove, the UK online property broker, rose 9 percent on an earnings
beat and after reporting recovering business activity. On the downside, BP, the UK oil supermajor, fell 2.7 percent
as the market continued to react badly to its plan to unload oil assets and shift to renewable energy.
In economic news, the German goods producing sector closed out a miserable second quarter on a respectably
strong note. Following a downwardly revised 7.4 percent monthly gain in May, production rose a larger than
expected 8.9 percent. Manufacturing showed an 11.1 percent monthly increase, led by capital goods, which
rose 18.3 percent. For France, industrial output expanded a larger than expected 12.7 percent on the month.
Following a slightly stronger revised 19.9 percent jump in May, this lifted annual growth from minus 23.4 percent
to minus 11.7 percent, a 4-month high.
Asia Pacific Markets
Major Asian markets closed lower Friday and posted mixed moves on the week, with sentiment impacted by President Trump’s executive order issued Thursday banning US firms from dealing with Chinese technology companies Tencent and ByteDance, owners of social media apps WeChat and TikTok respectively. Hong Kong’s Hang Seng index reacted most negatively, with a sharp drop in Tencent shares contributing to a 1.7 percent fall on the day, taking losses on the week to 0.3 percent. The Shanghai Composite index also closed down 1.0 percent on the day and 1.3 percent on the week despite the release of data showing better-than-expected growth in exports, while Australia’s All Ordinaries index fell 0.6 percent on the day and 0.1 percent on the week. Japan’s Nikkei and Topix indices closed down 0.4 percent and 0.2 percent respectively but outperformed on the week with gains of 2.9 percent and 3.4 percent respectively. China's trade surplus in US dollar terms widened from $46.42 billion in June to $62.33 billion in July. Exports rose 7.2 percent on the year in July, picking up from an increase of 0.5 percent in June and well above the consensus forecast for a drop of 0.6 percent, with stronger growth in exports to major trading partners including the United States, the European Union, and Japan. Imports fell 1.4 percent on the year after increasing 2.7 percent previously and below the consensus forecast for an increase of 1.0 percent. Household spending in Japan, in real terms, rose 13.0 percent on the month in June, rebounding strongly from a decline in previous months including a drop of 0.1 percent in May. Year-on-year growth also improved from a decline of 16.2 percent to a fall of 1.2 percent, stronger than the consensus forecast for a decline of 7.4 percent. Stronger growth was broad-based across major categories of spending. Restrictions put in place to curb the spread of the Covid-19 virus during the initial phase of the pandemic were eased to some extent over June, releasing significant pent-up consumer demand, but there remains downside risks for spending in coming months as cases pick up in some parts of the country, including Tokyo. The Reserve Bank of Australia published its quarterly Statement on Monetary Policy after leaving policy rates on hold at a record low of 0.25 percent at its monthly meeting earlier in the week. Compared with their previous assessment in May, officials now expect Australia's economy will contract over 2020 in response to the Covid19 pandemic to a lesser extent than previously anticipated but that the recovery from the pandemic's impact will be slower than previously forecast. They continue to expect headline inflation to remain below their target range of 2.0 percent to 3.0 percent over the next few years across a range of likely scenarios. Based on this assessment, the statement reaffirms that policy rates will not be increased until progress is being made towards full employment and officials are confident that inflation will be sustainably within the target range.
read moreUS Markets
Mega-cap stocks Apple, Amazon, and Facebook rallied again Friday on huge earnings beats but much of the rest
of the market traded weaker amid mixed corporate results and worries about the global recovery. The Dow Jones
industrial index rose 0.4 percent, the S&P 500 gained 0.8 percent, and the NASDAQ gained 1.5 percent.
Apple soared 10.5 percent after blowing away earnings expectations to trade above $400 for the first time and
it announced a 4 for 1 split. Amazon rose 3.7 percent. Facebook jumped by 8.2 percent as ad revenues surged.
Google, down 3.2 percent, was the lone mega-cap disappointment to report, as weakness in its ad business
offset strength in cloud computing.
The rest of the market was much less exciting, with energy the biggest laggard on disappointing earnings from
supermajors Chevron, off 2.7 percent, and ConocoPhilips, down 0.7 percent. Industrials suffered, with Caterpillar
down 2.8 percent after an earnings disappointment. Tobacco and beverage shares held down consumer staples.
On the positive side, Facebook and Charter Communications (up 2.9 percent) boosted communications services.
Apple’s surge led tech stocks higher.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 28 cents to US$43.40,
while spot gold rose US$20.18 to US$1,974.84. The US dollar rose against against most major currencies but
declined vs. the Canadian dollar and Chinese yuan. The US Treasury 30-year bond yield was unchanged at 1.20
percent while the 10-year note yield fell 1 basis points to 0.54 percent.
European markets
Worries about slowing growth and the prospect of renewed lockdowns hurt equities Friday. The Europe-wide
STOXX 600 declined 0.9 percent, the German DAX slipped 0.5 percent, the French CAC fell 1.4 percent, and the
UK FTSE-100 was off 1.5 percent.
A spike in Covid-19 cases in the north of England, and Prime Minister Boris Johnson’s comments postponing
further re-openings added to worries over an uptick in cases in France and Germany. Risk appetite was hurt by
disappointing economic data, including news that the Eurozone economy duly registered its worst ever
performance last quarter. Real GDP fell a record 12.1 percent on the quarter, more than the market consensus
and enough to slash annual growth from minus 3.1 percent to minus 15.0 percent, another all-time low.
Among sectors, real estate, financial services, and tech held up best, while worst off were autos, travel & leisure
and construction & materials. Among companies, IAG, owner of British Airways, fell 5.8 percent after announcing
another round of cost-savings and emergency financing. British American Tobacco was off 5 percent as the
market was disappointed in the company’s earnings guidance. On the positive side, Nokia, the telecom
equipment maker, rose 13 percent on an earnings beat and relatively upbeat guidance.
Asia Pacific Markets
Most major Asian markets sold off Friday, closing down on both the day and on the week after the release of GDP data confirming sharp contraction in major global economies. Japan’s Nikkei and Topix indices were particularly weak, both falling 2.8 percent on the day and extending weekly declines to 4.6 percent and 4.9 percent respectively after the release of data showing further weakness in the labor market. Australia’s All Ordinaries index also dropped sharply Friday as Covid-19 pandemic cases continued to rise in its two largest cities, Sydney and Melbourne, closing down 1.9 percent on the day and 1.5 percent on the week. Hong Kong’s Hang Seng index fell 0.5 percent on the day and dropped 0.5 percent on the week. The Shanghai Composite index was the main exception to these declines, closing up 0.7 percent on the day after the release of solid PMI data, taking the weekly gain to 3.5 percent. Official Chinese PMI survey data suggest conditions improved at a steady rate in both the manufacturing and services sectors in July as China's economy continues to recover from the impact of the pandemic. The CFLP manufacturing PMI index rose from 50.9 in June to 51.1 in July, just above the consensus forecast of 51.0 and indicating a slightly firmer expansion in activity. The non-manufacturing PMI index fell slightly from 54.4 to 54.2, indicating that activity in the sector continued to expand at a strong pace. Japanese labor market data for June show conditions remained weak. The unemployment rate fell slightly from 2.9 percent in May to 2.8 percent, still well above pre-pandemic levels, while the number of employed persons fell by 770,000 on the year after dropping 760,000 previously. Although substantial monetary and fiscal stimulus have been put in place in recent months to counter the economic impact of the pandemic, the timing and strength of any improvement in labor market conditions remain highly uncertain. Japan's industrial production index, in contrast, rose 2.7 percent on the month in June, rebounding from a decline of 8.9 percent in May, and fell 17.7 percent on the year after dropping 26.3 percent previously. This is the first month-on-month increase in the index since January, providing some indication that the sector has started to recover from the initial impact of the pandemic. Officials expect industrial output to expand further in the next two months, forecasting month-on-month increases of 11.3 percent in July and 3.4 percent in August.
read moreUS Markets
US-China discord, earnings disappointment, and worries over prospects for more US fiscal stimulus weakened
equities Friday. The Dow Jones industrial index declined 0.7 percent, the S&P 500 was off 0.6 percent, and the
NASDAQ was down 0.9 percent.
A plunge in Intel (down 16 percent) after it warned of delays in its updated microchips led a selloff in tech stocks,
alongside another bad day for the mega-cap tech stocks, the market leaders until recently. Microsoft eased 0.6
percent, Tesla dropped 6.4 percent, Apple was down 0.3 percent, Facebook fell 0.8 percent, and Alphabet eased
0.3 percent. Some late dip-buying reduced losses in the mega-caps, and Amazon ended up 0.8 percent after
weakening earlier.
American Express, a Dow heavyweight, lost 1.4 percent after it missed earnings expectations and said consumers
scaled back credit card use. Honeywell, the industrial conglomerate, fell 2.8 percent despite an earnings and
revenues beat, as it said the pandemic is likely to continue to dent its business, especially aerospace and energy.
Unexpectedly good news on US home sales gave equities a momentary boost at midmorning. New home sales
recovered to their pre-virus peak, far exceeding Econoday's consensus range in June at a 776,000 annual rate
that is 13.8 percent higher than May.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 14 cents to
US$43.30, while spot gold rose US$15.76 to US$1,901.93. The US dollar declined against most major currencies
but rose against the Chinese yuan. The US Treasury 30-year bond yield was flat at 1.23 percent while the 10-
year note yield was unchanged at 0.59 percent.
European markets
US-China tensions hit equities hard Friday after China ordered the closing of a US consulate in retaliation for a
similar US action. The Europe-wide STOXX 600 declined 1.7 percent, the German DAX fell 2.0 percent, the
French CAC slipped 1.5 percent, and the UK FTSE-100 was off 1.4 percent.
The US-China spat raised worries that the phase one US-China trade deal will collapse, or that the dispute may
escalate further headed into the US elections. Technology shares led the selloff, along with telecom, health care,
autos & parts, and industrials. Holding up better, but still weaker, were oil & gas, real estate, banks, utilities,
and basic resources.
Among companies, chipmaker ASML dropped 5.1 percent to lead the selloff as it tracked US semiconductor
stocks lower. Miner Anglo Pacific Group dropped 9 percent on disappointing quarterly results. Dassault, the
French aerospace company, dropped 5.2 percent on an analyst downgrade. IAG, owner of British Airways, fell
4.8 percent on a report it will issue more stock.
The market appeared to shrug off some better-than-expected economic data. For Germany, the PMI flash
composite output index rose from June's final 47.0 to 55.5 in July, well above market expectations and a 23-
month high. This was the first reading in positive growth territory since February. And Eurozone private sector
business activity also picked up strongly in July as the flash composite output index rose above the 50-expansion
threshold for the first time since February. A 54.8 headline reading was up sharply from June's final 48.5, well
above market expectations and a 25-month high.
Asia Pacific Markets
Major Asian markets closed lower Friday but posted mixed results on the week, with escalating US-China tensions the focus for investors at the end of the week. After US authorities shut China’s consulate in Houston earlier in the week, Chinese authorities responded Friday by closing the US consulate in Chengdu. A speech by US Secretary of State Mike Pompeo Thursday that was highly critical of the Chinese government also fueled concerns that the relationship is set to deteriorate further in the near-term. Losses on Wall Street Thursday after weak jobless claims data also weighed on sentiment in the region. Chinese shares sold off heavily Friday, with the Shanghai Composite index closing down 3.9 percent on the day to reverse gains made earlier in the week with a fall of 0.5 percent on the week. Hong Kong’s Hang Seng index also fell sharply, closing down 2.2 percent on the day and underperforming on the week with a decline of 1.5 percent. Australia’s All Ordinaries index fell 1.1 percent on the day and was little changed on the week with a 0.1 percent gain. Japanese markets were closed for a national holiday Friday, with Japan’s Nikkei and Topix indices up 0.2 percent and down 0.1 percent respectively when trading closed this week compared with their levels at the end of last week. Singapore industrial production data for June show some improvement in conditions in the domestic manufacturing sector but an ongoing negative effect from the Covid-19 pandemic. Output fell 6.7 percent on the year in June after dropping a revised 8.1 percent in May and rose 0.2 percent on the month after a revised fall of 15.8 percent previously. Performance diverged widely across industries within the manufacturing sector in June, with output in the volatile biomedical industry dropping sharply on the year in June but year-on-year growth improving elsewhere, including the electronics industry.
read moreUS Markets
Sectors including utilities, consumer staples, and health care led most equity indexes slightly higher Friday while
weakness in growth stocks, including the FAANGs, kept the market in check. Hopes for another round of US
fiscal stimulus appeared balanced by worries over new shutdowns as Covid-19 cases accelerated in many US
states. The Dow Jones industrial index declined 0.2 percent while the S&P 500 and NASDAQ both rose 0.3
percent.
Other outperforming sectors included materials, especially precious metals miners, and industrials, led by
trucking, after upbeat quarterly results. Lagging were consumer discretionary, financials, energy, and worst off
was the communications services sector amid FAANG weakness.
Netflix, down 6.5 percent, was a notable loser after missing the market’s aggressive earnings expectations and
projecting slower subscription growth. Microsoft, down 0.5 percent, was another drag after announcing staff
cuts. Amazon was off 1.3 percent, and Apple was down 0.2 percent as growth stocks remained out of favor vs.
value shares.
Among companies in the news, JB Hunt, the trucking and logistics giant, rose 3.2 percent on an earnings and
revenues beat. Other truckers, Heartland Express, up 3.8 percent, and Marten Transport, up 6.2 percent,
reported better than expected quarterly results. Among other winners, Blackrock, the big asset manager, rose
3.7 percent after an earnings and revenues beat.
On the downside, Regions Financial fell 4.4 percent after showing an unexpected quarterly loss. Crocs declined
4.7 percent after a downgrade at CL King in light of valuation concerns after the huge rally in the shoemaker’s
shares. State Street fell 4.4 percent after negative analyst comments on the financial service company’s rising
credit reserves.
In US economic data, consumer sentiment lost nearly 5 points to 73.2, about 6 points below Econoday's
consensus. This index had been trending near 100 before the virus crisis erupted. Meanwhile, housing starts
jumped 17.3 percent in June but the 1.186 million annual rate remains far short of the 1.6 million area precrisis. And permits, after coming off a big 14.1 percent rebound in May, managed only a 2.1 percent gain in June
to a 1.241 million rate.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 17 cents to US$43.12
while spot gold rose US$14.18 to US$1,810.38. The US dollar declined against most major currencies. The US
Treasury 30-year bond yield rose 1 basis points to 1.32 percent while the 10-year note yield was unchanged at
0.62 percent.
European markets
Equities ended mixed to slightly higher Friday in cautious trading ahead of the outcome of a meeting of European
Union leaders to consider a stimulus plan for Europe. The Europe-wide STOXX 600 edged up 0.2 percent, the
German DAX rose 0.4 percent, the French CAC slipped 0.3 percent, and the UK FTSE-100 rose 0.6 percent.
Positive company news gave UK and German stocks a boost while worries about rising Covid-19 cases in the US
and some flare-ups in Continental Europe weighed on markets.
UK shares were powered by a 3.9 percent rise in AstraZeneca on expectations for positive results in clinical trials
for its Covid-19 vaccine.
German shares were bolstered by a rally in autos after Daimler, up 3.0 percent, reported a smaller-than-expected
loss for the second quarter. Rio Tinto, up 2.5 percent, led miners higher after reporting rising iron shipments
and recovering demand from China. Ericsson, the Swedish telecom equipment maker, rose 12 percent on an
earnings beat.
On the downside, Hexpol, the Swedish chemicals maker, dropped 9 percent on an earnings miss. Travel & leisure
shares lagged the most, with Scandic Hotels off 6.4 percent after an earnings miss. Norwegian Air fell 8 percent
after agreeing to higher staffing costs after taking on direct responsibility for pilots and crew from its separate
staffing unit, OSM.
Asia Pacific Markets
Major Asian markets posted mixed results both on the day Friday and on the week, with key regional data, ongoing Covid-19 developments, and escalating US-China tensions all continuing to provide guidance to regional investor sentiment. The Shanghai Composite index stabilized Friday after dropping sharply Thursday, closing the day up 0.1 percent but finishing the week down 5.0 percent. Hong Kong’s Hang Seng index advanced 0.5 percent on the day but fell 2.5 percent on the week. Japan’s Nikkei and Topix indices both fell 0.3 percent on the day but were among the strongest performers in the region on the week with gains of 1.8 percent and 2.5 percent respectively, while Australia’s All Ordinaries index closed up 0.4 percent on the day and 1.8 percent on the week. Singapore's non-oil domestic exports rose 16.1 percent on the year in June after falling 4.6 percent in May, with both electronics and non-electronic exports increasing sharply after earlier declines. The rebound in headline exports growth in June reflects stronger year-on-year growth for seven of Singapore's top ten trading partners, including China, the European Union and Japan. Total imports fell 9.9 percent on the year after a sharp decline of 26.2 percent previously.
read moreUS Markets
Good news from Gilead Sciences on its treatment for Covid-19 gave stocks a boost Friday. Cyclicals most exposed
to the reopening trade led the gainers, with travel, finance, and energy outperforming, while momentum stocks
paused. The Dow Jones industrial index rose 1.4 percent, the S&P 500 gained 1.0 percent, and the NASDAQ rose
0.7 percent.
Among other sectors, utilities recovered some of the week’s losses. Materials outperformed, along with consumer
staples, communication services, and industrials. Tech shares lagged, with weakness in chipmakers and
software; real estate and health care were worst off.
Gilead rose 2.2 percent after the US biopharma reported additional favorable clinical results for its remdesivir
medication in speeding recovery and reducing deaths from Covid-19.
Among other companies in focus, Matson, the transportation company rallied 33 percent after issuing improved
guidance. Airlines were winners on the reopening trade, with American Airlines up 6.8 percent, JetBlue up 6.2
percent, and Southwest Air up 5.2 percent.
Carnival, the beat-up cruise company, gained 10.8 percent after saying bookings for 2021 have been surprisingly
strong. Tech stocks appeared to pull back after rallying through the week, with Microsoft down 0.3 percent on
the day. Paypal, the payments leader, fell 2.6 percent from Thursday’s record high. Netflix rose 8.1 percent on
an upgrade at Goldman Sachs.
In US economic data, falling prices for services pulled producer prices 0.2 percent lower in June, well short of
expectations for a 0.4 percent gain. But when excluding trade services (wholesalers and retailers) as well as
food and energy, producer prices rose 0.3 percent in the month.
European markets
Rebounding French and Italian industrial production figures gave equities a lift Friday and fed the narrative that
the economic recovery can be fast in Europe. Markets also reacted favorably to rising expectations for EU leaders
meeting next week to agree on a recovery plan for Europe. The Europe-wide STOXX 600 rose 0.9 percent, the
German DAX gained 1.2 percent, the French CAC was up 1.0 percent, and the UK FTSE-100 rose 0.8 percent.
French industrial production began to recover in May. Having fallen more than 37 percent in March/April, output
rebounded by a stronger than expected 19.6 percent on the month in mid-quarter to lift annual growth from
minus 35.0 to minus 23.4 percent. Separately, Italian Goods production rebounded in style in May. A record
42.1 percent monthly leap was more than double market expectations and the first increase of any size since
January. Following a slightly steeper revised 20.5 percent slump in April, annual growth climbed from minus
43.4 percent to minus 20.3 percent.
Among sectors, banks and autos outperformed while basic resources and technology lagged the market. Among
companies in the news, Carlsberg rose 6.4 percent after the Danish brewer reported better than expected results
and recovering business in key markets, including China. ST Microelectronics rose 5.1 percent on news it will
develop biometric payment cards. ING, the Dutch bank, rose 4.6 percent after unveiling its cost-cutting plan.
Intrum, the Swedish debt collector, rose 14 percent after raising its earnings guidance and saying European
markets are returning to normal faster than expected.
Asia Pacific Markets
Major Asian markets closed lower Friday, with performance over the week diverging widely across the region. Renewed concerns about Covid-19 developments were the main focus for investors Friday, with more large increases in cases in parts of the United States on Thursday followed by news of tighter public health restrictions in parts of Australia and reports that schools in Hong Kong will be suspended to help curb the spread of the virus. Hong Kong’s Hang Seng index was among the weaker performers in the region, closing down 1.8 percent on the day and up 1.3 percent on the week. The Shanghai Composite index also fell 2.0 percent on the day, with sentiment there also impacted by reports that state-owned investment funds were planning to reduce their equity market exposure after the strong gains recorded in recent weeks. Despite the fall on Friday, the index still closed the week up 7.3 percent. Japan’s Nikkei and Topix indices closed down 1.1 percent and 1.4 percent respectively on the day and fell 0.1 percent and 1.1 percent respectively on the week, while Australia’s All Ordinaries index fell 0.6 percent on the day and 2.1 percent on the week. Japan's producer price index fell 1.6 percent on the year in June after falling a revised 2.8 percent in May. This is the fourth consecutive year-on-year decline in producer prices. The index rose 0.6 percent on the month after falling a revised 0.5 percent previously. The smaller year-on-year decline in headline producer prices in June was mainly driven by a less pronounced - though still large - fall in energy prices, with price changes relatively steady for other major categories, including food. Total new yuan loans made by Chinese banks in June amounted to CNY1,810 billion, up from CNY1,480 billion in May and above the CNY1,660 billion recorded in June 2019. This level of lending likely reflects ongoing efforts to provide additional credit and liquidity in response to the economic impact of the Covid-19 pandemic. Total outstanding loans rose by 13.2 percent on the year at the end of June, unchanged from May.
read moreUS Markets
Risk-on powered stocks Monday as buyers continued piling into the market’s momentum darlings -- Facebook,
Amazon, Apple, Google, Microsoft, plus Tesla, which soared another 13 percent on top of recent huge gains.
The Dow Jones industrial index rose 1.8 percent, the S&P 500 gained 1.6 percent, and the NASDAQ was up 2.2
percent.
Investors were inspired by the day’s 5.7 percent rally in the Shanghai composite after an official Chinese
publication said the stage was set for a bull market. Risk sentiment also drew support from an upside surprise
in the US non-manufacturing purchasing managers’ report, which returned to expansion. Markets even saw as
positive the weekend’s Covid-19 news as they focused on lower mortality rates despite surging infection and
hospitalization numbers in many states.
Among sectors, consumer discretionary led gainers, along with communication services, tech, and financials.
Lagging were consumer staples, energy, and worst off were utilities as defensive shares lost favor.
Among the day’s winners, gains in Boeing, up 4.0 percent, and Goldman Sachs, up 5.1 percent, powered the
Dow higher on the recovery story. Other leaders included Square, the financial services company, up 4.9
percent on an analyst upgrade. Thermo Fisher, the laboratory instrument maker, rose 4.5 percent after
reporting strong gains in sales of testing equipment for Covid-19. Becton Dickinson, the medical devices
maker, gained 2,2 percent after the FDA authorized use of its fast-result Covid-19 test.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 26 cents to US$43.07,
while spot gold rose US$9.86 to US$1,786.18. The US dollar dropped against most major currencies in the
risk-on move. The US Treasury 30-year bond yield rose 1 basis point to 1.44 percent while the 10-year note
yield rose 1 basis point to 0.68 percent.
In economic data, the ISM's non-manufacturing index surged to a much higher-than-expected 57.1 in June.
Econoday's consensus for 50.1 was looking for virtually no change in the month, with June's result well beyond
the high estimate of 52.7.
European markets
Cyclicals led equities higher Monday as investors saw progress on treatments and vaccines for Covid-19, along
with signs of economic recovery. The Europe-wide STOXX 600 and the German DAX both rose 1.6 percent, the
French CAC gained 1.5 percent, and the UK FTSE-100 jumped 2.1 percent.
Gilead’s remdesivir treatment for the coronavirus was approved for use in the European Union, and reports
said the UK is nearing a deal to buy many doses of a potential vaccine from Sanofi and GlaxoSmithKline. The
market chose not to focus on soaring infection rates in many US states, in Latin America, India, and
elsewhere.
Among sectors, banks were the biggest winners. HSBC rose 6.6 percent, and Commerbank rose 6.8 percent,
with the latter buoyed by news its leaders would resign under pressure from activist shareholder Cerberus.
Meanwhile, UK shares outperformed, led by homebuilders, after a report the UK will raise the minimum home
price level for stamp tax from Stg125,000 to as much as Stg500,000. Barratt Developments, up 8 percent, and
Vistry Group, up 6.8 percent, were two leaders in the UK homebuilding sector.
Other leading sectors included technology, autos, insurance, basic resources, industrial technology, insurance,
basic resources, and industrials. Lagging but still higher were utilities, telecom, retail, food & beverage, health
care, and real estate.
In economic news, Eurozone retailers outperformed expectations in May. Following a slightly steeper revised
12.1 percent monthly drop in April, volume sales rose a record 17.8 percent to boost annual growth from
minus 19.6 percent to minus 5.1 percent. Separately, German manufacturers' orders rebounded sharply in
May. However, a 10.4 percent monthly rise was still less than expected and followed a steeper revised 26.2
percent slump in April. Annual growth improved from minus 37.0 percent to minus 29.4 percent.
Asia Pacific Markets
Most major Asian markets started the week with strong gains after an editorial in the state-controlled China Securities Journal advocated for a “healthy bull market” for domestic shares. This editorial has boosted confidence among regional investors that Chinese officials are supportive of further share market gains as part of efforts to drive economic recovery after the Covid-19 downturn. The Shanghai Composite index and Hong Kong’s Hang Seng index surged, closing up 5.7 percent and 3.8 percent respectively on the day, with trading volumes also picking up sharply. Japan’s Nikkei and Topix indices also advanced 1.8 percent and 1.6 percent respectively. Australia’s All Ordinaries index, however, underperformed with a fall of 0.6 percent after authorities announced that the border between the two most populous states, New South Wales and Victoria, will be closed in response to large increases in Covid-19 cases in the latter over the last week. The Markit Hong Kong PMI survey's headline index rose from 43.9 in May to 49.6 in June, its highest level since April 2018. This indicates that activity in the domestic economy was close to stable in June, albeit at a weak level, as authorities eased restrictions on businesses and households put in place to curb the spread of Covid-19 during the initial months of the pandemic. Fiscal measures to support the local economy may also have contributed to this improvement, though concerns about the Chinese government's decision to tighten security laws in Hong Kong may be a factor that weighs on sentiment in coming months.
read moreUS Markets
Rising infection rates and new restrictions imposed in Florida and Texas sent shares sharply lower Friday. The
Dow Industrials fell 2.8 percent to close the week down 3.3 percent, the S&P 500 fell 2.4 percent for a 2.9
percent weekly loss, while the Nasdaq fell 2.6 percent to close the week down 1.9 percent.
Governors of both Florida and Texas specifically cited alcohol consumption at bars as a major factor behind the
surge of new infections in both states. These are the first states to reimpose restrictions. Other states, including
North Carolina and Kansas, are considering pushing back reopening dates.
Vaxart rose 28 percent on news its oral covid vaccine will be included in a study funded by the US government
to accelerate vaccine development.
Bank stocks were pressured by the Federal Reserve's decision, following stress tests, to limit shareholder
payouts. The S&P banks group index fell 6.1 percent. Facebook fell 8.3 percent and Twitter fell 7.4 percent after
consumer products giant Unilever, citing lack of response to hate speech, pulled its advertising from both
platforms.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$0.39 to US$40.66,
while spot gold rose US$6.82 to US$1,770.61. The US dollar rose against most major currencies. The US Treasury
30-year bond yield fell 7 basis points to 1.37 percent while the 10-year note yield fell 4 basis points to 0.64
percent.
European markets
Pressured by news of rising infections in the US, European stocks moved mostly lower on Friday with the
Germany's DAX down 0.7 percent for a 2.0 percent loss on the week and France's CAC down 0.2 percent and
1.4 percent lower on the week. The UK FTSE-100 managed to post a 0.2 percent gain on the day but was down
2.1 percent on the week.
Bank stocks were big losers, down 2.2 percent on the STXE bank index after the Federal Reserve, following
annual stress tests, moved to limit US bank dividend payouts.
Positive news came from ECB President Christine Lagarde who said the worst of the pandemic may have passed.
Economic news included continued gains in Eurozone money supply and a much needed boost for Italian business
confidence. June's composite index rose to 65.4 from May's 52.7 for the first increase in Italy since February.
Asia Pacific Markets
Most major Asian markets closed higher Friday, while moves on the week were mixed but generally moderate. The regional data calendar was light Friday, with investors instead taking some direction from gains recorded on Wall Street Thursday after US authorities eased rules on bank risk-taking. Australia’s All Ordinaries index closed up 1.4 percent on the day despite a sharp drop in shares of domestic airline Qantas, ending the week down 0.8 percent. Japan’s Nikkei and Topix indices closed up 1.1 percent and 1.0 percent respectively on the day but were little changed on the week, with an increase of 0.1 percent and a decline of 0.3 percent respectively. Hong Kong’s Hang Seng index underperformed on both the day and on the week with declines of 0.9 percent and 0.4 percent respectively. Chinese markets were again closed Friday, with the Shanghai Composite index remaining up 0.4 percent from last week’s close. Singapore industrial production data showed the impact of the Covid-19 pandemic on the domestic manufacturing sector intensified in May. Output fell 7.4 percent on the year in May after increasing 13.6 percent in April,and dropped 16.5 percent on the month after a fall of 0.5 percent previously. The decline in headline growth was mainly driven by a smaller increase in production in the biomedical industry, which had recorded very strong growth in March and April as domestic firms responded to high demand for products required for public health measures. Growth also weakened elsewhere in the sector in May, reflecting the impact of weak external demand and restrictions on businesses put in place the curb the spread of Covid-19.
read moreUS Markets
Pandemic worries hurt risk assets Friday after Arizona and Florida reported big increases in Covid-19 cases and
Apple announced it would temporarily shut stores in several southern states. The Dow Jones industrial index
declined 0.8 percent; the S&P 500 declined 0.6 percent, and the NASDAQ was unchanged.
Major indexes gave up initial strong gains on the virus news and after Boston Fed President Eric Rosengren
offered a dour view on the economic outlook and impact of the pandemic. Rosengren said there is a big risk
associated with reopening the economy too fast. Fed Vice Chair Randall Quarles contributed to the negative
mood when he said the Fed would require bank stress tests to include additional negative pandemic scenarios.
Quadruple-witching pressures added to the day’s volatility.
Among sectors, real estate fared worst. Industrials were hit by a selloff in airlines as travel stocks suffered from
the virus effect. Banks led financials lower, along with technology and communications services. Holding up
better were energy shares as oil has perked up. Consumer staples rose with help from discount retailers, and
strength in Amazon lifted discretionary retail. Health care fared best on the pandemic narrative.
Among companies in the news, Novovax, the vaccine maker, rose 9.5 percent on an upgrade at Cantor Fitzgerald.
Spotify, the music streaming service, rose 2.7 percent after an upgrade at Rosenblatt Securities. Penn National
Gaming rose 1.3 percent after the gambling company said most of its stores have reopened. Occidental
Petroleum rose 0.2 percent after Suntrust upgraded the stock to buy. On the downside, Carmax fell 6.2 percent
after the online car broker said its sales have been hit badly by closures due to the virus. Slack Technologies fell
3.2 percent after a downgrade at Goldman Sachs.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 61 cents to US$42.10,
while spot gold rose US$17.52 to US$1,742.85. The US dollar rose against most major currencies but weakened
vs. the yen and the Chinese yuan. The US Treasury 30-year bond yield fell 1 basis point to 1.47 percent while
the 10-year note yield fell 1 basis point to 0.70 percent.
European markets
Focus on a pending E750 billion EU aid package and a positive surprise on UK retail sales helped equities edge
up Friday. The Europe-wide STOXX 600 rose 0.6 percent, the German DAX gained 0.4 percent, the French CAC
rose 0.4 percent, and the UK FTSE-100 rose 1.1 percent.
Among sectors, best performers were technology, utilities, media, health care, food & beverage, and personal &
household goods. Lagging were real estate, autos, insurance, chemicals, construction, industrials, and basic
resources.
Among companies in the news, Lufthansa ended down 0.4 percent after its biggest shareholder, billionaire Heinz
Thiele, agreed to talks with the government over its bailout plans for the troubled airline. Thiele previously
opposed the bailout. Wirecard, the German financial payments company, dropped 33 percent on top of
Thursday’s 60 percent plunge after its auditor declined to certify the company’s books and the firm said it was
missing more than US$2 billion.
In economic news, UK retail sales rose 12.0 percent in May versus the start of the quarter, nearly double market
expectations and enough to lift annual growth from minus 22.7 percent to minus 13.1 percent. However, despite
the unprecedented monthly spurt, purchases were still 13.1 percent short of their pre-Covid-19 level in February.
Asia Pacific Markets
Most major Asian markets closed higher on the day Friday, extending gains made earlier in the week. The regional data calendar was relatively light, keeping the focus on Covid-19 developments. Chinese authorities expressed confidence that a recent outbreak in Beijing has been contained, but concerns persist about higher cases in parts of the United States. The Shanghai Composite index outperformed on the day with an increase of 1.0 percent and was also one of the stronger performers on the week, closing up 1.6 percent. Australia’s All Ordinaries index was little changed on the day, up 0.2 percent, but closed up 1.7 percent on the week, while Hong Kong’s Hang Seng index advanced 0.7 percent on the day and 1.4 percent on the week. Japan’s Nikkei and Topix indices closed up 0.6 percent and unchanged on the day respectively, and both advanced 0.8 percent on the week. Japanese inflation data released Friday showed price pressures remain subdued in May. Headline CPI inflation was unchanged at 0.1 percent, with food price increasing at the same pace as they did in April, housing costs rising at a rising at a slightly faster pace, and utilities charges falling at a slightly faster pace. Core CPI, which excludes fresh food prices, fell 0.2 percent on the year, as it did in April, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, increased 0.4 percent on the year, up from 0.2 percent previously. The minutes of the BoJ’s meeting held April 27 and the minutes of an unscheduled meeting held May 22 showed the discussion at these meetings in line with the statements published when they concluded. Policy rates were left on hold at both of these meetings, as they were at the most recent meeting held earlier this month, but the minutes provided more details of some of the additional measures that officials have implemented as part of efforts to offset the impact of the Covid-19 pandemic on the Japanese economy. Preliminary estimates show Australian retail sales rose 16.3 percent on the month in May, rebounding sharply from a drop of 17.7 percent in April. The sharp fall in April and the increase in May were both records and largely reflected the impact of the initial tightening and then subsequent easing of restrictions on households and businesses to curb the spread of the Covid-19 virus. Spending on dining out and clothing were particularly strong after sharp declines previously. Headline retail sales rose 5.3 percent on the year in May.
read moreUS Markets
Equities recovered some of Thursday’s dramatic losses on buy-the-dip sentiment Friday but ended lower on the
week. Many investors remained cautious about rising Covid-19 infection rates in many US states and concerned
that the rally from March lows remains overdone given the dicey economic outlook. On the day, the Dow Jones
industrial index rose 1.9 percent; the S&P 500 gained 1.3 percent, and the NASDAQ rose 1.0 percent.
Among sectors, real estate was the best performer, with financials and energy beating the tape and bouncing
back from Thursday’s plunge. Materials gained with support from commodities and chemical stocks. Technology
shares outperformed, led by software and networking companies. Industrials perked up with airlines leading the
way. Consumer discretionary shares lagged on poor earnings from retailers Lululemon and PVH.
Among companies in the news, software company Adobe rose 4.9 percent after an earnings beat but removing
its guidance. American Airlines surged 16 percent after reporting improving passenger traffic. Hertz, the
struggling car rental company, jumped 37 percent after it announced plans to sell more shares following the
recent stock price recovery.
On the downside, Lululemon, the sports apparel retailer, declined 3.8 percent after missing the market’s high
earnings expectations. PVH, another clothing retailer, fell 5.9 percent after an earnings miss and lower guidance
In US economic data, consumer sentiment improved in June and, at 78.9, exceeded the top side of Econoday's
consensus range. This index fell nearly 20 points in April to 71.8 before edging higher in May to 72.3. June's
success reflected improvement in expectations which rose more than 7 points though the assessment of current
conditions also improved, up 5-1/2 points.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$0.86 to US$38.90,
while spot gold rose US$3.74 to US$1,731.59. The US dollar rose against most major currencies but weakened
versus commodity currencies of Australia, New Zealand and Canada. The US Treasury 30-year bond yield rose
6 basis points to 1.46 percent while the 10-year note yield rose 4 basis points to 0.71 percent.
European markets
Equities recovered early declines to end mixed to slightly higher Friday following Thursday’s big selloff, as sectors
that led Thursday’s losses bounced back. Sentiment appeared to stabilize as investors focused on an improving
pandemic picture in the Eurozone. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX declined 0.2
percent, the French CAC rose 0.5 percent, and the UK FTSE-100 also rose 0.5 percent.
Among sectors, best performers were basic resources, real estate, autos, media, travel & leisure, oil & gas,
utilities, banks, and insurance. Lagging were financial services, health care, chemicals, retail, personal &
household goods, technology, construction, and telecom.
IAG, owner of British Airways, rose 4.8 percent, as it joined several other airlines in filing legal action against
UK quarantine rules. Pearson rose 11.7 percent on news an activist investor had taken a stake in the UK
publisher. ON the downside, AstraZeneca, the vaccine maker, fell 0.9 percent on mixed clinical trial news.
In economic data, Eurozone goods production dropped in April. A record 17.1 percent monthly fall was less than
expected but with March's drop revised from 11.3 percent to 11.9 percent, annual workday adjusted growth still
slumped from minus 13.5 percent to minus 28.0 percent. Separately, the UK economy imploded in April, the
first full month of the lockdown. Real GDP contracted fully 20.4 percent on the month, much more than expected
and almost ten times larger than the steepest pre-Covid-19 decline.
Asia Pacific Markets
Most major Asian markets closed lower on the day Friday, extending losses on the week. The regional data calendar was light, with investors instead taking direction from the heavy losses on Wall Street on Thursday and renewed concerns about the US economic outlook and a potential second wave of Covid-19 infections. Australia’s All Ordinaries index fell sharply for a second consecutive day, closing down 2.0 percent on the day and 2.6 percent on the week after strong gains earlier in the month. Japan’s Nikkei and Topix indices fell 0.8 percent and 1.2 percent respectively on the day, taking losses on the week to 2.4 percent and 2.6 percent respectively, while Hong Kong’s Hang Seng index closed down 0.7 percent on the day and 1.9 percent on the week. the Shanghai Composite index outperformed with no change on the day and a fall of 0.4 percent on the week. Indian data scheduled for release Friday were not published due to the ongoing impact of the national lockdown and other measures introduced to curb the domestic spread of Covid-19. These restrictions severely limited the ability of officials to collate the data. Inflation data for May were not published, as was the case with April data last month. Industrial production data for April were also not published.
read moreUS Markets
Blowout US jobs numbers Friday gave bulls license to continue the risk-on rally that has propelled equities higher
since March. The Dow Jones industrial index rose 3.2 percent; the S&P 500 gained 2.6 percent, and the NASDAQ
rose 2.1 percent.
In very unexpected and positive results, nonfarm payrolls shot 2.509 million higher in May versus April's
enormous decline of 20.687 million (revised). Market expectations called for a decline in payrolls of nearly 8
million. The unemployment rate surprisingly fell, not rose, by 1.3 percentage points to 13.3 percent.
The Bureau of Labor Statistics attributed the improvement to the limited resumption of economic activity as
virus restrictions eased. Payrolls rose sharply in leisure and hospitality (1.239 million), construction (464,000),
education and health services (424,000), as well as retail trade (367,800) and manufacturing (225,000).
With all stock sectors higher, best performers were energy, aerospace, banks, homebuilders, apparel, hospitals,
and packaging. Lagging but still higher were biotech, pharma. Internet, entertainment, and other stocks geared
toward lockdowns and staying at home.
Oil exploration companies were big winners, reflecting gains in crude oil prices, as markets responded to the
recovery story, and expectations rose for oil exporters to trim output again. Haliburton, the big driller, rose 10.2
percent.
Among other companies in focus, chipmaker Broadcom rose 2.7 percent after reporting in-line quarterly results
and saying it will keep its dividend. Gap, the retailer, rose 1.4 percent after reporting a wider-than-expected loss
and lower than expected revenues. On the downside, Slack Technologies, the remote work communications
company, fell 14 percent after announcing its quarterly results as markets had hoped for even stronger revenue
growth.
European markets
Surprisingly positive US jobs figures gave equities a second kick higher Friday on top of earlier gains powered
by strength in banks, energy, homebuilders, and travel stocks. The Europe-wide STOXX 600 jumped by 2.5
percent, the German DAX rallied 3.4 percent, the French CAC gained 3.7 percent, and the UK FTSE-100 rose 2.3
percent.
The jobs report gave credence to the recovery narrative that has underpinned markets. Among other positives,
the EU Commission reportedly called on member nations to lift travel restrictions by the end of June. European
airlines rose, with Air France KLM up 12.5 percent, and Lufthansa up 6.2 percent.
Among the day’s biggest gainers were Carnival, the cruise operator, up 19.8 percent, and builder Taylor Wimpey,
up 4.4 percent on a positive trading report, plus a better than expected UK Halifax housing price index report.
Among sectors, outperformers included banks, oil & gas, autos, travel, insurance, basic resources, and
industrials. Lagging, but still higher were defensive shares such as utilities, health care, food & beverage, media,
telecom, and real estate.
In economic data, UK house prices dipped 0.2 percent in May versus April. However, the latest drop was shallower
than expected and only reduced the annual inflation rate from 2.7 percent to 2.6 percent.
Asia Pacific Markets
Major Asian markets closed higher on the day Friday, extending gains on the week as confidence grows about the potential for recovery in the region from the Covid-19 pandemic’s economic impact. Moves on Friday, however, were generally moderate, with the regional data calendar light and investors waiting for guidance from US payrolls data. Japan’s Nikkei and Topix indices advanced 0.7 percent and 0.5 percent on the day respectively, and closed up 4.5 percent and 3.1 percent on the week, while Australia’s All Ordinaries index rose 0.1 percent on the day and 4.2 percent on the week. The Shanghai Composite index closed up 0.4 percent on the day but underperformed on the week with an increase of 3.8 percent. Hong Kong’s Hang Seng index outperformed on both the day and on the week, with gains of 1.7 percent and 8.0 percent respectively. Investor concerns about the impact of the Chinese government’s decision last week to impose stricter security rules in Hong Kong appeared to have eased, with local authorities insistent that these changes will not hinder businesses and the financial sector. Sentiment was also boosted after the CEO of Hong Kong’s stock exchange, Charlie Li, said on Thursday that many US-Listed Chinese firms are likely to list in Hong Kong later this year. Expectations of more listings have also prompted higher capital inflows into Hong Kong in recent weeks, though authorities have continued to express confidence that these flows can be managed with no pressure on the long-standing currency peg with the US dollar. Household spending in Japan, in real terms, fell 11.1 percent on the year in April after falling 6.0 percent in March, a smaller decline than the consensus forecast for a drop of 14.5 percent. Spending had already been weak before the Covid-19 pandemic after consumption tax rates were raised in October 2019, with the year-onyear fall in April the seventh in a row. Spending on food, clothing, transportation and communications and recreation all fell, partly offset by stronger growth in spending on utilities. Data published last week showed retail sales fell 13.7 percent on the year in April after dropping 4.7 percent in March.
read moreUS Markets
Equities were flat to higher Friday with defensive sectors leading as markets saw progress on Covid-19 vaccines
but confronted rising US-China worries. The Dow industrial index was flat (down 0.037 percent), the S&P 500
rose 0.2 percent, and the NASDAQ was up 0.4 percent.
On the positive side were comments from top US health adviser Anthony Fauci about Moderna’s preliminary
vaccine trial. Also positive were more reports about the big push to secure a vaccine soon, with AstraZeneca’s
vaccine also reportedly showing progress. On the negative side for markets was the China story after China
moved to limit Hong Kong’s independence, and the US and China traded barbs over the pandemic, trade conflicts,
and other disputes.
Among stock sectors, defensive plays including real estate and utilities were the day’s best performers, with
consumer staples also outperforming, led by food stocks and health & personal care. Other gainers included
communications, especially internet stocks. On the downside, the energy sector fared worst as oil prices fell on
worries about Chinese demand. Financials lagged as banks gave back some of the week’s gains. Materials and
consumer discretionary shares also underperformed.
Among companies, Nvidia, the gaming chipmaker, rose 2.9 percent after strong quarterly results. Coty, the
beauty products company, surged 12.6 percent after launching a new line. On the downside, Ross Stores fell 3.1
percent after an earnings miss and disappointing the market on its plan to reopen its stores. Deere, the heavy
equipment company, fell 1.5 percent despite topping expectations on strong sales of farm equipment.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 87 cents to US$35.30 while
spot gold rose US$9.78 to US$1,735.10. The US dollar rose against most major currencies. The US Treasury 30-
year bond yield fell 1 basis point to 1.37 percent while the 10-year note yield fell 1 basis point to 0.66 percent.
European markets
Equity indexes ended flat Friday as weakness in China-sensitive sectors offset gains elsewhere. The Europe-wide
STOXX 600 was unchanged (down 0.03) percent, the German DAX firmed 0.1 percent, the French CAC was
unchanged (down 0.02) percent, and the UK FTSE-100 fell 0.4 percent.
Renewed US-China tensions, plus news that China had dropped its annual growth target, hurt oil stocks, miners,
luxury, technology, and other sectors with heavy exposure to China. On the positive side, autos outperformed,
along with travel & leisure, media, real estate, and construction, with support from the reopening narrative and
hopes for progress on a Covid-19 vaccine.
Among companies in focus, Asia-focused banks were hit hard, including HSBC, off 5 percent, and Standard
Chartered, off 2.4 percent, while big UK oil companies Royal Dutch Shell, off 0.9 percent, and BP, down 0.6
percent, tracked oil prices lower. In merger news, German real estate companies TAG Immobilien, up 6.6
percent, and LEG Immobilien, up 0.8 percent, gained on news the two were considering a merger.
In economic data, UK retail sales collapsed in April. Following a previously unprecedented and marginally steeper
revised 5.2 percent monthly drop in March, volumes fell a record 18.1 percent as many stores were unable to
open due to the coronavirus crisis. This was much sharper than expected and left purchases some 22.6 percent
short of their level a year ago, also a new all-time low.
Asia Pacific Markets
Major Asian markets sold off heavily Friday in response to news China’s government is considering tightening security controls on Hong Kong, with moves on the week mixed. Hong Kong’s Hang Seng index plunged 5.6 percent on the day and closed the week down 3.7 percent, while the Shanghai Composite index dropped 1.9 percent both the day and on the week. Japan’s Nikkei and Topix indices fell 0.8 percent and 0.9 percent respectively on the day, reducing gains on the week to 1.8 percent and 1.7 percent respectively. Australia’s All Ordinaries index also closed down 0.9 percent on the day but outperformed on the week with a gain of 2.1 percent. Senior Chinese leaders meeting at the annual National People’s Congress, which started in Beijing Friday, are considering draft legislation that will extend to Hong Kong national security measure that currently only apply to mainland China. Despite Hong Kong's status as a "special administrative region" with greater local autonomy, civil unrest there over the last twelve months has clearly increased support in Beijing to impose tighter controls. A similar proposal in 2003 was withdrawn after large-scale protests, and the sharp drop in Hong Kong shares Friday likely reflects concerns that this move now may also lead to a renewed escalation in civil unrest. The meeting of the National People’s Congress also included the presentation of the government’s economic report from Premier Li Keqiang. Uncertainty about the near-term outlook as the economy recovers from the Covid-19 pandemic has prompted officials to dispense with their normal practice of announcing a target for annual GDP growth. Premier Li, however, told the Congress that the government is aiming for employment growth of around 9 million people this year and to keep inflation around 3.5 percent. He also reaffirmed that policy settings will remain supportive this year, with monetary policy aiming to keep lending rates low and an increase in infrastructure spending expected to help widen the fiscal deficit from around 2.8 percent of GDP in 2019 to around 3.5 percent in 2020. The Bank of Japan held an unscheduled policy meeting Friday. Although policy rates were left on hold, as they have been since 2016, the main focus of the meeting was to decide upon additional measures to provide funds to financial institutions as part of efforts to offset the economic impact of the pandemic. In addition to previously announced measures worth around Y45 trillion, officials have agreed to provide up to Y30 trillion to banks at zero interest for up one year for the purpose of lending these funds to domestic businesses at zero interest and with no collateral. The BoJ will pay a positive interest rate of 0.1 percent on these funds to encourage banks to participate in this program. Japanese inflation data were also published Friday and showed price pressures weakened significantly in April. Headline inflation fell from 0.4 percent in March to 0.1 percent in April, while Core CPI, which excludes fresh food prices, fell 0.2 percent on the year after increasing 0.4 percent previously. This measure of underlying inflation is in negative territory for the first time since late 2016, with changes in consumer spending patterns associated with the pandemic likely a major factor driving weaker prices in many categories. The Reserve Bank of India also held an “off-cycle” meeting Friday, bringing forward the meeting scheduled to take place early next month. Officials cut the main policy rate by 40 basis points to 4.0 percent after they cut it by 75 basis points at their late meeting in March. This decision reflects officials' assessment that the impact on economic activity of the pandemic and the national lockdown put in place late March has already been more severe than initially anticipated and is set to continue. In contrast, officials are less concerned about the nearterm outlook for inflation and the potential for it to rise above their target range. In addition to cutting rates Friday, the RBI also agreed to maintain an "accommodative" monetary policy stance as long as necessary to revive growth. New Zealand retail trade sales volumes fell 0.7 percent on the quarter in the three months to March after revisions show growth was flat in the three months to December. This is the biggest quarterly fall in sales volumes in eight years and reflects the impact of travel, social, and business restrictions imposed to curb the domestic spread of Covid-19. Year-on-year growth in sales volumes also moderated from 3.3 percent in the three months to December to 2.3 percent in the three months to March.
read moreUS Markets
Signs of improvement in selected US economic data and hopes for wider economic reopening kept selling
pressure in check Friday despite a return of the US-China trade dispute. The Dow industrials rose 0.3 percent,
the S&P 500 gained 0.4 percent, and the NASDAQ was up 0.8 percent.
Markets keyed on two US economic reports that were somewhat less gloomy than expected. Consumer sentiment
actually edged up nearly 2 points to 73.7 in May, well above the expected 66.0. Also somewhat better than
expectations, the New York Empire State manufacturers index came in at minus 48.5, up from April's disastrous
minus 78.2. By contrast, other big US data releases, retail sales, and industrial production, showed no relief
from the virus shock.
Meanwhile, on the US-China trade front, the Commerce Department said foreign companies using American
chip-making equipment would be required to apply for permits before they could supply semiconductors to
Huawei, China's telecom champion. China’s Global Times newspaper reported China may retaliate by placing US
companies and others affected by the permit requirement on an “unreliable entities list” that would subject them
to restrictions.
Among sectors, consumer discretionary shares outperformed on the reopening narrative, led by retailers. Health
care outperformed, led by managed care and biotech. Consumer staples advanced, along with materials, miners,
and energy. Laggards included utilities and real estate, along with technology, with chipmakers hit by the Huawei
dispute.
Among companies in the news, semiconductor bellwether Applied Materials fell 4 percent after reporting an
earnings and revenues miss, but losses were limited as the firm spoke of recovering underlying business
conditions. VF Corporation, owner of North Face and other outdoorsy brands, fell 6 percent after earnings and
revenue misses. On the positive side, Dow member Nike rose 0.5 percent after talking up signs of recovering
demand in Asia and elsewhere.
In US data, retail sales fell 16.4 percent, steeper than Econoday's consensus for 11.2 percent contraction,
following a revised 8.3 percent decline in March. Auto sales, down 12.4 percent, were actually strong relative to
other groups: apparel down 78.8 percent, electronics & appliances down 60.6 percent, furniture down 58.7
percent, restaurants down 29.5 percent, general merchandise down 20.8 percent, food & beverage stores down
13.1 percent. Industrial production fell 11.2 percent in April compared to March. Manufacturing production fell
13.7 percent. Capacity utilization fell nearly 8 percentage points to 64.9 percent.
European markets
Better Chinese data, suggesting stabilizing industrial conditions, gave equities a lift Friday, though markets ended
down on the week. For Friday, the Europe-wide STOXX 600 rose 0.5 percent, the German DAX rose 1.2 percent,
the French CAC firmed 0.1 percent, and the UK FTSE-100 rose 1.0 percent.
Reports of more fiscal stimulus ahead from Germany and other Eurozone countries supported stocks. On the
negative side were worries that the US-China trade dispute is heating up again, along with ongoing concerns
about a second wave of Covid-19 cases as many countries begin reopening.
Among sectors, outperforming were basic resources, autos, travel, industrials, chemicals, food & beverage,
financial services, personal & household goods, and media, while underperformers were construction, utilities,
retail, banks, real estate, telecom, technology, insurance, health care, and oil & gas.
Among companies in focus, French chipmaker STMicroelectronics, a heavyweight in the CAC, dropped 3 percent
on the US-China trade dispute after the US blocked chip sales to Huawei. On the positive side, Swiss pharma
Roche rose 1.8 percent after announcing it would sell new diagnostics for Covid-19 patients.
Asia Pacific Markets
Most major Asian markets closed Friday little changed or higher on the day and little changed or lower on the week. Chinese activity data published Friday indicated that economic conditions have continued to stabilize from the initial impact of the coronavirus pandemic at the start of the year. Regional investor sentiment was also guided by a move higher in global oil prices during the Asian trading session, concerns about the potential for renewed trade tensions between China and other major economies as a result of the pandemic, and uncertainty about US economic data scheduled for release later in the day. Australia’s All Ordinaries index was among the stronger performers in the region Friday, closing up 1.4 percent on the day to post a small 0.1 percent gain on the week as public health restrictions were eased in response to a drop in coronavirus cases. Japan’s Nikkei and Topix indices also rose on the day, up 0.6 percent and 0.5 percent respectively, but finished the week down 0.7 percent and 0.3 percent respectively. The Shanghai Composite index fell 0.1 percent on the day and 0.9 percent on the week, while Hong Kong’s Hang Seng index also fell 0.1 percent on the day but underperformed on the week with a decline of 1.8 percent. Chinese data showed industrial production, retail sales, and fixed asset investment all posted month-on-month increases and improved year-on-year growth in April, suggesting that economic activity remains well below prepandemic levels but that the stabilization in conditions that began in March has continued. This is broadly in line with previously published PMI survey data. Industrial production rose 2.27 percent on the month in April after surging 33.04 percent in March, with year-on-year growth picking up from a decline of 1.1 percent to an increase of 3.9 percent. Retail sales rose 0.32 percent on the month after a similarly modest increase of 0.38 percent previously, with year-on-year growth improving from a decline of 15.8 percent to a fall of 7.5 percent. Fixed asset investment rose 6.19 percent on the month after increasing 6.10 percent previously, with year-to-date growth also improving from a drop of 16.1 percent to a fall of 10.3 percent. Revised Hong Kong GDP data showed headline growth rates for the three months to March were unchanged from initial estimates published earlier in the month, confirming the severe impact of the coronavirus pandemic on the domestic economy. GDP contracted by a record 5.3 percent on the quarter and by a record 8.9 percent on the year, after dropping 0.3 percent on the quarter and 3.0 percent on the year in the three months to December. Household consumption, investment spending, and exports all fell sharply in the three months to March, only partly offset by a large increase in government spending. Also published Friday, Japanese data showed the producer price index fell 2.3 percent on the year in April after falling 0.4 percent in March, the biggest decline since mid-2016, mainly reflecting weaker energy prices.
read moreUS Markets
Signs of improvement in selected US economic data and hopes for wider economic reopening kept selling
pressure in check Friday despite a return of the US-China trade dispute. The Dow industrials rose 0.3 percent,
the S&P 500 gained 0.4 percent, and the NASDAQ was up 0.8 percent.
Markets keyed on two US economic reports that were somewhat less gloomy than expected. Consumer sentiment
actually edged up nearly 2 points to 73.7 in May, well above the expected 66.0. Also somewhat better than
expectations, the New York Empire State manufacturers index came in at minus 48.5, up from April's disastrous
minus 78.2. By contrast, other big US data releases, retail sales, and industrial production, showed no relief
from the virus shock.
Meanwhile, on the US-China trade front, the Commerce Department said foreign companies using American
chip-making equipment would be required to apply for permits before they could supply semiconductors to
Huawei, China's telecom champion. China’s Global Times newspaper reported China may retaliate by placing US
companies and others affected by the permit requirement on an “unreliable entities list” that would subject them
to restrictions.
Among sectors, consumer discretionary shares outperformed on the reopening narrative, led by retailers. Health
care outperformed, led by managed care and biotech. Consumer staples advanced, along with materials, miners,
and energy. Laggards included utilities and real estate, along with technology, with chipmakers hit by the Huawei
dispute.
Among companies in the news, semiconductor bellwether Applied Materials fell 4 percent after reporting an
earnings and revenues miss, but losses were limited as the firm spoke of recovering underlying business
conditions. VF Corporation, owner of North Face and other outdoorsy brands, fell 6 percent after earnings and
revenue misses. On the positive side, Dow member Nike rose 0.5 percent after talking up signs of recovering
demand in Asia and elsewhere.
In US data, retail sales fell 16.4 percent, steeper than Econoday's consensus for 11.2 percent contraction,
following a revised 8.3 percent decline in March. Auto sales, down 12.4 percent, were actually strong relative to
other groups: apparel down 78.8 percent, electronics & appliances down 60.6 percent, furniture down 58.7
percent, restaurants down 29.5 percent, general merchandise down 20.8 percent, food & beverage stores down
13.1 percent. Industrial production fell 11.2 percent in April compared to March. Manufacturing production fell
13.7 percent. Capacity utilization fell nearly 8 percentage points to 64.9 percent.
European markets
Better Chinese data, suggesting stabilizing industrial conditions, gave equities a lift Friday, though markets ended
down on the week. For Friday, the Europe-wide STOXX 600 rose 0.5 percent, the German DAX rose 1.2 percent,
the French CAC firmed 0.1 percent, and the UK FTSE-100 rose 1.0 percent.
Reports of more fiscal stimulus ahead from Germany and other Eurozone countries supported stocks. On the
negative side were worries that the US-China trade dispute is heating up again, along with ongoing concerns
about a second wave of Covid-19 cases as many countries begin reopening.
Among sectors, outperforming were basic resources, autos, travel, industrials, chemicals, food & beverage,
financial services, personal & household goods, and media, while underperformers were construction, utilities,
retail, banks, real estate, telecom, technology, insurance, health care, and oil & gas.
Among companies in focus, French chipmaker STMicroelectronics, a heavyweight in the CAC, dropped 3 percent
on the US-China trade dispute after the US blocked chip sales to Huawei. On the positive side, Swiss pharma
Roche rose 1.8 percent after announcing it would sell new diagnostics for Covid-19 patients.
Asia Pacific Markets
Most major Asian markets closed Friday little changed or higher on the day and little changed or lower on the week. Chinese activity data published Friday indicated that economic conditions have continued to stabilize from the initial impact of the coronavirus pandemic at the start of the year. Regional investor sentiment was also guided by a move higher in global oil prices during the Asian trading session, concerns about the potential for renewed trade tensions between China and other major economies as a result of the pandemic, and uncertainty about US economic data scheduled for release later in the day. Australia’s All Ordinaries index was among the stronger performers in the region Friday, closing up 1.4 percent on the day to post a small 0.1 percent gain on the week as public health restrictions were eased in response to a drop in coronavirus cases. Japan’s Nikkei and Topix indices also rose on the day, up 0.6 percent and 0.5 percent respectively, but finished the week down 0.7 percent and 0.3 percent respectively. The Shanghai Composite index fell 0.1 percent on the day and 0.9 percent on the week, while Hong Kong’s Hang Seng index also fell 0.1 percent on the day but underperformed on the week with a decline of 1.8 percent. Chinese data showed industrial production, retail sales, and fixed asset investment all posted month-on-month increases and improved year-on-year growth in April, suggesting that economic activity remains well below prepandemic levels but that the stabilization in conditions that began in March has continued. This is broadly in line with previously published PMI survey data. Industrial production rose 2.27 percent on the month in April after surging 33.04 percent in March, with year-on-year growth picking up from a decline of 1.1 percent to an increase of 3.9 percent. Retail sales rose 0.32 percent on the month after a similarly modest increase of 0.38 percent previously, with year-on-year growth improving from a decline of 15.8 percent to a fall of 7.5 percent. Fixed asset investment rose 6.19 percent on the month after increasing 6.10 percent previously, with year-to-date growth also improving from a drop of 16.1 percent to a fall of 10.3 percent. Revised Hong Kong GDP data showed headline growth rates for the three months to March were unchanged from initial estimates published earlier in the month, confirming the severe impact of the coronavirus pandemic on the domestic economy. GDP contracted by a record 5.3 percent on the quarter and by a record 8.9 percent on the year, after dropping 0.3 percent on the quarter and 3.0 percent on the year in the three months to December. Household consumption, investment spending, and exports all fell sharply in the three months to March, only partly offset by a large increase in government spending. Also published Friday, Japanese data showed the producer price index fell 2.3 percent on the year in April after falling 0.4 percent in March, the biggest decline since mid-2016, mainly reflecting weaker energy prices.
read moreUS Markets
Better mood music from US-China trade talks helped spur across-the-board gains in US equities Friday, along
with ongoing expectations for economic recovery. The Dow industrials rose 1.9 percent, the S&P 500 gained 1.7
percent, and the NASDAQ was up 1.6 percent.
Risk assets were soothed by news that top US and Chinese officials had agreed to “create a favorable atmosphere
and conditions” to implement the phase-one trade accord, despite President Trump’s threat to jettison the pact,
and despite an ongoing war of words between the two sides over the origins of the global pandemic. Markets
appeared unfazed by disastrous monthly US employment figures as the focus has already shifted to the third
quarter and forward-looking economic indicators. Markets continue to buy into a hopeful scenario that says the
worst pandemic effects are past.
Among sectors, winners included miners, retail, autos, airlines, finance, chipmakers, tobacco, health & personal
care, and banks. Laggards included internet, software, utilities, pharma, and utilities.
Among companies in the news, Axon, the Taser maker, rose 23 percent after a revenues beat, and positive
guidance. Zillow, the real estate broker, rose 9 percent after its CEO said the housing market has passed the
worst. Herbalife, the dietary supplements business, rose 12 percent on an earnings and revenues beat. Uber,
the ridesharing leader, rose 6 percent on signs of improving ride volumes in the US and Europe.
In US economic data, the catastrophic destruction of the labor market was about as expected with nonfarm
payrolls falling 20.5 million in April versus Econoday's consensus for 21.5 million. The unemployment rate didn't
rise quite as much as expected, but at 14.7 percent and a 10.3 percentage point surge it really can't be called
good news. And this rate would have been closer to 20 percent if not for a special classification for virus effects.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$1.71 to US$30.82,
while spot gold fell US$8.83 to US$1,706.41. The US dollar was weaker against most major currencies but up
vs. the yen. The US Treasury 30-year bond yield rose 5 basis points to 1.38 percent while the 10-year note yield
rose 3 basis points to 0.67 percent.
European markets
Positive earnings reports and easing worries over a renewed US-China trade war gave equities a boost Friday
The Europe-wide STOXX 600 rose 0.9 percent, the German DAX gained 1.4 percent, the French CAC rose 1.1
percent, and UK markets were closed for a holiday.
Other positives included news the ECB is considering expanding its asset purchases to include junk bonds to
fight the pandemic fallout, and agreement by Eurozone governments to increase low-cost lending through the
European Stabilization Mechanism.
Among the day’s winners were: ING, the Dutch bank, up 3.4 percent, after announcing an earnings beat; and
Siemens, the German manufacturer, up 5.9 percent as the market liked the German manufacturer’s earnings
and cost-cutting plan. Automakers outperformed on the better trade news, with BMW, the German luxury
automaker up 2.5 percent. Industrials, telecom, travel & leisure, and chemicals all outperformed.
Asia Pacific Markets
Major Asian markets posted solid gains Friday, with most also closing the week higher. Reports of discussions between senior US and Chinese officials on the next stage of trade negotiations provided some support to investor sentiment. Japan’s Nikkei and Topix indices outperformed on the day with increases of 2.6 percent and 2.2 percent respectively and advanced 2.9 percent and 1.9 percent respectively on the week. The Shanghai Composite index closed up 0.8 percent on the day and 1.2 percent on the week. Australia’s All Ordinaries index rose 0.7 percent on the day and 3.1 percent on the week, with the national government announcing Friday plans to ease social and business restrictions put in place to curb the spread of the coronavirus but state governments indicating that these plans will be implemented cautiously. Hong Kong’s Hang Seng index rose 1.0 percent on the day but underperformed on the week with a decline of 1.7 percent. Japanese data published Friday showed a drop in household spending in March and a sharp contraction in the services sector in April. Household spending fell 6.0 percent on the year in March after declining 0.3 percent in February, with the impact of the coronavirus pandemic adding to weakness that had already been evident since an increase in consumption tax rates last October. The Markit PMI survey for the services sector showed a fall in its headline index from 33.8 in March to 21.5 in April, the lowest level since the survey began in 2007. Survey respondents reported weaker orders, new export orders, and employment, a sharp drop in business confidence, and falls in both input costs and selling prices. With the manufacturing sector survey published last week also showing a bigger contraction, the composite index fell from 36.2 in March to a record low of 27.8 in April. The Reserve Bank of Australia published its quarterly Statement on Monetary Policy Friday after leaving policy rates on hold at a record low of 0.25 percent at its monthly meeting earlier in the week. Consistent with public comments made in recent weeks, officials expect both the global economy and Australia's economy to contract sharply in the first half of the year in response to the global coronavirus pandemic. Looking further ahead, they acknowledge the outlook is highly uncertain but have a baseline scenario of the economy recovering in the second half of the year and into 2021. Nevertheless, they expect inflation will remain below their 2.0 percent to 3.0 percent target range for the foreseeable future and remain committed to keeping policy rates at or below current levels until conditions improve.
read moreUS Markets
Earnings disappointment hurt equities Friday, along with worries over President Trump’s threats to target China
with new trade sanctions. The Dow industrials fell 2.6 percent, the S&P 500 was off 2.8 percent, and the NASDAQ
fell 3.2 percent.
Apple sold off 1.6 percent despite strong results amid disappointment that it did not provide second-quarter
guidance due to virus uncertainty. Amazon, off 7.6 percent, beat on revenues but the market reacted badly to
the company’s decision to spend its entire $4 billion first quarter profit on coping with the pandemic.
Among sectors, worst hit were energy, autos, retail, banks, airlines and telecom. Holding up better were food,
precious metals, pharma, and steel.
In US economic data, reflecting a giant 76.0 score for deliveries -- delays tied to virus shutdowns -- ISM's
composite manufacturing headline came in at 41.5, above expected. In contrast, new orders came in at 27.1
with production and employment both at 27.5, all 15 to 20 points lower than March. Backlogs fell more than 8
points to 37.8 with input prices down a couple more points to 35.3.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$1.30 to US$26.57,
while spot gold rose US$12.21 to US$1,700.02. The US dollar was mixed against major currencies. The US
Treasury 30-year bond yield fell 2 basis points 1.26 percent while the 10-year note yield fell 2 basis points to
0.62 percent.
European markets
Equities slipped Friday on weakness in energy, mining and travel stocks, with sentiment hurt by President
Trump’s threat to renew trade sanctions against China. The Europe-wide STOXX 600 fell 0.8 percent and the UK
FTSE-100 declined 2.3 percent. Other major markets were on holiday.
Royal Dutch Shell dropped 7 percent for a second day of steep declines, after a ratings downgrade Friday. BP
also fell 4.6 percent. British Airways fell 3 percent after announcing cutbacks amid continued fallout from the
pandemic.
Outperformers included construction, autos, chemicals and technology, while lagging were basic resources,
travel, insurance, and consumer goods.
Asia Pacific Markets
Most major Asian markets were closed for holidays Friday, including those in China, Hong Kong, Korea, Singapore, and India. Those markets open for trading fell sharply, with Australia’s All Ordinaries index closing down 4.9 percent, reversing most of the strong gains made earlier in the week, and Japan’s Nikkei and Topix indices dropping 2.8 percent and 2.2 percent on the day after weak PMI data. Major markets closed higher on the week to varying degrees, with Hong Kong’s Hang Seng index up 3.4 percent, the Shanghai Composite index up 1.8 percent, Japan’s Nikkei and Topix indices up 1.9 percent and 0.7 percent respectively, and Australia’s All Ordinaries index up 0.5 percent. The Markit Manufacturing PMI headline index for Japan fell to 41.9 in April, below the flash estimate of 43.7, confirming a decline from 44.8 in March, and indicating that Japan's manufacturing sector contracted at the steepest place since March 2009. Although the Japanese manufacturing sector was already experiencing an extended period of weakness heading into 2020, it is clear that the economic impact of the global coronavirus pandemic has exacerbated and will likely prolong the downturn. The minutes of the Bank of Japan’s March 16 meeting, also published Friday, showed that some officials expressed concern that Japan's economy may not recover strongly even after the direct impact of the pandemic recedes given that it was weak even before the impact hit. Australia's producer price index increased by 0.2 percent on the quarter in the three months to March after increasing 0.3 percent in the three months to December. Year-on-year growth in the producer price index eased from 1.4 percent to 1.3 percent.
read moreUS Markets
Strength in tech leaders Apple and Microsoft lifted US equities indexes, despite mixed corporate news Friday.
Markets took favorable note of plans for some US states to ease lockdown restrictions. The Dow industrials rose
1.1 percent, the S&P 500 gained 1.4 percent, and the NASDAQ was up 1.7 percent.
Among sectors, outperformers included railroads, tobacco, homebuilders, tech, autos and retail. Lagging were
oil exploration & production, airlines, real estate, machinery, and entertainment. Market leaders Apple, up 2.9
percent, and Microsoft, up 1.8 percent, rose amid favorable expectations for earnings next week.
Among other companies in the news, Google firmed 0.4 percent after saying it would cut costs including slashing
its marketing budget by half, a remarkable turnabout for the growth juggernaut. Intel also managed to recover
from initial losses to end up 0.4 percent after it reported strong quarterly results but disappointing guidance.
American Express rose 0.9 percent after topping earnings expectations but boosting its credit provision.
Boeing dropped 6.4 percent after reports it will announce job cuts and slash aircraft output in response to falling
demand. Beleaguered retailer JC Penney fell 11 percent after reports it was close to bankruptcy.
In US economic data, civilian aircraft pulled durable goods orders down 14.4 percent in March from February.
Orders for nondefense aircraft fell in March, at minus $16.3 billion, in what may be the trend given low travel
and the failure of the Boeing 737. In a separate report, consumer sentiment actually improved slightly since the
preliminary reading on April 9th. April's final at 71.8 tops Econoday's consensus range though it was 17.3 points
below March. The April decline in expectations, at nearly 10 points to 70.1, is much less severe than the nearly
30-point plunge in current conditions to 74.3.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by 26 cents to US$21.84,
while spot gold fell US$3.52 to US$1,727.98. The US dollar weakened against most major currencies. The US
Treasury 30-year bond yield fell 2 basis points 1.17 percent while the 10-year note yield fell 2 basis points to
0.59 percent.
European markets
Bleak economic data and an underwhelming package of EU stimulus measures depressed equities Friday. The
Europe-wide STOXX 600 fell 1.1 percent, the German DAX lost 1.7 percent, the French CAC was off 1.3 percent,
and the UK FTSE-100 also fell 1.3 percent.
Risk assets reacted poorly to news that European Union leaders had agreed to a relatively modest 500 billion
euro aid package while leaving details of an anticipated larger package for later discussion. Markets expect the
ECB to expand its asset purchase program in the absence of fiscal policy action. Weak economic data, including
a record drop in UK retail sales and an unprecedented plunge in German business sentiment added to the
market’s grasp of the scale of damage from the coronavirus and associated lockdowns.
Among sectors, declines were across the board with weakest performers in travel & leisure, banking, media, and
oil & gas, autos, and industrials, while holding up relatively well were health care, real estate, utilities, food &
beverage, telecom, retail, and construction.
On a busy earnings day, Swiss food conglomerate Nestle rose 2 percent after reporting strong sales growth and
affirming its guidance, as it said the coronavirus impact is unknowable. Sanofi, the French pharma, rose 2 percent
after an earnings beat reflecting consumers stocking up on drugs as the virus epidemic took hold. Among
decliners, Lufthansa fell 7 percent after analyst downgrades after the airline spelled out its new business plan
and cost cuts.
In economic data, UK retail sales nosedived in March. Following an unrevised 0.3 percent monthly fall in February,
volumes slumped fully 5.1 percent, their steepest drop on record as many stores stopped trading from the third
week of the month due to the coronavirus crisis. Meanwhile, Ifo's latest survey found German business sentiment
deteriorating dramatically further and hitting a new series low this month. At just 74.3, the headline index
dropped a record 11.6.
Asia Pacific Markets
Most major Asian markets closed lower Friday, extending losses on the week. Economic data published Friday were generally weak, while investor sentiment was hurt by news overnight that Chinese drug trials of a potential treatment for coronavirus had not proved successful. Shanghai Composite index closed down 1.1 percent on both the day and the week, while Hong Kong’s Hang Seng index fell 0.6 percent on the day and 2.3 percent on the week. Japan’s Nikkei and Topix indices fell 0.9 percent and 0.3 percent on the day respectively, and dropped 3.2 percent and 1.5 percent on the week respectively. Australia’s All Ordinaries index outperformed on the day with an increase of 0.5 percent but was one of the weaker regional performers on the week, closing down 4.4 percent. Japanese inflation data showed price pressures were generally steady in March. The headline consumer price index rose 0.4 percent on the year in March, unchanged from the rate recorded in February, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, advanced 0.6 percent on the year in March, also unchanged from February. BoJ officials in recent months have committed to keep policy rates at or below current levels until they are confident that there will not be a loss of "momentum" towards meeting their 2.0 percent inflation target. These data suggest that progress toward the inflation target remains slow and likely reinforces the case for keeping monetary policy accommodative. Also published Friday, Japan's all industry index fell 0.6 percent on the month in February, weakening sharply from an increase of 0.6 percent in January, and broadly in line with previously published indicators showing the adverse initial impact of the global coronavirus pandemic on Japan's economy in February. Singapore industrial production data showed a strong rebound in output in March, though this was largely driven by the volatile pharmaceuticals industry. Industrial output rose 16.5 percent on the year in March, up sharply from a revised decline of 0.7 percent in February, and rose 21.7 percent on the month after falling a revised 22.1 percent previously. Output in the biochemical industry, which represents around 18 percent of the manufacturing sector and includes pharmaceuticals, surged in March, up 91.4 percent on the year after growth of 6.7 percent in February. Conditions elsewhere in the sector, however, were weak. Officials note that the impact of the global coronavirus pandemic will likely weigh on industrial production significantly in coming months, reflecting both weaker external demand and restrictions on domestic businesses.
read moreUS Markets
Talk of a gradual reopening of economic activity by US states gave risk assets a boost Friday, along with a
positive report on a COVID-19 treatment. The Dow industrials gained 3.0 percent, the S&P 500 rose 2.7 percent,
and the NASDAQ was up 1.4 percent.
President Trump’s guidelines for a phased reopening of many public facilities unveiled Thursday, and reports of
near-term moves by some governors to lift restrictions conveyed the sense that the pandemic may be easing.
Markets were entranced by a report by the STAT medical news publication that Gilead’s remdesivir had helped
COVID-19 patients recover in a limited trial. Gilead rose 8.5 percent on the news.
All sectors gained, with industrials, energy, and financials leading. Consumer staples and technology lagged but
still advanced. Among companies in the news, Boeing surged 15 percent after saying it would restart aircraft
production next week at its Washington State plants. Procter & Gamble, the consumer staples leader, rose 2.6
percent on an earnings beat, despite lowering its 2020 guidance.
In US economic news, the leading economic indicators dropped by a record 6.7 percent in March in what the
report described as sudden and broad-based deterioration among its 10 components, especially for
unemployment claims, which have continued to mount in April, and in stock prices, which have since recovered
strongly. But recovery isn't the theme of this report, which warns that the US is "facing a very deep contraction."
European markets
Hopes for reopening economies in Europe and the US lifted equities indexes Friday. The Europe-wide STOXX 600
jumped 2.6 percent, the German DAX gained 3.2 percent, the French CAC rose 3.4 percent, and the UK FTSE100 was up 2.8 percent.
Among sectors, travel & Leisure, autos, industrials, basic resources, and construction led the winners, while
defensives lagged, including utilities, telecom, health care, and personal & household goods.
Among companies in focus, big miner Rio Tinto rose 3.3 percent after projecting a rebound in Chinese demand,
and as commodities prices popped up. LVMH Moet Hennessy, the French luxury goods leader, rose 4.4 percent,
and Volkswagen was up 6.4 percent despite bleak first quarter results, and pulling their guidance.
In economic data, Eurozone inflation decelerated sharply in March. The final data put the annual rate at just 0.7
percent, unrevised from its flash print and so still down fully 0.5 percentage points from February's final 1.2
percent. This equaled its lowest level since November 2016 and the monthly decline was one of the steepest on
record.
Asia Pacific Markets
Major Asian markets closed the week with solid to strong gains Friday, with sentiment boosted by reports late Thursday that trials for a drug used to treat coronavirus patients had had positive results. Chinese economic data published Friday showed major activity indicators improved in March. Japan’s Nikkei and Topix indices were among the stronger performers in the region, advancing 3.2 percent and 1.4 percent respectively on the day and closing the week up 2.0 percent and 0.9 percent respectively. The Shanghai Composite index closed up 0.7 percent on the day and 1.5 percent on the week, while Hong Kong’s Hang Seng index closed up 1.6 percent the day and 0.3 percent on the week. Australia’s All Ordinaries index gained 1.4 percent on the day and 1.9 percent on the week. Chinese GDP data published Friday showed a sharp contraction in domestic activity for the first quarter of the year, but monthly data showed month-on-month gains in March, indicating that the economy has started to recover to some extent from the initial impact of the coronavirus outbreak at the start of the year. GDP fell 9.8 percent on the quarter in the three months to March after increasing 1.5 percent in the three months to December, while year-on-year GDP growth weakened from an increase of 6.0 percent to a decline of 6.8 percent, somewhat weaker than the consensus forecast for a fall of 6.0 percent. This is the first year-on-year fall in GDP on record. Monthly activity data for March showed some improvement after extreme weakness in February. Industrial production surged 32.13 percent on the month in March after slumping 24.19 percent in February, retail sales rose a modest 0.24 percent after falling 3.64 percent previously, and fixed asset investment increased 6.05 percent after dropping 22.13 percent previously. All three indicators fell in year-on-year terms in March but to a lesser extent than they did in the first two months of the year. Speaking after the release of the data, officials expressed confidence that economic conditions will improve further in coming months. Singapore's non-oil domestic exports rose 17.6 percent on the year in March after increasing 3.1 percent in February, while total imports rose 0.3 percent on the year after increasing 9.4 percent previously. The increase in headline exports growth was mainly driven by stronger demand from regional trading partners, perhaps reflecting shifts in supply chains during the initial impact of the global coronavirus pandemic. These offset weaker year-on-year growth in Singapore's exports to major economies, including the United States, China, Japan, and the European Union. These data suggest that the full impact of the pandemic on regional trading flows had yet to take place in March but could intensify in coming months.
read moreUS Markets
Equities mostly weakened Monday in quiet trading as the market gave back some of last week’s strong gains
ahead of what will be a disastrous corporate earnings season. The Dow industrials fell 1.4 percent and the S&P
500 declined 1.0 percent. The NASDAQ managed to rise 0.5 percent, with support from a rally in Netflix.
Real estate, banks, and financials lagged, with credit cards faring worst as credit concerns rise as earnings
season begins. Industrials suffered, with machinery and airlines weak. Materials also lagged. Best performers
included consumer discretionary, powered by gains in Amazon. Energy outperformed, led by refiners.
Communications services were ahead, with support from Netflix, which rose 7 percent after a positive mention
in Barron’s given its strong position in the video streaming market.
In company news, JP Morgan fell 4.4 percent after saying it would tighten mortgage lending standards to limit
its risk amid a weakening housing market. Walt Disney fell 1.0 percent amid reports its executive, Robert Iger,
was planning measures to keep the company afloat given the COVID-19 hit to business. Boeing, the
beleaguered aircraft company, fell 2.9 percent amid reports it is planning to issue huge new debt. Ford fell 4
percent after issuing an earnings warning given a sales drop due to the virus effect.
On the positive side, Amazon rose 6 percent on news it would soon allow third-party sellers on its platform to
ship non-essential products. Apple rose 2.0 percent amid reports it will launch several 5G phones in the fall.
Gilead, the pharma, rose 2.4 percent on news pointing to positive but inconclusive results so far in clinical
tests of its proposed COVID-19 treatment.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by 54 cents to US$32.02,
while gold rose US$12.60 to US$1,765.40. The US dollar was mixed against most major currencies. The US
Treasury 30-year bond yield rose 4 basis points to 1.39 percent while the 10-year note yield rose 3 basis
points to 0.76 percent.
Asia Pacific Markets
Major Asian markets closed lower Monday as global oil prices moved higher after OPEC and its partners agreed over the weekend to cut production significantly over the next two years. Japan’s Nikkei and Topix indices fell 2.3 percent and 1.7 percent respectively, while the Shanghai Composite index closed down 0.5 percent ahead of key data scheduled for publication later in the week. Markets were closed in Australia and Hong Kong. India's consumer price index rose 5.91 percent on the year in March, down from 6.58 percent in February. Concerns in part about the deflationary impact of the virus prompted the Reserve Bank of India in March to cut its main policy rate by 75 basis points from 5.15 percent to 4.40 percent, its lowest level since 2010.
read moreUS Markets
Equities retreated Friday as the US jobs report surprised to the downside, even as markets expect much worse
employment news ahead, and the global spread of COVID-19 continued. The Dow industrials fell 1.7 percent,
while the S&P 500 and NASDAQ 100 both fell 1.5 percent.
In economic data, US nonfarm payrolls fell a sharper-than-expected 701,000 in March, in a report showing only
the beginning of the coronavirus crisis as the sample was taken early in the month. The unemployment rate, in
the largest monthly increase in 45 years, jumped 0.9 percentage points to 4.4 percent. Employment in leisure
and hospitality fell by 459,000, mainly in food services and drinking places.
All stock sectors declined, with energy, utilities, and financials lagging the most, while health care and materials
did better, and consumer staples fared best. Oil prices rose, but were well off their highs, after news suggesting
Russia might cooperate with OPEC to cut oil output. Major oil exporters including Russia and Saudi Arabia are
scheduled to convene Monday.
In company news, Tesla rose 5.6 percent after reporting better deliveries in the first quarter. Chewy, the pet
food company, fell 4.8 percent after pulling its 2020 guidance. Lennar, the builder, slipped 0.1 percent as it
warned on slowing sales. Cree, the lighting company, declined 1.1 percent after cutting its guidance. Leggett &
Platt, a diversified manufacturer, fell 6.2 percent after reporting a big drop in demand. Disney, the entertainment
leader, fell 3.2 percent, and General Electric fell 2.5 percent after both furloughed staff.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose by US$4.53 to US$34.38,
while gold rose US$6.32 to US$1,621.19. The US dollar rose against most major currencies. The US Treasury
30-year bond yield fell 1 basis point to 1.24 percent while the 10-year note yield was up 2 basis points to 0.61
percent.
European markets
Equities declined Friday as bad economic data and bleak corporate news showed the coronavirus toll. The Europewide STOXX 600 fell 1.0 percent, the German DAX eased 0.5 percent, the French CAC dropped 1.6 percent, and
the UK FTSE-100 fell 1.2 percent. Reports that virus cases in Europe may be reaching a plateau provided some
relief, but risk appetite remained depressed.
Financials led the decline as markets expect more dividend suspensions and buyback suspensions. Energy stocks
fell back after Thursday’s rally as expectations faded for output cuts large enough to bring production in line with
falling demand. Automakers fell on demand worries. On the positive side, health care stocks held up better as
a conservative play, and retail stocks were bolstered by surprisingly positive Eurozone retail sales figures for
February. Insurance stocks were hit by regulators' calls to suspend dividends. Dutch insurers Aegon (off 8.5
percent), and NN Group (down 6.5 percent) led decliners.
In economic data, Eurozone economic activity plunged in March. The flash composite output index was revised
down 1.7 points to 29.7, making for its steepest-ever decline and a record low. Separately, the UK flash
composite output index was revised down 1.1 to 36.0 in the final March report, 17.0 points below its final
February mark and a new series low.
Asia Pacific Markets
Most major Asian markets closed lower Friday after weak PMI survey data, though moves were relatively small. Performance diverged widely across the region over the week. Japan’s Nikkei and Topix indices were little changed on the day, flat and down 0.4 percent respectively, but recorded some of the biggest losses over the week, down 8.1 percent and 9.2 percent respectively. The Shanghai Composite index fell 0.6 percent on the day and 0.3 percent on the week, while Hong Kong’s Hang Seng index closed down 0.2 percent on the day and fell 1.3 percent on the week. Australia’s All Ordinaries index was one of the weaker performers on the day, down 1.6 percent, but posted a solid gain of 4.8 percent over the week. PMI survey data for March published Friday showed activity contracted sharply in the Japanese services sector and across the Hong Kong and Singapore economies but showed that conditions in China’s services sector weakened at a slower pace. The Markit PMI Services sector business activity index fell to 33.8 in March, above the flash estimate of 32.7 but confirming a sharp drop from 46.8 in February. Combined with a drop in the headline index for the Japanese manufacturing sector, published earlier in the week, this took the composite index from 47.0 to 36.2, its lowest level since the earthquake and tsunami of 2011. The equivalent index for the Chinese services sector increased from a record low of 26.5 in February to 43.0 in March, perhaps indicating that conditions there may stabilize soon. The headline index for China’s manufacturing sector rose from 40.3 to 50.1, taking the composite index from 27.5 to 46.7. Economy-wide PMI surveys for Hong Kong and Singapore confirmed the scale of the economic impact from the coronavirus pandemic and indicate that both will experience recession conditions for the first half of the year. The headline index picked up slightly in Hong Kong, up from 33.1 in February to 34.9 in March but still indicating a sharp contraction in activity, while the equivalent index for Singapore fell from 47.0 to a survey-record low of 33.3. Retail sales in Australia rose 0.5 percent on the month in February after falling 0.3 percent in January, with yearon-year growth picking up from 2.2 percent to 5.7 percent. Officials noted that spending on groceries, pharmaceuticals, and other household items increased significantly in response to the coronavirus crisis. They also pointed out, however, that businesses impacted by the downturn in tourism have already seen weaker sales and that those impacted by curbs on trading and other social activities will likely report weaker sales in March and beyond.
read moreUS Markets
Equities retreated Friday after a remarkable three-day rally amid skepticism the market has bottomed, and as
COVID-19 cases continue to accelerate. The Dow industrials fell 4.1 percent, the S&P 500 lost 3.4 percent, and
the NASDAQ was down 3.8 percent.
Energy, especially oil supermajors, industrials, especially airlines and aerospace & defense, and chemicals were
among the worst performers. Oil prices fell on reports Russia and Saudi Arabia are not exploring ways to limit
supply. Defensive shares held up best, especially real estate and utilities.
In economic news, the Bank of Canada cut its policy rate by 50 basis points to 0.25 percent, which Governor
Stephen Poloz called its lower bound, and Poloz pledged to continue buying assets to support the functioning of
financial markets. In US data, consumer sentiment fell sharply in March, ending the crisis month at 89.1 which
is down 6.8 points from mid-month and down 11.9 points from February.
Among companies in focus, sportswear company Lululemon Athletica fell 6 percent after an earnings beat and
withdrawing its guidance, while builder KB Home lost 5.1 percent after topping expectations and also withdrawing
guidance.
European markets
Equities fell back Friday after a steep three-day rally amid disappointment EU leaders failed to deliver an
anticipated package of stimulus measures, and after news that UK Prime Minister Boris Johnson had tested
positive as the infections surged in the UK and elsewhere. The Europe-wide STOXX 600 fell 3.3 percent, the
German DAX was off 3.7 percent, the French CAC lost 4.2 percent, and the UK FTSE-100 dropped 5.3 percent.
The FTSE-100 suffered as sterling rose, which hurt export-oriented companies that dominate the index.
Weakness centered in the same sectors that rebounded this week, especially travel & leisure, banks, carmakers,
and energy. Outperformers included health care, utilities, retail, insurance and real estate while laggards were
autos, travel & leisure, banks, oil & gas, construction, technology, industrials, and basic resources.
Notable losers included Volkswagen, off 5.7 percent after the firm warned of layoffs and other cost-cutting
measures. Carnival, the UK cruise company, was off 21 percent as the investors reckoned with the company’s
financial situation. British Petroleum fell 5.5 percent.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with gains across the week also varying sharply. After heavy falls Thursday, Japan’s Nikkei and Topix indices bounced back strongly Friday, closing up 3.9 percent and 4.3 percent respectively. This took their weekly gains to 17.1 percent and 13.7 percent respectively, with major global stimulus measures announced over the course of the week appearing to be the main factor supporting sentiment. Hong Kong’s Hang Seng index and the Shanghai Composite index recorded more moderate increases, closing up 0.6 percent and 0.3 percent on the day, and finishing the week up 2.0 percent and 1.0 percent respectively. Australia’s All Ordinaries index fell 5.1 percent Friday, closing the week with a gain of 0.4 percent, as authorities announced further travel restrictions and indicated that tighter curbs on social and business activity will soon be imposed. The Reserve Bank of India held an unscheduled meeting Friday and cut its main policy rate by 75 basis points from 5.15 percent to 4.4 percent, its lowest level since 2010. This meeting was scheduled to take place next week but officials decided to bring it forward in response to the global coronavirus pandemic. The Indian government earlier this week announced a three-week national lockdown as part of its efforts to contain the outbreak and also announced a fiscal stimulus package worth $22 billion. RBI officials cited the need to mitigate the economic impact of the pandemic, to revive growth, and preserve financial stability. They warned that the potential impact of the pandemic on the Indian economy could be severe but for now is highly uncertain and for that reason declined to provide specific growth and inflation forecast in today's statement. They stressed, however, that today's rate cuts and earlier measures are part of a "war effort" and that they will do "whatever is necessary to shield the domestic economy from the pandemic". They advise that "all instruments - conventional and unconventional - are on the table". These comments clearly indicate that further measures will be used in coming weeks and months if the impact of the pandemic continues to build.
read moreUS Markets
US stocks fell back in seesaw trading Friday on news New York State would shut down non-essential business
as coronavirus cases continued to spread and economic disruptions widened. The Dow industrials dropped 4.6
percent, the S&P 500 fell 4.3 percent, and the NASDAQ lost 3.8 percent.
Markets reacted badly when New York Governor Andrew Cuomo said he would order all non-essential workers
to stay home, and all non-essential businesses to close. California issued a similar order, while other states,
including New Jersey, were reportedly considering similar shutdowns. US officials continued negotiations over
the size and contours of the US bailout package.
Outperforming were travel & leisure, semiconductors, software, homebuilders, pharma, and insurance, while
home & personal care, retail, tobacco, chemicals, and asset managers lagged. Energy stocks also suffered as oil
prices resumed their selloff after Thursday’s bounce.
Among companies in focus, Boeing fell 2.7 percent on reports it may cut its dividend and announce big layoffs.
Coca-Cola fell 8.4 percent after saying it would not meet its guidance. AT&T fell 9 percent after cancelling share
buybacks.
In US economic data, existing home sales peaked just before the coronavirus emergency hit, up 6.5 percent in
February to a much stronger-than-expected 5.770 million annual rate.
European markets
Equities rebounded Friday as beaten-up shares found buyers and markets focused on more government stimulus
measures, including a huge UK relief package. The Europe-wide STOXX 600 rose 1.8 percent, the German DAX
rallied 3.7 percent, the French CAC jumped 5.0 percent, and the UK FTSE-100 rose 0.8 percent.
Travel & leisure and energy shares led the gains, as sectors that have suffered the most on coronavirus
disruptions bounced back. Other outperforming sectors included real estate, construction, autos, and industrials.
Laggards included media, health care, telecom, utilities, and consumer staples.
Among companies in focus, Hapag-Lloyd, a German shipping company, rose 4.6 percent on upbeat earnings,
Interroll, the Swiss conveyor-belt maker, surged 24 percent, also on an earnings beat. On the downside,
Rightmove, a UK property broker, fell 11.3 percent after warning about the impact of the coronavirus.
Asia Pacific Markets
Major Asian markets closed higher Friday, in some cases outpacing gains made on Wall Street Thursday, but still only partly recovering from heavy losses earlier in the week. The regional data calendar was light Friday and major developments relating to the global coronavirus outbreak also relatively limited during the trading session. Hong Kong’s Hang Seng index advanced 5.1 percent on the day but closed the week down 5.2 percent while the Shanghai Composite index advanced 1.6 percent on the day to finish down 4.9 percent on the week. Australia’s All Ordinaries index closed slightly higher on the day Friday, up 0.9 percent, but was among the weakest performers in the region over the week, falling 13.2 percent. Japanese markets were closed Friday for a national holiday, with the Nikkei and Topix indices closing the week down 5.0 percent, and up 1.7 percent, respectively. The People's Bank of China left the one-year loan prime rate unchanged at 4.05 percent at its monthly review Friday, with the equivalent five-year rate also unchanged at 4.75 percent. Officials lowered these rates by 10 basis points and 5 basis points respectively last month and also reduced banks' reserve requirements earlier this month as part of efforts to support liquidity and lower financing costs. State media, reporting on today's decision to leave the loan prime rate on hold, argued that "flexible and prudent monetary policy" is currently allowing lenders to support the Chinese economy as it deals with the impact of the coronavirus outbreak.
read moreUS Markets
Oversold conditions and hopes for a big US fiscal stimulus package boosted US equities Friday, as the market
continued its volatile daily seesaw pattern. The Dow industrials jumped 9.4 percent, the S&P 500 rose 9.3
percent, and the NASDAQ was up 9.3 percent, with gains accelerating into the close.
Markets also reacted favorably to President Trump’s announcement of increased testing and other emergency
measures. This followed news of an array of other governments' stimulus efforts including liquidity additions and
new spending from Australia, China, Japan, and the UK -- and more expected from the Eurozone -- plus a
surprise Canadian 50 basis point rate cut.
Among sectors, financials led the gains, as money center banks in particular recovered from Thursday’s huge
losses. Technology outperformed, led by software and internet names. Consumer staples and communications
services outperformed. Laggards included industrials, consumer discretionary, healthcare, and materials. Energy
lagged the most to extend the week’s huge losses, as oil prices declined again.
Among companies in focus, Adobe, the software company, rose 18 percent on an earnings beat and guidance
upgrade. Oracle, the software company, rose 20 percent after an earnings beat and increase in share
repurchases. Broadcom ended up 7 percent as tech stocks rallied late, despite the chipmaker withdrawing its
guidance due to uncertain business conditions.
In US economic news, coronavirus effects hurt consumer sentiment more than forecasters were expecting so far
this month, at 95.9 versus Econoday's consensus for 98.0 and 101.0 in February. This is the lowest reading since
October but is still historically very solid.
European markets
Hopes for US fiscal stimulus alongside European efforts lifted stocks Friday. The Europe-wide STOXX 600 rose
1.0 percent, the German DAX gained 0.8 percent, the French CAC rose 1.8 percent, and the UK FTSE-100 was
up 2.5 percent.
Among sectors, outperformers included basic resources, utilities, banks, chemicals, autos, and retail.
Underperformers included travel & leisure, despite a bounceback in airlines, real estate, oil & gas, health care,
media, and insurance.
Among companies in focus, Roche rose 3.2 percent after the FDA authorized use of the Swiss pharma’s test for
Covid-19. Italian banks led banks higher as interest rates rebounded, with Banco BPM up 15 percent. German
airline Lufthansa rose 7.1 percent.
Asia Pacific Markets
Major Asian markets experienced extreme volatility and diverged widely Friday, but closed the week well down. Investors’ attention remained focused on news about the global coronavirus pandemic and ongoing efforts to curb its spread and limit its social and economic impact. Across the region, major events were cancelled, businesses and public facilities closed, and transport restrictions tightened, while officials continued to take steps to improve liquidity and support economic activity, including a large fiscal package announced by the Indonesian government. Australia's All Ordinaries index saw particularly sharp moves, dropping around 8 percent early in the session but then staging an extraordinary recovery after the Australian government announced plans to restrict public gatherings of more than 500 people at the start of next week. Earlier in the day, the Reserve Bank of Australia took aggressive steps to boost liquidity, adding around double its usual daily amount to short-term bank funding. The index closed up 4.1 percent on the day to finish the week down 11.1 percent. Japanese shares also sold off heavily at the open, following the lead set by Wall Street Thursday, but managed to recover some of these losses later in the session. The Nikkei and Topix indices closed the day down 6.1 percent and 5.0 percent respectively, extending weekly losses to 16.0 percent and 14.3 percent respectively. Shanghai Composite index fell 12 percent on the day and 4.8 percent on the week, while Hong Kong's Hang Seng index closed down 1.1 percent on the day and 8.1 percent on the week. Shares of regional airlines again sold off heavily. The regional data calendar was light Friday and had no material impact on investor sentiment. Japan's Index of Tertiary Industry Activity (seasonally adjusted) rose 0.8 percent on the month in January after falling 0.2 percent in December. These data largely pre-date the impact of the coronavirus outbreak. The Markit Services PMI survey, published earlier this month, indicated that activity in the sector strengthened in January before weakening sharply in February in response to the outbreak.
read moreUS Markets
Equities fell again Friday as markets continued to struggle to price in the impact of the spreading coronavirus,
but prices recovered dramatically into the close. The Dow industrials ended down 1.0 percent, the S&P 500 fell
1.7 percent, and the NASDAQ was off 1.9 percent.
All sectors fell, with energy and financials leading the selloff on falling oil prices and falling interest rates. Health
care, consumer staples, and industrials outperformed but still showed losses. Airlines and hotel stocks saw
bargain-hunting after their extraordinary selloff on the virus shock.
The day’s featured losers included Costco, off 1.4 percent, despite reporting big earnings and same-store sales
gains. Dow member JP Morgan fell 5.2 percent partly on news that its CEO, Jamie Dimon, had undergone heart
surgery. Starbucks fell 1.1 percent because of a business hit from closures of many stores in China and
elsewhere. Oil stocks Diamondback Energy (off 17 percent) and Devon Energy (down 16 percent) were among
the big losers. In financials, Bank America was typical, off 4 percent, and Wells Fargo lost 5 percent.
In US economic news, nonfarm payrolls surged 273,000 in both February (initial data) and January (revised
data), far surpassing Econoday's consensus ranges. The unemployment rate edged 1 tenth lower to revisit
historical lows at 3.5 percent as the number of unemployed actively looking for work fell 105,000 to 5.787
million.
European markets
Coronavirus fear knocked equities down again Friday, with falling oil prices hitting energy stocks, on news of
more virus cases and economic fallout. The Europe-wide STOXX 600 dropped 3.7 percent, the German DAX fell
3.4 percent, the French CAC lost 4.1 percent, and the UK FTSE-100 was off 3.6 percent.
Oil & gas shares led the selloff, along with basic resources, construction, financial services, utilities, and
industrials. Relative outperformers included autos, travel & leisure, telecom, and media, but everything was
down sharply.
Airbus was off 6.2 percent after reporting no orders in February. Tullow Oil, the Irish driller, was off 15 percent
on falling oil prices. Infineon, the German chipmaker, fell 5.6 percent on reports regulators would reject its
proposed acquisition of Cypress Semiconductor.
In economic news, German manufacturers posted a sharp rebound in orders at the start of the year. Following
an unrevised 2.1 percent monthly drop in December, January saw a rise of 5.5 percent, more than three times
the market consensus. Annual growth climbed from minus 8.6 percent to minus 1.4 percent.
Asia Pacific Markets
Major Asian markets closed the week with heavy losses Friday, again following the lead set by US markets Thursday, though performance over the week was mixed. Shares in major airlines fell sharply across the region Friday on renewed concerns about the spread and effect of the global coronavirus outbreak. Regional data released Friday mainly pre-dated the main impact of the outbreak, with investors focused instead on the release of Chinese trade data over the coming weekend. Japan’s Nikkei and Topix indices fell 2.7 percent and 2.9 percent respectively on the day and closed the week down 1.9 percent and 2.6 percent respectively. Australia’s All Ordinaries index fell 2.9 percent on the day and 3.4 percent on the week. Hong Kong’s Hang Seng index also posted a large fall on the day, down 2.3 percent, but closed the week up 0.1 percent while the Shanghai Composite index outperformed over region markets with a drop of 1.2 percent on the day and a gain of 5.4 percent on the week. Retail sales in Australia fell 0.3 percent on the month in January after falling 0.5 percent in December and advanced 2.2 percent on the year, moderating from growth of 2.4 percent previously. These data reflect the impact of serious wildfires in many parts of the country over the new year period but officials warned that the coronavirus outbreak will also have a large impact on retail sales in coming months. Household spending in Japan fell 3.9 percent on the year in January after falling 4.8 percent in December, weaker than the consensus forecast for a drop of 3.0 percent. This weakness was broad-based across major categories, with core household spending also down sharply on the year. Data published last week showed retail sales fell 0.4 percent on the year in January after falling 2.6 percent in December.
read moreUS Markets
Equities extended their flight from risk Friday on fears linked to the spreading coronavirus, and markets ignored
strong economic reports though major indices did end well above their lows. The Dow industrials fell 1.4 percent,
the S&P 500 lost 0.8 percent, and the NASDAQ recovered to end flat.
Markets rebounded from their worst levels in the afternoon after a statement from Fed Chair Jerome Powell that
the Fed is prepared to act as appropriate to support the economy, and a report in The Washington Post that the
Trump administration may propose tax cuts or other fiscal measures to cushion the impact of the virus. The
World Health Organization raised its assessment of the global risk from the virus to “very high.” Cases spiked in
Korea, Iran, and Italy, and a new case was reported in Mexico. Businesses announced an array of disruptions as
a result of the virus, including the cancellation of the Geneva Motor Show, along with earnings warnings.
Among sectors, defensive sectors appeared hardest hit Friday, along with financials, on falling interest rates,
while tech and energy, which have been hit hardest earlier in the week, fared best, though still suffering losses.
Among companies in the news, VMWare, the software company, dropped 11 percent after an earnings miss and
poor guidance in light of the virus and acquisition costs. Baidu, the Chinese search company, recovered to end
up 0.1 percent after earlier declines on a warning of the virus impact on future business in China, and an earnings
and revenues beat. Exxon Mobil was one of the few bright spots, up 3.3 percent, after finding buyers at the lows.
In US economic news, consumer sentiment ended February at 101.0, up 1 tenth from the preliminary score and
up a sizable 1.2 points from January. Cut-off date for the survey was Tuesday of this week, which was not only
before increasing reports of the virus' spread but also before further sharp declines in the stock market. The
report notes that among the 20 percent of the sample who did mention the virus, the sentiment score was 11
points lower at 90.0, a level still consistent, however, with consumer strength.
Separately, the Chicago PMI rose to a higher-than-expected but still contractionary score of 49.0 in January, the
highest score since August last year. Delivery times surged 7.9 points in the month to 61.3 with the report citing
commentary that the coronavirus is already disrupting supply chains and is delaying shipments from China.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.46 to US$50.52, while
gold, likely on profit-taking to raise cash needed for margin calls on losses in equities, fell US$68.00 to
US$1,584.60. The US dollar was mixed, down against the yen, the euro and the swiss franc but up versus the
Australian and Canadian dollar and the pound. The US Treasury 30-year bond yield fell 12 basis points to 1.68
percent while the 10-year note yield declined 11 basis points to 1.15 percent.
European markets
Equities plunged again Friday, extending the week’s dramatic selloff on worries linked to the spreading
coronavirus. The Europe-wide STOXX fell 3.5 percent, the German DAX dropped 3.9 percent, the French CAC
was off 3.4 percent, and the UK FTSE-100 dropped 3.2 percent.
Among sectors, airlines continued to lead to the downside, with British Airways parent IAG off 8.4 percent after
warning of the impact of the virus. Other big losers included chemicals, with BASF down 5 percent after a similar
warning. Insurance companies also took a hit, with Munich Re down 5 percent on an earnings miss and virus
warning. Miners, oil & gas, and banks were also hit especially hard on slowdown worries. Utilities, autos, and
personal & household goods held up better but still saw big drops.
Asia Pacific Markets
The global selloff in equities, driven by escalating concerns about the coronavirus outbreak, continued during the Asian trading session Friday, with regional markets ending sharply lower. Losses on the week were in some cases the worst since the 2009 global financial crisis and took several regional indices into correction territory, down more than ten percent from their recent peaks. Japanese markets were among the weakest, with the request from Prime Minister Shinzo Abe Thursday for schools to shut down over March adding to concerns about the outbreak and its impact on the economy. The Nikkei and Topix indices fell 3.7 percent and 3.6 percent respectively on Friday, with losses on the week reaching 10.0 percent and 9.8 percent respectively. Australia’s All Ordinaries index also sold off aggressively again, closing down 3.4 percent on the day and 9.9 percent on the week. The Shanghai Composite index fell 3.7 percent, extending its weekly decline to 5.2 percent, while Hong Kong’s Hang Seng index fell 2.4 percent on the day and 4.3 percent on the week. Regional currency moves were also pronounced, with safe-haven flows boosting the value of the Japanese yen but higher risk aversion pushing the Australian dollar to multi-year lows. Japanese data for January published Friday largely pre-date the likely impact of the outbreak on activity and sentiment and had relatively little impact on investor sentiment. The unemployment rate rose from 2.2 percent in December to 2.4 percent in January, above the consensus forecast of 2.2 percent. Japan's industrial production index rose 0.8 percent on the month after advancing 1.2 percent in December, stronger than the consensus forecast for an increase of 0.3 percent and broadly in line with previously published PMI survey data. Retail sales fell 0.4 percent on the year in January after falling 2.6 percent in December, a smaller drop than the consensus forecast for a decline of 1.0 percent. India's gross domestic product increased 4.7 percent on the year in the three months to December, up from growth of 4.5 percent in the three months to September and matching the consensus forecast. The Reserve Bank of India left policy rates on hold at its most recent meeting in early February. Despite some recent signs of improvement in industrial production and PMI survey data, officials judged that the economy is still relatively weak and noted several risks to the growth outlook. They forecast GDP will grow by 5.0 percent in the 2019-20 fiscal year and by 6.0 percent in the 2020-21 fiscal year.
read moreUS Markets
Risk-off returned Friday on the news of the spread of the coronavirus outside China, and on surprisingly poor US
purchasing managers’ data. The Dow industrials lost 0.8 percent, the S&P 500 dropped 1.1 percent, and the
tech-heavy NASDAQ fell 1.8 percent.
News of a spike in virus cases in Korea, and rising numbers in Japan and in the Middle East added to worries,
along with highly publicized clusters of cases affecting hospitals in Beijing. In the US, the virus was blamed for
an unexpected drop in business activity, especially in services, in the latest purchasing managers’ report.
The services PMI dropped to 4-year lows, falling roughly 4 points to 49.4 as respondents, citing the virus,
reported slowing orders. Manufacturing held up better, falling roughly 1 point, though the 50.8 level is the softest
since August last year. Both production and new orders slowed in the month with respondents citing difficulties,
including delivery delays, tied to the virus.
Among sectors in the S&P 500, only defensive sectors utilities and real estate managed gains, with technology
getting hit hardest on renewed worries about the Chinese economy. Communications services and consumer
discretionary shares were also notable losers. Market heavyweight Apple fell 2.3 percent, and Exxon Mobil lost
1.2 percent as oil prices fell. Netflix, the streaming video company, fell 1.5 percent, and Facebook was off 2.1
percent in the downdraft.
Among companies in the news, Deere, the farm equipment maker, rose 7 percent on an earnings and revenues
beat and in-line guidance, mostly reflecting improved farmer sentiment amid hopes for improving exports to
China. Coca-Cola rose 0.7 percent after warning that the coronavirus would hurt its business but saying it still
expects to hit its 2020 guidance.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 89 cents to US$58.43, while
gold surged US$26.00 to US$1648.60. The US dollar was weaker against major currencies. The US Treasury 30-
year bond yield declined 5 basis points to 1.92 percent while the 10-year note yield was also down 5 basis points
at 1.47 percent.
European markets
Virus worries and weak US purchasing managers’ data hurt European equities Friday. The Europe-wide STOXX
fell 0.5 percent, the German DAX declined 0.6 percent, the French CAC slipped 0.5 percent, and the UK FTSE-
100 was off 0.4 percent.
Risk assets reacted badly to an uptick in Chinese cases of the COVID-19 virus, along with rising infections in
Japan, Korea, and elsewhere. Markets also traded off on news from the US that the virus appears to have hit US
services in addition to manufacturing, as evident in flash PMI composite data for February.
Among companies in the STOXX 600, utilities, construction & materials, real estate, and health care
outperformed, while losers included autos, oil & gas, banks, technology, industrial goods & services, and basic
resources.
Among companies in the news, Burberry, the luxury UK clothier, dropped 2.6 percent after an analyst downgrade.
Pearson, the UK publisher, fell 5 percent on an earnings miss. Air France fell 3.3 percent on its assessment of
the impact of the virus on its outlook. On the plus side, Allianz rose 0.4 percent after the German financial
services company beat estimates and raised its dividend and buybacks. Sika, a Swiss chemicals company, rose
4.7 percent after beating earnings expectations. Jeronimo Martins, a Portuguese food company, rose 2 percent
after topping earnings expectations.
In economic data, Eurozone private sector business activity remained subdued in February. At 51.6, a 6-month
high, the flash composite output index was only 0.3 points above its final January reading and, while stronger
than expected, still too close to the 50-expansion threshold to signal any significant pick-up in activity.
Separately, February was another soft month for German business activity. At 51.1, the PMI flash composite
output index was down a tick versus January and close enough to the 50-expansion threshold to signal only a
sluggish increase in business activity.
Asia Pacific Markets
Major Asian markets posted mixed results on Friday, with their performance also diverging over the week as investors continued to assess the likely economic impact of the coronavirus outbreak. Chinese officials on Friday reported that production and trading activity in key industrial areas was resuming at a favorable pace this week, but there remain serious concerns about the spread of the outbreak both inside and outside of China. The Shanghai Composite index was among the strongest performers in the region both on the day and on the week, up 0.3 percent and 4.2 percent respectively. Weak Japanese data published Friday, however, weighed on domestic markets. The Nikkei index fell 0.4 percent on the day and 1.3 percent on the week, while the Topix index was flat on the day and dropped 1.7 percent on the week. Hong Kong’s Hang Seng index closed down 1.1 percent on the day and 1.8 percent on the week, while Australia’s All Ordinaries index fell 0.3 percent on the day and was flat on the week. Flash Japanese PMI survey data were the main highlight of the regional data calendar Friday and are among the first indicators to provide information about the impact of the coronavirus outbreak on regional activity and sentiment in February. Conditions across the Japanese economy appeared to have deteriorated significantly so far this month. The flash estimate for the manufacturing sector survey’s headline index is 47.6, down from 48.8 in January and, if confirmed by final data, would indicate that conditions in the sector are at their weakest since 2012. The flash estimate for the services sector survey's headline index is 46.7, down sharply from 51.0 in January, which would indicate that conditions in the sector are at their weakest since 2014. The flash estimate for the composite survey’s sector index is 47.0, down from 50.1 in January. Japanese inflation data also published Friday showed steady price pressures. Headline CPI inflation moderated from 0.8 percent in December to 0.7 percent in January, largely reflecting a smaller increase in food prices, while underlying measures of inflation were little changed. These numbers suggest that progress towards the Bank of Japan’s 2.0 percent inflation target remains very slow but are unlikely to persuade officials that there has been a loss of momentum towards meeting that target, a development that they have advised would trigger an easing in policy.
read moreUS Markets
US equities ended narrowly mixed Friday as the market continued to grapple with fallout from the Chinese
coronavirus. The Dow industrials eased 0.1 percent, the S&P 500 gained 0.2 percent, and the NASDAQ also rose
0.2 percent.
A mixed batch of US economic reports left the market uncertain, including weak industrial production and core
retail sales readings, offset in part by a better than expected consumer sentiment report.
In economic data, US retail sales rose 0.3 percent in January and also gained 0.3 percent excluding autos. Both
of these are moderate and both hit Econoday's consensus. When excluding autos and also gasoline, retail sales
rose a slightly better 0.4 percent, which just exceeds Econoday's consensus range. But when excluding not only
autos and gas but also food services and building materials, sales came in unchanged, which missed
expectations.
Separately, the shutdown of the Boeing 737 Max and a drop in utility production pulled down industrial production
by an as-expected 0.3 percent in January. Manufacturing fell 0.1 percent. In another report, consumer sentiment
rose for a second straight month, 1.2 points higher in the preliminary February reading, the best since March
2018.
Among stock sectors, real estate remained the top performer on the day and on the week. Technology shares
outperformed, with help from software stocks. Energy lagged the most, despite an uptick in oil prices. Consumer
staples were hurt by weakness in food and drug stores. Communications services lagged, along with industrials,
consumer discretionary, and health care.
Among winners Friday, chipmaker Nvidia rose 7.1 percent after its results and guidance beat expectations. eBay,
the online auctioneer, rose 2.6 percent after raising its guidance and buyback plans. Expedia, the travel agency,
rallied 11 percent after an earnings beat and strong 2020 guidance.
European markets
Weak corporate earnings and coronavirus worries weakened equities slightly Friday. The Europe-wide STOXX
600 eased 0.1 percent, the German DAX was off 0.01 percent, the French CAC declined 0.4 percent, and the UK
FTSE-100 fell 0.6 percent.
Among sectors in the STOXX 600, outperformers included defensive sectors -- real estate, utilities, food &
beverage, and insurance. Lagging were basic resources, autos & parts, banks, health care, and travel & leisure.
Among companies in focus, AstraZeneca, the UK pharma, dropped 4.3 percent after guiding lower on the
expected impact of the coronavirus on business in China. Renault, the French automaker, fell 0.9 percent after
poor results, lower guidance, and cutting its dividend. Royal Bank of Scotland fell 6.8 percent after the market
reacted poorly to its latest business plan. Pernod Ricard and Remy Cointreau, French liquor companies, fell 0.5
percent and 0.9 percent, respectively, after an analyst downgrade.
On the positive side, Electricite de France rose 10 percent after its earnings beat expectations. Unipol Gruppo,
the Italian financial services, rose 6.4 percent on a positive earnings surprise.
Asia Pacific Markets
Major Asian markets posted mixed results on the day Friday and also diverged over the week. The regional data calendar was again relatively light at the end of the week, keeping the focus of investors on incoming news relating to the coronavirus outbreak. Reports late in the trading session quoted a senior executive from Chinese e-commerce firm Alibaba advising that the outbreak had caused significant disruption to the firm’s operations, while the Singapore government was also reported to have warned that the impact of the outbreak on the Singapore economy has already exceed that of the SARS outbreak in 2003. The Shanghai Composite index and Hong Kong’s Hang Seng index both closed up on the day and on the week, the former up 0.4 percent and 1.4 percent respectively and the latter up 0.3 percent and 1.5 percent respectively. Australia’s All Ordinaries index posted similar gains, up 0.3 percent on the day and 1.5 percent on the week. Japanese markets, however, closed lower, with shares of automaker Nissan down sharply to ten-year lows after it cut forecasts for operating revenue and announced it would not pay a dividend in the second half. The Nikkei index fell 0.6 percent on the day and on the week, while the Topix index closed down 0.6 percent on the day and 1.7 percent on the week. Japan's Index of Tertiary Industry Activity fell 0.2 percent on the month in December after advancing 1.4 percent in November, broadly in line with the previously published Markit services sector PMI survey. India's wholesale price index increased by 3.1 percent on the year in January, up from 2.59 percent in December, mainly reflecting stronger fuel prices. WPI inflation is now at its highest level since April 2019 and has rebounded strongly from a slump towards the end of last year.
read moreUS Markets
US equities retreated Friday from recent highs after a mixed US employment report, and as coronavirus worries
returned. The Dow industrials fell 0.9 percent, with both the S&P 500 and NASDAQ down 0.5 percent.
Among sectors, materials, health care and energy fared worst. On the plus side, communication services
performed best, with defensive sectors -- utilities, real estate, and consumer staples – also doing well.
Among companies in the news, Wynn, the casino company, fell 5.4 percent as its decent results were
overshadowed by the recent closing of its properties in China on virus worries. Columbia Sportswear was off 4.0
percent on disappointing guidance and an analyst downgrade. Take-Two Interactive, a gaming software company
dropped 11.9 percent after an earnings beat but revenue miss, and the departure of a key executive.
On the positive side, Lions Gate, the media company, surged 5.2 percent after its quarterly results beat
expectations. Uber, the ridesharing leader, rose 9.7 percent on an earnings beat and after raising guidance.
Activision Blizzard, the videogame company, rose 2.1 percent after reporting an earnings and revenues beat.
In US economic data, indications of labor market stress from a strong showing for nonfarm payrolls and a rising
participation rate were offset by still lifeless average hourly earnings. Nonfarm payrolls rose 225,000 in January
to easily exceed Econoday's consensus range with construction surging 44,000. The labor participation rate
likewise showed pressure, up 2 tenths to 63.4 percent to also exceed the consensus range. Yet average hourly
earnings rose a modest 0.2 percent to miss expectations for 0.3 percent and following only a 0.1 percent rise in
December.
European markets
Risk-off sentiment returned Friday on renewed coronavirus worries and as traders trimmed positions headed
into the weekend. The Europe-wide STOXX 600 eased 0.3 percent, the German DAX fell 0.5 percent, the French
CAC was off 0.1 percent, and the UK FTSE-100 declined 0.5 percent.
The death toll from the virus continued to rise and more companies reported extended disruptions in their
Chinese operations. Meanwhile, some surprisingly bad European economic reports soured market sentiment.
Sectors with heavy China exposure, including autos, basic resources, and luxury goods were among the biggest
losers Friday after bouncing back in recent days.
Among companies in focus, Norsk Hydro, the Norwegian miner, dropped 12 percent on a Q4 earnings miss due
to falling aluminum prices. Burberry, the UK luxury clothier, slipped 0.1 percent after warning of weakening
business due to store closures in China.
In economic news, German goods producers had a disastrous end to 2019. Output slumped 3.5 percent on the
month, a much steeper than expected decline and easily more than enough to cancel out November's slightly
larger revised advance. Annual growth dropped from minus 2.5 percent to minus 6.7 percent. Separately, French
industrial production dropped 2.8 percent on the month for the second worst performance since the global
financial crisis. With November's rise also revised away, annual growth slumped from 0.9 percent to minus 3.0
percent, its lowest since May 2014.
Asia Pacific Markets
Major Asian markets were little changed on the day Friday but their performance over the week diverged as investors reacted to a variety of factors, including the coronavirus outbreak, a cut in Chinese tariffs, central bank decisions, and mixed economic data. The Shanghai Composite index advanced 0.3 percent on the day, continuing its recovery from a sharp drop at the start of the week as trading resumed after the lunar new year holidays. The index still closed the week down 3.4 percent compared with its level before the holidays. Hong Kong’s Hang Seng index, in contrast, fell 0.3 percent on the day but outperformed on the week with a gain of 4.1 percent. Japan’s Nikkei and Topix indices fell 0.2 and 0.3 percent respectively on the day and advanced 2.7 percent and 2.8 respectively on the week. Australia’s All Ordinaries index closed the day down 0.4 percent but was little changed on the week. The Reserve Bank of Australia published its quarterly Statement on Monetary Policy (SMP) Friday after leaving policy rates on hold at a record low of 0.75 percent at its monthly meeting earlier in the week. Officials last adjusted policy rates in October when they were reduced by 25 basis points. Officials believe that the domestic economy is gaining strength, partly in response to policy easing delivered last year, but revised their near-term and medium-term forecasts slightly lower compared with the last statement published in November.
read moreUS Markets
US stocks fell Friday on risk-off sentiment amid rising coronavirus worries, poor earnings, weak economic data,
and unease around the Senate impeachment trial. The Dow industrials fell 2.1 percent, the S&P 500 fell 1.8
percent, and the NASDAQ was off 1.6 percent.
Most sectors were down, with industrials, technology, and energy stocks off the most, while US Treasuries gained
in the risk-off move. Airlines tumbled anew after news that some US airlines had suspended flights to China.
Exxon Mobil, off 4.1 percent, and Chevron, off 3.9 percent, were hit hard by declining oil prices. Dow member
Caterpillar fell 4.1 percent on disappointing earnings. On the positive side, a rally in Amazon, up 7.3 percent on
an earnings beat, lifted consumer discretionary stocks.
In US economic data, consumer data eased at year end, no surprise following yesterday's fourth-quarter GDP
report that showed only a modest rate for consumer spending. Consumer spending for December in this report,
which was bundled into yesterday's GDP data, rose an as-expected 0.3 percent. Personal income in December
proved moderate at best, up only 0.2 percent, which missed Econoday's consensus for 0.3 percent, after a
revised 0.4 percent rise in November. December's slowing reflects a $36.2 billion decrease in government subsidy
payments to farmers.
European markets
European equities dropped again Friday on news of spreading coronavirus, weak economic reports, and renewed
US-EU-UK trade worries. The Europe-wide STOXX 600 fell 1.1 percent, the German DAX dropped 1.3 percent,
the French CAC lost 1.1 percent, and the UK FTSE-100 was down 1.3 percent.
The coronavirus scare remained the market focus, as Italy and UK reported their first cases. Meanwhile, news
that the UK and EU plan to defy the United States on Huawei sanctions, and lack of progress in the US-EU dispute
over autos and digital trade, left markets uneasy, and Friday’s batch of late-2019 European economic reports
suggested a slowdown was already under way. Adding to the unease, Jan. 31 marked the UK’s formal exit from
the EU.
Among sectors in the STOXXX 600, those with heavy exposure to China were hit hardest, including luxury, travel,
leisure, and auto names. Lufthansa was off 2.3 percent as airlines scaled back service to China. Banks suffered,
with Spain’s Banco Sabadell off 11.2 percent on poor quarterly earnings. Oil and mining stocks tanked on worries
that the coronavirus will torpedo the Chinese economy.
In economic news, flash GDP data showed the Eurozone economy slowing at the end of 2019. A minimal 0.1
percent quarterly increase in total output was well short of an upwardly revised 0.3 percent rise (was 0.2 percent)
in the July-September period and constituted the worst performance since GDP last contracted in 2013. It was
also at the lower end of expectations. Annual growth was just 1.0 percent, a 6-year low. Separately, France also
ended 2019 on a surprisingly soft note as real GDP shrank 0.1 percent on the quarter, its first contraction since
2016. Annual growth fell 0.6 percentage points to just 0.8 percent. Separately, German retail sales fell back 3.3
percent in December after a revised 1.6 percent monthly rise in November. The December drop was much
steeper than expected and by far the worst performance in recent history.
Asia Pacific Markets
Major Asian markets posted mixed results Friday but closed the week lower, with the coronavirus outbreak still the main focus of investors’ attention. Hong Kong’s Hang Seng index underperformed on both the day and the week, down 0.5 percent and 5.9 percent respectively. Japan’s Nikkei and Topix indices rose 1.0 percent and 0.6 percent respectively on the day after the release of mixed data, but finished the week down 2.6 percent and 2.7 percent respectively. Australia’s All Ordinaries index rose 0.2 percent on the day and closed the week down 1.1 percent. Chinese markets were closed for lunar new year holidays all week and are likely to fall sharply when trading resumes Monday. Japanese data published Friday showed weaker retail sales growth but a rebound in industrial production and another month of very low unemployment in December. Retail sales fell 2.6 percent on the year in December after falling 2.1 percent in November, bigger than the consensus forecast for a decline of 1.7 percent, with growth weaker in key categories including food, fuel, and motor vehicles. Growth in industrial production, however, improved in both month-on-month and year-on--year terms in December, broadly in line with forecasts made last month by officials but in contrast with PMI survey data which indicated that conditions in the manufacturing sector weakened that month. Japan's unemployment rate was unchanged at 2.2 percent in December, with a solid increase in employment and a small fall in the participation rate.
read moreUS Markets
Risk-off sentiment returned Friday to sink stocks on more coronavirus worries plus weakness in energy, health
care, and financials. The Dow industrials eased 0.6 percent, the S&P 500 fell 0.9 percent, and the NASDAQ also
declined 0.9 percent.
The US CDC reported at least three US cases of the virus, and said it was monitoring others. China has extended
its efforts to control the outbreak by limiting travel for huge numbers. Traders noted the World Health
Organization has declined to declare a health emergency.
Energy was among the worst performers as the sector’s declines continued amid falling crude oil prices spurred
by fear of weaker Chinese demand due to the virus epidemic. Health care providers also suffered, with increasing
focus on Bernie Sanders’s rising strength in polls. Financials were hit by big earnings misses at Discover Financial
Services, off 11.2 percent, and Synchrony Financials, down 9.9 percent. Consumer discretionary stocks lagged
on losses in hotel and restaurant stocks. Communications suffered with entertainment and media stocks off the
most.
Utilities and consumer staples outperformed as traders rotated into defensive sectors, though technology shares
held up a bit better, with help from a big rally in Dow member Intel, up 8.1 percent. The semiconductor leader
reported a huge earnings and revenues beat, better guidance, and boosted its quarterly dividend. Another Dow
component, American Express, rose 2.9 percent on an earnings beat and upgraded 2020 guidance.
In US economic data, growth has slowed for the manufacturing PMI so far in January, to a lower-than-expected
51.7 after better readings of 52.6 for November and 52.4 in December. Growth in new orders, both domestic
and foreign, is flat as are price pressures. PMI's service sample is reporting moderate-to-solid growth of 53.2
so far this month which, when combined with manufacturing, make for a flash composite of 53.1.
European markets
Better European purchasing managers reports and corporate news lifted European equities Friday. The Europewide STOXX 600 rose 0.9 percent, the German DAX jumped 1.4 percent, the French CAC gained 0.9 percent,
and the UK FTSE-100 was up 1.0 percent.
Outperformers included defensive sectors, including utilities, plus technology, with help from strong results at
Intel. Bayer, the German chemical and drug-maker, rose 1.7 percent on a report that it may settle its US liability
case related to the weed-killer Roundup linked to cancer. Givaudan, a Swiss cosmetics company, gained 2.0
percent on a profits beat and better guidance.
In economic news, at 51.1, the German flash composite output index was on the strong side of market
expectations in January. It was also nearly a full point above its final December reading and a 5-month high.
Manufacturing remained in the doldrums but, at 45.2, at least the flash sector PMI gained a tidy 1.5 points versus
its final year-end mark to secure an 11-month peak. At the same time, its services counterpart was up 1.3 points
at a respectable 54.2, its best in five months. Separately, the Eurozone manufacturing flash PMI also
outperformed expectations, rising to a surprisingly firm 47.8 from 46.3, as the rate of contraction slowed. At
50.9, the flash composite output index only matched its final December reading. The subdued headline reading
was attributable to services where the flash sector PMI slipped from December's final 52.8 to 52.2, a 2-month
low.
Asia Pacific Markets
Markets were closed in China and Korea as lunar new year holidays begin, while moves elsewhere in the region were generally modest. Although the regional data calendar was busy Friday, investor attention was focused on news about the coronavirus outbreak, with Chinese authorities announcing more cases, fatalities, and travel restrictions, and cases also reported elsewhere in Asia. After a sharp fall Thursday, Hong Kong’s Hang Seng index stabilized Friday, up 0.2 percent on the day but down 3.8 percent on the week. Japan’s Nikkei and Topix indices closed up 0.1 percent and unchanged respectively on the day and fell 0.9 percent and 0.3 percent respectively on the week. Australia’s All Ordinaries index rose 0.1 percent on the day and 0.3 percent on the week. With markets closed Friday, the Shanghai Composite index ended the week down 3.2 percent. Japanese CPI data published Friday showed increases in both headline inflation and underlying measures of inflation in December. The headline consumer price index rose 0.8 percent on the year in December, up from 0.5 percent in November and the strongest increase since April 2019, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, advanced 0.9 percent on the year, up from 0.8 percent previously. BoJ officials at their policy meeting earlier this week reaffirmed their commitment to keep policy rates at or below current levels until they are confident that there will not be a loss of "momentum" towards meeting their 2.0 percent inflation target. Today's data will likely reassure officials that there remains some momentum towards meeting this target. PMI data also indicate conditions in Japan’s manufacturing and services sector have improved a the start of the year. The flash estimate for the Markit manufacturing PMI headline index for January is 49.3, up from the final estimate of 48.4 for December, and reaching its highest level in five months, while the equivalent index for the services sector PMI survey increased from 49.4 in December to 52.1 in January.
read moreUS Markets
US equities firmed Friday –- though ending well off the day’s highs -- as the market uptrend and the bullish
narrative remained intact, with support from strong US and Chinese economic data, and signs of cooling in trade
tensions. The Dow industrials rose 0.2 percent, the S&P 500 gained 0.4 percent, and the NASDAQ was up 0.3
percent.
Upbeat US housing starts and Chinese industrial production figures Friday underpinned perceptions that the
global economy remains resilient. Positive comments from the EU trade commissioner soothed worries about
US-Europe trade tensions following the signing of an interim US-China trade pact this week.
Among sectors, communications services outperformed as Google rose 2.0 percent on a price target upgrade at
UBS. Meanwhile, financials showed strength with banks up on robust earnings from regional banks Citizens
Financial, up 3.3 percent, and First Horizon National, up 4.3 percent. Consumer discretionary stocks
outperformed, led by fast-food restaurants. Lagging were industrials, with weakness in transport and logistics.
Health care was off, and energy lagged the most.
Among companies in the news, CSX, the railroad, was off 0.5 percent after in-line results but a gloomy report
on business conditions. JB Hunt, the trucker, dropped 4.2 percent on an earnings miss and bearish guidance.
Expeditors International, the logistics company, also fell 5.6 percent after warning its Q4 results would miss
expectations.
In US economic news, housing starts in December surged a monthly 16.9 percent to a 1.608 million annual rate
while building permits, though dipping 3.9 percent in the month, came in at 1.416 million. In a separate report,
industrial production fell an as-expected 0.3 percent in December following a downwardly revised but still
outsized gain of 0.8 percent in November. And finally, consumer sentiment held nearly steady in the preliminary
reading for January, at 99.1 versus December's 99.3.
European markets
Positive comments on the US-European trade dispute from a top European trade official lifted equities Friday.
The Europe-wide STOXX 600 rose 1.0 percent, the German DAX gained 0.7 percent, the French CAC rose 1.0
percent, and the UK FTSE-100 was up 0.9 percent.
Markets focused on EU Trade Commissioner Phil Hogan’s comment that trade talks were off to a good start, and
the EU is ready to negotiate on the issue of subsidies to Airbus and other disputes. On the other hand, Hogan
also appeared to downplay the significance of the US-China trade pact, in comments sure to rankle US officials.
Separately, in another market positive, traders viewed Friday’s upbeat Chinese industrial production and
investment figures as signaling resilience in the global macroeconomy.
Among sectors, basic resources, utilities, health care, and technology outperformed, while oil & gas, travel &
leisure, and banks lagged.
In economic news, UK retail sales were surprisingly weak in December. A 0.6 percent monthly fall followed a
steeper revised 0.8 percent drop in November and left volumes at their lowest level since December 2018. This
was the fourth decrease in the last five months but an even weaker period a year ago still saw annual growth
edge up from 0.8 percent to 0.9 percent.
Asia Pacific Markets
Major Asian markets closed Friday little changed on the day but posted mixed results on the week. Chinese data published Friday were broadly in line with expectations, showing improvement in some indicators and stability in others. The data also confirmed weaker annual growth in 2019, largely reflecting the impact of China’s trade dispute with the United States over the year. The Shanghai Composite index was flat on the day and closed the week down 0.5 percent, while Hong Kong’s Hang Seng index rose 0.6 on the day and 1.5 percent on the week. Japan’s Nikkei and Topix indices closed up 0.5 percent and 0.4 percent respectively on the day and advanced 0.8 percent and was unchanged respectively on the week. Australia’s All Ordinaries index advanced 0.3 percent on the day and outperformed with a 2.0 percent gain on the week. Chinese quarterly GDP and monthly activity data were the highlight of the regional calendar Friday. China's economy expanded 6.0 percent on the year in the three months to December, unchanged from the pace recorded in the three months to September, and just above the consensus forecast of 5.9 percent. GDP grew 1.5 percent on the quarter, also unchanged from the increase recorded previously. In annual terms, China's GDP grew 6.1 percent in 2019, down from 6.6 percent in 2018 and at the lower end of the government's 6.0 to 6.5 percent growth target range for the year. Speaking after the release of the data, officials argued that counter-cyclical fiscal policy during 2019 had helped the economy to meet the growth target and noted that there remains scope for policy to provide further support to the economy in 2020. Nevertheless, officials also said that the goal of policy would be to improve the "quality and effectiveness" of growth rather than targeting a high growth rate. Monthly Chinese data also published today showed stronger growth in industrial production and fixed asset investment and steady growth in retail sales in December. Industrial production advanced 6.9 percent on the year in December, accelerating from growth of 6.2 percent in November and well above the consensus forecast of 5.9 percent, mainly reflecting stronger growth in the manufacturing sector. Retail sales grew 8.0 percent on the year, unchanged from previously and just above the consensus forecast of 7.8 percent, while fixed asset investment grew 5.4 percent year-to-date, up from 5.2 percent previously and just above the consensus forecast of 5.2 percent. Singapore's non-oil domestic exports increased 2.4 percent on the year in December after falling 5.9 percent in November. This is the first increase in these exports in nine months and was mainly driven by a rebound in non- electronics exports. The year-on-year increase in headline exports growth was largely driven by improved demand from major markets, including China, Japan, the United States and the European Union. Total imports fell 2.3 percent on the year after falling 5.8 percent previously.
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US equities slipped Friday after an underwhelming US jobs report, and as traders scaled back on risk headed
into the weekend after the US announced a new round of sanctions against Iran. The Dow industrials fell 0.5
percent, the S&P 500 declined 0.3 percent, and the NASDAQ was off 0.3 percent.
In US economic news, the December employment report saw a 145,000 rise in nonfarm payrolls that was on the
low side of Econoday's consensus range of forecasts. This is also the lowest in seven months, though it followed
a revised 256,000 jump in November that was the highest in 10 months.
A second set of headlines was even softer as average hourly earnings rose only 0.1 percent on the month for a
2.9 percent year-on-year rate; both of these readings are below the consensus range. Also soft was the
workweek, coming in at 34.3 hours which again is below the consensus range, with November revised lower at
34.3 hours. These readings suggest slowing growth going into year-end. Yet despite the softness and in a very
important offset, the unemployment rate held at an extremely low 3.5 percent.
Among sectors in the S&P 500 Friday, financials, industrials, and consumer discretionary sectors weakened the
most, while defensive sectors – utilities and real estate – fared best, along with health care and technology.
Energy stocks weakened as oil prices continued to retreat from recent highs on Mideast jitters.
Among companies in the news, builder KB Home slipped 3.2 percent despite an earnings beat, as deliveries
missed expectations. Boeing fell 1.9 percent on news of a new raft of internal emails suggesting Boeing staff
were well aware of problems with the Supermax 737 aircraft. On the plus side, Synnex, a business technology
company, jumped 12.9 percent as revenues and earnings beat expectations, and it raised its dividend.
European markets
European equities edged down Friday from recent highs after somewhat soft US employment figures. The
Europe-wide STOXX 600, the German DAX, the French CAC, and the UK FTSE-100 all eased 0.1 percent.
US payrolls rose a relatively muted 145,000, with downward revisions to prior months, and soft earnings figures.
Meanwhile, attention is turning to US-China trade meetings scheduled next week, ahead of a signing ceremony
set for Jan. 15 for an interim trade pact. Details of the agreement have not been announced, which leads many
market participants to expect a modest accord, and more trade disputes to come.
Defensive shares fared best, with utilities the leader. Travel & leisure, and autos & parts also outperformed.
Ryanair, the Irish airline, rose 5.6 percent after raising its profits guidance on strong holiday bookings. On the
downside, retail, banks, and industrial sectors lagged. In the UK retail category, reports of weak holiday sales
hit shares of Superdry, which fell 6.8 percent, and B &M, off 6.1 percent.
In economic news, French industrial production (excluding construction) rose a stronger than expected 0.3
percent on the month in November and that after the October rate had been nudged a tick firmer to 0.5 percent.
Annual growth jumped from minus 0.1 percent to 1.3 percent, its strongest reading since last May.
Asia Pacific Markets
Most major Asian markets advanced Friday, following the lead set by Wall Street Thursday as concerns eased about US-Iran tensions, with moderate to solid gains recorded on the week across the region. Australia’s All Ordinaries outperformed on both the day and on the week with gains of 0.7 percent and 2.0 percent respectively after stronger-than-expected retail sales data, while Hong Kong’s Hang Seng index closed up 0.3 percent on the day and 0.7 percent on the week. Japan’s Nikkei and Topix indices closed up 0.5 percent and 0.4 percent on the day respectively, with tech suppliers benefitting from gains made by Apple, with both indices closing up 0.8 percent on the week. The Shanghai Composite index underperformed, closing down 0.1 percent on the day and rising just 0.3 percent on the week. Retail sales in Australia rose 0.9 percent on the month in November after increasing 0.1 percent in October, above the consensus forecast for growth of 0.3 percent. Stronger headline retail sales in November was broad- based across most major categories of spending, with officials noting that an increasing tendency by major retailers to offer pre-holiday discounts in late November had boosted sales by a greater amount than in previous years. In original terms, retail sales rose 2.7 percent on the year, up from 2.0 percent previously. Household spending in Japan fell 2.0 percent on the year in November, picking up from a decline of 5.1 percent in October and close to the consensus forecast for a drop of 1.8 percent. Spending rose 2.6 percent on the month after slumping 11.5 percent previously. Weakness in October was largely a reaction to the surge in spending that took place in September ahead of an increase in consumption tax rates at the start of October.
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US equities slipped and safe-haven assets rose Friday on fear of widening conflict after the US killed a top Iranian military commander. The Dow industrials fell 0.8 percent, the S&P 500 declined 0.7 percent, and the NASDAQ lost 0.8 percent.
Oil prices surged while US Treasuries and gold rallied after a US airstrike killed Iranian Quds Force chief Qassem Soleimani at the Baghdad airport. Iran vowed to strike back hard at the US and its allies. The US action followed an assault by demonstrators on the US embassy in Baghdad, and the Pentagon said Soleimani was actively planning attacks on US personnel in the region. Markets also reacted poorly to a surprisingly weak US purchasing managers’ report, which pointed to worsening contraction in the industrial sector.
US equities retreated from recent record highs largely on the Iran news, with materials the worst performer, led by metals, with copper prices off sharply. Bank stocks were among the biggest losers on the drop in interest rates. Airlines suffered from the rise in oil prices, with American Airlines off 5 percent, and United down 2.1 percent. Weakness in autos dragged down consumer discretionary shares. On the positive side, gold mining shares and weapons makers got a lift from the ratcheting up in the US-Iran conflict. Lockheed Martin, the giant aerospace contractor, rose 3.6 percent.
Among companies in the news, Tesla, the automaker, rose 2.9 percent after its Q4 auto deliveries beat market expectations, and the company said its production was expanding in the US and China. On the downside, Incyte, the pharma, fell 9.4 percent on disappointing clinical test results.
In US economic news, ISM manufacturing came in well below Econoday's consensus forecasts, which were nearly all calling for improvement. But at 47.2 in December, the index actually declined from November's lower-than- expected 48.1. This compares with a median forecast of 49.1. Separately, minutes of the December FOMC meeting showed monetary policy firmly on hold until the economy shows either increasing strength or increasing weakness.
European markets
European equities mostly weakened Friday in a shift out of risk assets after a US airstrike killed a top Iranian military commander. The Europe-wide STOXX 600 slipped 0.3 percent, the German DAX fell 1.3 percent, the French CAC was almost flat at up 0.04 percent, and the UK FTSE-100 rose 0.2 percent.
Oil prices surged on the escalation in Mideast tensions as Iran vowed revenge on the US and its allies. The oil price spike hurt airline stocks in particular, with Lufthansa’s 6.4 percent drop dragging down the German DAX. On the positive side, the rise in oil prices lifted the UK FTSE-100 in the face of wider weakness, with UK supermajor BP jumping 2.8 percent.
Oil & gas stocks outperformed, along with defensive plays including food & beverages, and real estate. British American Tobacco saw good gains, up 2.7 percent, after US regulators proposed a less stringent ban on e- cigarette flavors than expected. Imperial Brands, another UK cigarette company, rose 2.5 percent on the news.
On the downside, travel & leisure, autos, chemicals, and basic resources lagged the most.
In economic news, German unemployment rose 8,000 to 2.279 million at year-end. Following a revised 14,000 decline in November, the increase was small enough to leave the jobless rate unchanged at 5.0 percent, in line with market expectations. However, job vacancies declined 21,000 after a sharper revised 13,000 drop in mid- quarter. This was the largest decrease since they began sliding back in April. The downtrend seems to be steepening. In a separate report, German consumer prices rose 0.5 percent on the month in December. The surprisingly sharp gain lifted annual inflation from November's final 1.1 percent to 1.5 percent, its strongest reading since July.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with a bare regional data calendar keeping the focus on external developments, particularly the US airstrike against Iranian military leaders in Baghdad and subsequent spike in global oil prices. The Shanghai Composite index was flat on the day and advanced 2.6 percent on the week, Hong Kong’s Hang Seng index fell 0.3 percent on the day and rose 0.8 percent on the week, and Australia’s All Ordinaries index closed down 0.7 percent on the day and down 1.2 percent on the week. Japanese markets were again closed Friday, with the Nikkei and Topix indices earlier in the week closing down 0.8 percent and 0.7 percent respectively on the previous week’s level.
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US equities retreated from early gains to end mostly flat Friday as markets looked for more specifics on the US- China trade pact heralded by US and Chinese officials. The Dow industrials and the S&P 500 were unchanged, and the NASDAQ was up 0.2 percent.
The fact that the deal has not been signed, and many details remain unclear to markets left traders uncertain and skeptical despite President Trump and Chinese officials saying the two sides had agreed to a phase-one deal calling for the US to scale back tariffs, largely in exchange for Chinese purchases of US goods.
President Trump tweeted early Friday the US and China had agreed on a phase-one trade deal including "many structural changes and massive purchases" of US farm products. The US Trade Representative said the agreement covers intellectual property, technology transfer, agriculture, financial services, currency, and foreign exchange, but it did not offer specifics. US tariffs scheduled to take effect Dec. 15 will not be implemented, but a 25 percent tariff will remain in effect on $250 billion of Chinese imported goods, USTR said, and tariffs on another batch of $120 billion in Chinese imports will be cut in half to 7.5 percent. Negotiations on a phase-two deal are to start immediately.
Weak US retail sales data added to the caution. US markets did not respond strongly to the big victory for UK Prime Minister Boris Johnson that bolstered European markets.
Among sectors, utilities and technology were the day’s leaders, with energy and materials lagging. Among companies in focus, Adobe, the software company, rose 3.6 percent on an earnings beat. On the downside, Broadcom was off 3.8 percent on disappointment over its revenue forecast. Software leader Oracle was off 3.5 percent on negative reaction to its operating margin results.
In US economic news, retail sales rose only 0.2 percent in November to miss Econoday's low estimate. In fact all the major readings came in just under the low estimates with ex-auto sales up 0.1 percent, ex-autos ex-gas unchanged, and the control group up only 0.1 percent.
European markets
Major European equities indexes gained Friday on news of a phase-one US-China trade deal, and after a sweeping victory for the UK Conservatives. The Europe-wide STOXX 600 rose 1.1 percent, the German DAX gained 0.5 percent, the French CAC rose 0.6 percent, and the UK FTSE-100 rallied 1.1 percent.
Risk assets improved as markets saw progress in removing worries over trade and Brexit, but reaction on the trade front was muted as the deal remains unsigned, and on lack of specifics about the agreement. UK domestic- oriented stocks outperformed on the election results, which were seen as assuring Brexit will proceed in early 2020 on Prime Minister Boris Johnson’s terms. The election outcome boosted sterling, which hurt export-oriented sectors, but the news bolstered outlook for the domestic economy.
Among sectors, travel & leisure, retail, and media outperformed, while real estate, health care, and oil & gas lagged. Among companies in the news, Hollywood Bowl, the UK entertainment company, led gainers, up 7.2
percent, on a positive earnings surprise. On the downside, Henkel, the German consumer goods company, fell
3.3 percent on a profits warning.
Asia Pacific Markets
Major Asian markets advanced Friday, in some cases sharply, with several also recording strong gains on the week. Investors reacted positively to reports late Thursday that the US and China have agreed in principle to “phase one” of a trade deal and that scheduled tariff increases will not go ahead. Chinese officials, however, provided no indication during the Asian trading session that an agreement has been reached. Sentiment was also boosted by the UK election results and the likelihood that Brexit uncertainty will soon be resolved. Hong Kong’s Hang Seng index was among the strongest performers in the region on the day, up 2.6 percent, and outperformed on the week, up 4.5 percent. Japan’s Nikkei and Topix indices also rallied Friday, up 2.6 percent and 1.6 percent respectively on the day, extending gains on the week to 2.9 percent and 1.6 percent respectively. After little change earlier in the week, the Shanghai Composite index closed Friday up 1.8 percent on the day and 1.9 percent on the week, while Australia’s All Ordinaries index underperformed with an increase of just 0.5 percent on the day and on the week. Japan's Tankan survey showed business sentiment has weakened in both the manufacturing sector and non- manufacturing sector in recent months. The business conditions index for large manufacturers fell from 5 in the three months to September to zero in the three months to December, while the equivalent index for large non- manufacturing firms fell from 21 to 20. Officials attributed some of this weakness to the impact of a major typhoon in October and the recent increase in consumption tax rates. The survey also showed firms across both sectors expect capital expenditures to strengthen in the fiscal year ending March 2020, with firms in the non- manufacturing sector revising up their estimates significantly.
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US equities surged Friday as US jobs data far exceeded expectations, and on news suggesting better prospects for a US-China trade deal. The Dow industrials rose 1.2 percent, the S&P 500 rose 0.9 percent, and the NASDAQ was up 1.0 percent.
Market worries about a slowdown, and the sustainability of consumer spending, were relieved by US jobs data showing an unexpected decline in unemployment, an upward revision in wages, and job gains far above expectations in the latest month. A positive surprise in US consumer sentiment data bolstered the healthy consumer narrative. On the trade front, risk assets advanced after Chinese officials spoke of waiving tariffs on US pork and soybeans; later, President Trump and Larry Kudlow, his economic adviser, said the trade talks were progressing.
All sectors in the S&P 500 gained, with energy, financials, industrials, materials, and tech leading. Utilities and real estate were the laggards, along with consumer staples and telecom. Rising oil prices supported energy stocks, especially in the exploration and production sector, while rising interest rates lifted bank stock.
Among companies in focus, Haliburton, the petroleum driller, rose 4.3 percent, as oil prices rose. Goldman Sachs, the bank, gained 3.4 percent. Ulta Beauty, a beauty products chain, was the day’s biggest gainer, up 11 percent, after a positive earnings surprise and reporting stronger margins.
In economic news, the unemployment rate ticked down to 3.5 percent in November while nonfarm payrolls rose 266,000 to far surpass Econoday's consensus range of forecasts. Much of the gain reflects a swing higher for manufacturing, up 54,000 overall and including a 41,000 gain for motor vehicle payrolls on resolution of the GM strike. In a separate report, consumer sentiment showed unexpected strength, jumping 2.3 points to 99.2, which is 3.2 points above Econoday's consensus. Both components posted big gains: current conditions up 3.6 points to 115.2 and expectations up 1.6 points to 88.9.
European markets
Major European equities indexes tracked Wall Street higher Friday after unexpected strength in US jobs data, and positive US-China trade news. The Europe-wide STOXX 600 jumped 1.2 percent, the German DAX gained
0.9 percent, the French CAC rose 1.2 percent, and the UK FTSE-100 surged by 1.4 percent.
UK stocks outperformed as a decline in sterling lifted export-oriented companies, especially miners, while rising oil prices bolstered energy stocks after OPEC and other oil exporters agreed to output cuts. The retail sector outperformed, with Marks & Spencer up 4.1 percent after an analyst upgrade. For the STOXX 600, basic resources led the gainers, along with retail, travel & leisure, and personal & household goods.
Among other companies in focus, Swiss Re, the insurer, rose 3.0 percent after announcing it would sell its ReAssure unit to Phoenix Group, a UK insurer. ReNeuron, a biopharma, surged 10 percent on a positive earnings surprise. Associated British Foods, the grocery chain, rose 1.1 percent on upbeat profits guidance. On the
downside, Tarkett, a building product manufacturer, dropped 4.3 percent after cutting its guidance.
In economic news, German goods production surprisingly declined in October. Following a 0.6 percent monthly drop in September, output fell a sizeable 1.7 percent, its fourth decrease in the last five months and its worst performance since April. Compared with a year ago, production fell 5.3 percent. Separately, UK house prices rebounded more sharply than expected in November. A 1.0 percent monthly rise in the Halifax HPI followed an unrevised 0.1 percent dip in October and a 0.4 percent fall in September and was the largest increase since February.
Asia Pacific Markets
Most major Asian markets closed up on the day Friday, with performance on the week more mixed. A light regional data calendar provided little guidance to investors, with much of the focus on US payrolls data scheduled for release after the close of trading in the region. Hong Kong’s Hang Seng index rose outperformed on the day, up 1.1 percent, and closed the week 0.6 percent higher, while the Shanghai Composite index advanced 0.4 percent on the day and outperformed on the week with a 1.4 percent gain. Japan’s Nikkei and Topix indices closed up 0.2 percent and 0.1 percent respectively on the day and up 0.3 percent and 0.8 percent respectively on the week. Australia’s All Ordinaries index also posted a modest increase on the day, up 0.3 percent, but closed the week down 1.9 percent after heavy losses earlier in the week. Household spending in Japan fell 5.1 percent on the year in October, down sharply from growth of 9.5 percent in September and weaker than the consensus forecast for a drop of 3.0 percent. This fall in spending was broad- based across categories and was largely a reaction to the surge in spending that took place in September ahead of an increase in consumption tax rates at the start of October, with this pattern also seen in retail sales growth data released last week.
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US equities slipped Friday on concerns over US-China relations, and worries about US-China trade talks, after
President Trump signed a law supporting Hong Kong’s pro-democracy protesters and threatening to sanction
Chinese officials. The Dow industrials fell 0.4 percent, the S&P 500 declined 0.4 percent, and the NASDAQ was
off 0.5 percent.
China threatened unspecified retaliation in response to the US bill supporting Hong Kong’s protesters, which was
approved with veto-proof support in Congress. Earlier this week, markets rallied on a series of reports pointing
to a near-term phase-one US-China trade pact.
A Reuters report Friday that the US may again limit US firms from doing business with Chinese telecom Huawei
added to concerns and hurt risk assets, including stocks and commodities, including oil, while gold prices gained.
Oil prices were hit after Russia’s energy minister called for a delay in oil output controls. Investors were awaiting
news on US holiday shopping as a sign of the consumer’s health including a readout on Black Friday and Cyber
Monday sales next week.
Energy, materials, and consumer discretionary sectors were the weakest performers, while health care,
technology, and financials outperformed. Among energy stocks, exploration and production leader Apache was
off 4.1 percent.
European markets
Most major European equities indexes declined Friday on worries over US-China relations, despite some upbeat
European economic reports. The Europe-wide STOXX 600 slipped 0.4 percent, the German DAX eased 0.1
percent, the French CAC declined 0.1 percent, and the UK FTSE-100 fell 1.0 percent.
Risk assets declined on worries about prospects for a US-China trade deal after China rebuked the US after
President Trump signed a bill that would sanction China over its treatment of Hong Kong protesters. Trump
softened the blow by issuing a statement speaking of his respect for China’s leaders and suggesting he may not
implement the measure.
Trade-sensitive sectors including mining and autos were hit hardest, along with oil & gas, and banks.
Outperforming were telecom, technology, utilities, and media. Among companies in focus, DNB, a Norwegian
bank, dropped 9.2 percent on news of potential legal trouble.
In economic news, Eurozone inflation accelerated in November, its first increase since June. At a 1.0 percent
annual rate, this month's outturn was up 0.3 percentage points versus October's final reading and on the strong
side of market expectations. It was also a 3-month peak, albeit still some 0.4 percentage points short of its mark
at the start of the year. In a separate report, German unemployment unexpectedly fell in November. Following
a smaller revised 5,000 increase in October, joblessness dropped 16,000 to 2.266 million, only its second decline
since April. However, the slide was shallow enough to leave the unemployment rate unchanged at October's 5.0
percent.
Asia Pacific Markets
Major Asian markets closed lower Friday, with results mixed on the week. Hong Kong’s Hang Seng index was the weakest performer both on the day and on the week, with declines of 2.1 percent and 0.9 percent respectively, perhaps reflecting concern about the potential impact of US legislation expressing support for Hong Kong protests. With US markets closed Thursday and the regional data calendar light on Friday, moves elsewhere in the region were relatively modest. Australia’s All Ordinaries index outperformed most other regional indices, falling 0.3 percent on the day and gaining 1.9 percent the week, while the Shanghai Composite index fell 0.6 percent on the day and 0.5 percent on the week. Japan’s Nikkei and Topix indices both closed down 0.5 percent on the day, reducing gains on the week to 0.8 percent and 0.5 percent respectively. Japanese data published Friday showed weaker industrial production growth but steady unemployment in October. Industrial production fell 4.2 percent on the month after increasing 1.7 percent in September, broadly in line with PMI survey data that indicated weaker conditions in the manufacturing sector that month. Weaker growth in October followed a surge in spending by consumers in September ahead of an increase in consumption tax rates at the start of October. Japan's unemployment rate was unchanged at 2.4 percent in October, in line with the consensus forecast. The unemployment rate has been at or below 2.5 percent since the start of 2018. India's gross domestic product increased 4.5 percent on the year in the three months to September, down from growth of 5.0 percent in the three months to June and below the consensus forecast of 4.7 percent. This is the fifth consecutive decline in year-on-year growth and the weakest growth seen since early 2013. With the Reserve Bank of India having already cut policy rates by more than 100 basis points in recent months, the weakness in economic activity shown in today's data likely boosts the chance that further policy easing will be considered at the next meeting scheduled to take place next week.
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US equities rose Friday after President Trump told Fox News a trade deal with China is “potentially very close.”
The Dow industrial average rose 0.4 percent, the S&P 500 rose 0.2 percent, and the NASDAQ was also up 0.2
percent.
Among sectors, financials outperformed, led by money center banks. Consumer discretionary stocks gained on
mostly upbeat retail store results. Technology shares lagged on weakness in software, while real estate fared
the worst.
Among a batch of retailers reporting quarterly results, Gap rose 4.4 percent on an earnings beat, despite
declining revenues and same-store sales. Nordstrom shares rallied 10.5 percent on a big earnings beat, and
after raising its EPS guidance. On the negative side, Williams Sonoma fell 1.9 percent despite mostly in-line
results. Foot Locker, the sporting goods store, declined 2.9 percent on a downgrade to its fourth-quarter
guidance. In the tech space, Intuit, the financial software leader, beat earnings expectations, but dropped 4.2
percent on disappointing guidance.
In US economic news, November’s flash PMI data showed modest strength, led by a six-tenth gain for
manufacturing to a better-than-expected 52.2. Services also rose, up 5 tenths to 51.6, which was also better
than expected. In a separate report, consumer sentiment continued to recover from its tariff-related scare in
August, at 96.8 in final November for the best score since July. Expectations were up more than 3 points to 87.3
in a gain that likely reflects confidence in future income. Not contributing to November, however, are current
conditions, down 1.6 points to 111.6.
European markets
Major European equities indexes popped up Friday on better noises on the US-China trade front, and some better
Eurozone economic data. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX firmed 0.2 percent,
the French CAC was up 0.2 percent, and the UK FTSE-100 gained 1.2 percent. The heavily export-oriented UK
index benefited from a decline in sterling on negative UK flash PMI data released for the first time Friday. The
flash composite index fell to 48.5 from 50.0 in October, signaling a 0.2 percent UK GDP drop in the fourth
quarter, IHS Markit said.
Markets reacted favorably to President Trump’s comment that a trade deal is close, with trade-sensitive shares,
especially miners, outperforming. Travel & leisure, banks, and media outperformed. On the downside, real
estate, chemicals, and utilities underperformed.
In other economic news, the Eurozone flash manufacturing PMI (46.6) chalked up a useful improvement versus
its final October print (45.9) although it remained comfortably in recession territory. At 50.3, the Eurozone flash
composite output index was short of October's already soft final 50.6, below market expectations and close
enough to the 50-expansion threshold to signal stagnation in private sector business activity. The composite
decline was due to services where the flash sector PMI weighed in at 51.5, down from October's final 52.2 and
a 10-month low. For Germany, the flash composite output index was 49.2, up on October's final 48.9 but this
was also still one of the weakest readings seen in the last six-and-half years. At 43.8, the flash sector PMI
suggests that manufacturing remains in the doldrums albeit not quite to the extent that it was in October (final
PMI 42.1). More worryingly, growth of services activity slowed again with a flash PMI of just 51.3, down 0.3
points versus October's final 51.6 mark.
Asia Pacific Markets
Most major Asian markets closed Friday up on the day but down on the week, with uncertainty on year-term prospects for US-China trade talks still the main focus for regional investors. Japan’s Nikkei and Topix indices posted modest gains on the day of 0.3 percent and 0.1 percent respectively, closing the week down 0.8 percent and 0.3 percent respectively. Despite ongoing civil unrest, Hong Kong’s Hang Seng index advanced 0.5 percent on the day and was the strongest regional performer on the week, up 0.8 percent, while Australia’s All Ordinaries index rose 0.6 percent on the day but fell 1.2 percent on the week. The Shanghai Composite index underperformed on the day, down 0.6 percent, to finish the week down 0.2 percent. Japanese inflation data released Friday showed steady headline inflation but slightly stronger underlying measures of inflation in October. The headline consumer price index rose 0.2 percent on the year in October, as it did in September, falling short of the consensus forecast of 0.4 percent, with stronger increases in food prices and housing costs offset by weaker utilities prices. Core CPI, which excludes fresh food prices, increased 0.4 percent on the year in October, up from 0.3 percent in September, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, advanced 0.7 percent on the year, up from 0.5 percent previously. The increase in underlying inflation in October may indicate to officials that there remains some momentum towards the BoJ’s 2.0 percent inflation target. BoJ officials have in recent months advised that monetary policy will be eased further "without hesitation" if they consider that the "momentum" towards meeting their inflation target is “lost”.
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US equities rose Friday after upbeat comments on prospects for a US-China trade deal from White House economic adviser Larry Kudlow. The Dow industrial average and the S&P 500 both rose 0.8 percent, and the NASDAQ gained 0.7 percent.
Kudlow said the US and China were close to agreement, and a separate report in Politico said the US was likely to extend a waiver for rural US telecom firms to buy equipment from Huawei, the Chinese telecom, another signal suggesting a trade rapprochement.
Among companies in the news, semiconductor bellwether Applied Materials rallied 8.9 percent on positive earnings and revenue surprises, and on Q1 guidance above market expectations. Most semiconductor shares tracked Applied Materials higher, with an extra boost from the positive US-China trade news. However, Nvidia Corp., another chip-maker, weakened 2.7 percent on disappointing Q4 revenue guidance. RH, formally Restoration Hardware, rose 7.6 percent after Berkshire Hathaway announced a 6.5 percent stake in the company.
Among sectors, health care outperformed, led by gains in big pharma stocks Pfizer, up 2 percent, and Johnson & Johnson, up 3.1 percent. Energy stocks were winners on the trade news, with Apache, the exploration and production company, up 2.1 percent, and supermajor ConocoPhillips up 1.8 percent. Consumer discretionary shares lagged, with fast-food restaurant stocks and homebuilders lower.
In US economic news, October retail sales rose 0.3 percent but ex-auto sales, which were thought to prove stronger, proved a little less solid than the headline at a 0.2 percent gain. In a separate report, the effects of the now resolved GM strike made a strong appearance in industrial production data and are largely responsible for two straight monthly contractions, at a much deeper-than-expected minus 0.8 percent in October following a revised minus 0.3 percent in September.
European markets
Major European equities indexes perked up Friday after Larry Kudlow, the White House economic adviser, said a trade deal with China was close. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX rose 0.5 percent, the French CAC was up 0.6 percent, and the UK FTSE-100 edged up 0.1 percent.
Gains in the export-heavy FTSE-100 were limited by sterling’s rise as UK political news pointed to a victory for the pro-Brexit Conservatives in upcoming elections. UK domestic mid-cap shares outperformed, up 0.9 percent on the domestic political picture, with homebuilders leading.
Trade sensitive commodities and technology stocks led the gains, with utilities and telecom lagging. Semiconductor shares showed special strength on the trade news, and after Applied Materials, the US microchip
leader, issued a positive forecast for early 2020. ASML Holding, the Dutch chipmaker, was up 2.1 percent, and Infineon, the German semiconductor firm, rose 0.9 percent. UK mining shares managed to rise on the trade news. Gains in automakers were limited as markets await word from President Trump on pending tariffs on European auto imports.
Asia Pacific Markets
Asia markets were again mixed Friday, with significant variation also posted over the week. The regional data calendar was light Friday, while US-China trade news was also limited. Australia’s All Ordinaries index was among the strongest performers in the region on the day and on the week, with gains of 0.8 percent and 1.0 respectively, while Japan’s Nikkei and Topic indices both closed up 0.7 percent on the day but both closed down 0.4 percent on the week. The Shanghai Composite index fell 0.6 percent on the day and 2.5 percent on the week. Hong Kong’s Hang Seng index was flat on the day but fell 4.8 percent on the week, with no signs of any resolution to the ongoing civil unrest ahead of the weekend. Final Hong Kong GDP data for the three months to September published after the trading session showed no change from preliminary estimates published last month and confirm the economy contracted for the second consecutive quarter, meeting the technical definition of a recession. GDP fell 3.2 percent on the quarter, the biggest drop since the start of 2009, after a decline of 0.4 percent in the three months to March. Year-on-year growth also slowed sharply, down from an increase of 0.5 percent in the three months to June to fall of 2.9 percent in the three months to September, again the weakest since 2009. Chinese data published earlier in the day showed house prices growth slowed for the fifth month in a row, up 7.8 percent on the year in October after increasing 8.4 percent in September.
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US equities ended slightly higher Friday amid uncertainty over prospects for a US-China trade deal after President Trump pushed back against rising expectations for tariff cuts as part of a near-term deal. The Dow industrials gained 0.02 percent, the S&P 500 rose 0.3 percent, and the NASDAQ gained 0.5 percent.
Risk assets have rallied in recent days on a series of reports suggesting China and the US were moving closer to an interim trade pact, and the two sides would even roll back existing tariffs. But President Trump’s hawkish trade adviser, Peter Navarro, said Trump had not agreed to cut tariffs, and Trump echoed Navarro. Equities were under pressure through much of the day but managed to close slightly higher.
Among companies in the news, Walt Disney, the entertainment company, rose 3.8 percent after an earnings beat, and showing strong momentum after recent acquisitions. On the downside, Gap Inc., the clothing company, dropped 7.6 percent after cutting its guidance and announcing its CEO would step down.
In US economic news, US consumer sentiment was reported steady and favorable, at 95.7 for the preliminary November reading and very near October's 95.5 and the monthly average since November last year of 95.9. Inflation expectations remain low, unchanged at 2.5 percent for the year-ahead outlook, though up 1 tenth to
2.4 percent for the 5-year outlook.
European markets
Most major European equities indexes declined Friday after President Trump said he has not agreed to roll back tariffs, which forced markets to reassess prospects for a US-China trade pact. The Europe-wide STOXX 600 slipped 0.3 percent, the German DAX fell 0.5 percent, the French CAC was off 0.02 percent and the UK FTSE- 100 fell 0.6 percent.
Utilities and health care, defensive sectors, were the only segments to show gains, with banks, food & beverages, retail, basic resources, and oil & gas among the worst performers. Disappointing quarterly results pushed French banks Natixis and Credit Agricole down 7.3 percent and 2.3 percent, respectively, while German financial services firm Allianz fell 2.4 percent.
In economic news, French industrial production (ex-construction) staged a partial rebound in September. Following an unrevised 0.9 percent monthly drop in August, output rose a slightly smaller than expected 0.3 percent, lifting annual growth from minus 1.3 percent to 0.1 percent, its first positive reading since May.
Asia Pacific Markets
Major Asian markets closed down or only slightly higher Friday, with Japanese markets outperforming on both the day and on the week. The Nikkei and Topix indices both increased 0.3 percent on the day and advanced 2.0 percent and 2.1 percent respectively on the week. Hong Kong’s Hang Seng index recorded the biggest fall on the day, down 0.8 percent, but still advanced 1.9 percent on the week, while Australia’s All Ordinaries index fell 0.1 percent on the day and finished the week up 0.8 percent. The Shanghai Composite index fell 0.5 percent on the day and underperformed with an increase of 0.2 percent on the week. Chinese trade data were the main focus of the regional data calendar Friday. China’s trade surplus in US dollar terms widened from US$39.65 billion in September to US$42.81 billion in October. Exports fell 0.9 percent on the year in October after falling 3.2 percent in September, mainly reflecting some improvement in demand from the United States and the European Union. Imports fell 6.4 percent on the year, after falling 8.5 percent previously. Chinese authorities set the reference rate for the yuan below 7.00 per US dollar for the first time since August.
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US equities advanced Friday on stronger-than-expected US jobs and Chinese manufacturing data, and positive
comments from US officials on prospects for a US-China trade pact. The Dow industrials rose 1.1 percent, the
S&P 500 advanced 1.0 percent, and the NASDAQ was up 1.1 percent.
Risk appetite improved on the upbeat data, and on White House economic adviser Larry Kudlow’s comment that
the US and China were making progress on their dispute over intellectual property, and on Commerce Secretary
Wilbur Ross’s remark that a phase one trade deal was likely to be signed in early November.
Among sectors, industrials, materials, banks, technology, and health care outperformed. Rising oil prices gave
energy stocks a boost. Underperformers included consumer staples and consumer discretionary stocks.
Among companies reporting, Dow member Exxon Mobil jumped 3 percent after an earnings and revenues beat.
Chevron, another Dow stock, rose 0.04 percent on mixed earnings results, in light of a big tax charge. BeiGene,
a biotech, rocketed 37 percent after announcing a joint venture with Amgen, which rose 2.2 percent. Fitbit, the
exercise tech company, advanced 15.2 percent after saying it would be acquired by Google, which rose 1.1
percent.
In US economic news, GM strike or not, October's employment report came in solid. Nonfarm payrolls rose
128,000, which is on the high side of expectations with strength underscored by upward revisions to the two
prior months totaling a net 95,000. Manufacturing, reflecting the effects of the now settled GM strike, fell 36,000
in a decline that looks to reverse in the November employment report. Other indications of strength come from
the unemployment rate, up 1 tenth but at a low 3.6 percent, which is just off September's 50-year low, and the
participation rate, which keeps climbing, up another tenth to 63.3 percent. In a separate report, the ISM
manufacturing report was on the low side of expectations at 48.3 for October; the index missed Econoday's
consensus by 1 point but gained a 1/2 point from September. New orders improved nearly 2 points in October
but, at 49.1, are still under breakeven 50.
European markets
Most major European equities indexes rose Friday on upbeat Chinese and US economic data, plus positive USChina trade headlines. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX rose 0.7 percent, the
French CAC gained 0.6 percent and the UK FTSE-100 gained 0.7 percent.
Markets reacted favorably to a positive surprise on Chinese manufacturing PMI data, and US jobs data above
expectations. More comments from US officials pointing to a US-China trade pact added to better market
sentiment.
Among sectors, cyclicals outperformed defensive sectors, with miners, autos and construction leading, while
telecom, utilities and media underperformed.
Among companies in focus, DSV Panalpina, a Danish transport service, jumped 7.4 percent on an earnings beat.
Novo Nordisk, a Danish pharma, rose 3.6 percent after improving its sales guidance due to rising sales of new
drugs. Autos have been strong, with Fiat Chrysler (up 0.6 percent) and Peugeot (up 0.6 percent) as the market
digested details of their planned merger. Banks continued to suffer, with Danish Danske Bank off 4 percent after
cutting its guidance.
Asia Pacific Markets
Major Asian markets posted mixed results Friday, with their performance on the week also varying widely. Regional data published Friday showed some improvement in Chinese manufacturing but weaker activity in the Japanese economy. The Shanghai Composite index was the strongest regional performer on the day, up 1.0 percent, but closed the week up just 0.1 percent. Japan’s Nikkei and Topix indices closed down 0.3 percent and flat on the day respectively and advanced 0.2 percent and 1.1 percent respectively. Hong Kong’s Hang Seng index rose 0.7 percent on the day, extending its weekly gain to 1.6 percent, while Australia’s All Ordinaries index closed up 0.1 percent on the day but finished the week down 0.9 percent. The Markit Manufacturing PMI headline index for China advanced from 51.4 in September to 51.7 in October, above the consensus forecast of 50.1. This is the fourth consecutive increase in the headline index and takes it to its highest level since February 2017. The increase in the headline index in October reflects respondents' reports that output and new orders both strengthened, with the latter reported to have grown at the fastest pace since January 2013. New export orders were also reported to have risen for the first time in five months and at the fastest pace since February 2018, suggesting that progress in US-China trade talks in recent weeks has provided a boost to external demand. The Markit Manufacturing PMI headline index for Japan fell to 48.4 in October, just below the flash estimate and consensus estimate of 48.5 and confirming a decline from 48.9 in September. This index has now indicated contraction in the sector for six consecutive months and is at its lowest level since June 2016. Although respondents cited production disruptions caused by severe typhoons in October and the impact of an increase in consumption tax rates at the start of the month as factors contributing to this weakness, they also reported that underlying demand conditions remain subdued. Also published today, labor market data showed Japan’s unemployment rate rose from 2.2 percent in August to 2.4 percent in September, with year-on-year growth in payrolls moderating from 1.0 percent to 0.8 percent.
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US equities rose Friday, with technology, materials, and energy stocks leading on positive earnings and hopes
for a US-China trade deal. The Dow industrials rose 0.6 percent, the S&P 500 gained 0.4 percent, and the
NASDAQ was up 0.7 percent.
Risk assets improved after US Trade Representative Robert Lighthizer’s comment that the US and China are
close to finalizing terms of a trade deal. Along with technology, materials advanced, with precious metals miners
and chemicals outperforming. Energy shares gained, led by exploration and production stocks, with crude oil
prices rising. Industrials advanced, with machinery shares leading.
Among companies in the news, Intel rallied 8.1 percent to lead semiconductors higher after an earnings beat
and raising its Q4 and annual guidance. Another Dow stock, Visa, the credit card company, rose 0.9 percent
after an earnings beat and healthy business report. Agriculture chemicals company Scotts Miracle-Gro rose 4.2
percent on an analyst upgrade. H & E Equipment, which rents tools to contractors, rose 9.7 percent to extend
its gains after reporting strong results Thursday.
On the downside, Amazon, the online retail leader, fell 1.1 percent after reporting a big earnings miss, reflecting
its investments in one-day delivery. Its shares recovered from the worst levels of the day. V.F. Corporation,
maker of Vans shoes and North Face camping gear, fell 7.4 percent after an earnings miss, despite reaffirming
its guidance and raising its dividend.
In US economic news, consumer sentiment fell back in the latter half of October compared to the first half but
still showed solid improvement from September. The index ended October at 95.5 versus 96.0 at mid-month
and against 93.2 in September.
European markets
Most major European equities indexes ended marginally higher Friday after mixed corporate results. The Europewide STOXX 600 rose 0.2 percent, the German DAX was up 0.2 percent, the French CAC gained 0.7 percent
and the UK FTSE-100 slipped 0.1 percent.
The food & beverages sector suffered after Anheuser-Busch Inbev reported an earnings miss and cut its profits
guidance for the year. The Belgium-based brewer dropped 11 percent. On the positive side, WPP, the UK
advertising giant, rallied 6.1 percent, and Michelin, the French tiremaker rose 6 percent on earnings beats.
Barclays, the UK bank, rose 2.4 percent on strong trading revenues.
French markets outperformed after luxury goods makers Kering (up 8.7 percent) and Moncler (up 11.3 percent)
said sales were holding up in Hong Kong, a key market, despite ongoing protests there. UK markets
underperformed as traders eyes more delays and uncertainty over Brexit.
Asia Pacific Markets
Major Asian markets posted mixed but generally modest results Friday, with changes on the week also showing some variation. The regional data calendar was light Friday, with Brexit developments again a major focus but providing little clear direction. Australia’s All Ordinaries index was among the stronger performers in the region, closing up 0.6 percent to extend its gain on the week to 1.2 percent. Japanese markets also advanced Friday, with the Nikkei and Topix indices up 0.2 percent and 0.3 percent respectively on the day and both closing the week 1.5 percent higher. The Shanghai Composite index rose 0.5 percent on the day and was flat on the week, while Hong Kong’s Hang Seng index fell 0.5 percent on the day and 0.2 percent on the week.
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US equities slipped Friday as bad news from Boeing and Johnson & Johnson led the major averages lower, despite generally favorable corporate earnings. The Dow industrials fell 1.0 percent, the S&P 500 declined 0.4 percent, and the NASDAQ was off 0.8 percent.
The Federal Aviation Administration said Boeing misled the FAA by withholding pilot messages about the flight- control system that was blamed for crashes of its 737 Max planes. Boeing was off 6.8 percent and was a big weight on the Dow industrials. In other corporate news, Johnson & Johnson fell 6.2 percent on news it would recall its baby powder after regulators found asbestos in some powder samples.
Weaker Chinese GDP figures Friday added to concerns about a global slowdown. Meanwhile, Federal Reserve speakers this week appeared to leave the door open to a rate cut Oct. 30, but their comments this week left market participants uncertain about whether the Fed would deliver the expected cut.
Software and internet stocks were another notable laggard Friday, with Facebook off 2.3 percent on worries over its proposed Libra digital currency. Elsewhere, American Express, the financial services company, fell 2 percent after cutting its guidance. On the positive side, Coca-Cola gained 1.8 percent after an earnings beat and raising its guidance on better organic growth.
European markets
European equities edged down Friday on corporate warnings and uncertainty over the fate of the EU-UK Brexit deal. The Europe-wide STOXX 600 eased 0.3 percent, the German DAX was down 0.2 percent, the French CAC declined 0.7 percent, and the UK FTSE-100 was off 0.4 percent.
Parliament is scheduled to vote on the EU-UK Brexit agreement Saturday, with the outcome evidently too close to call. Some reports said an alliance of Labour Party and former Conservative Party members appeared likely to succeed in rejecting the pact and forcing yet another extension in the Brexit timetable past Oct. 31.
European market sentiment reflected the global slowdown narrative, with weaker Chinese growth figures adding to the worries, and more big goods-makers citing slowing global growth. Volvo, the big Swedish truckmaker, Friday reported its orders dropped in the third quarter, and predicted demand would fall next year in Europe and the Americas. Volvo managed to rise 2.4 percent on an earnings beat, but many other automakers fell, with Renault off 5.5 percent after cutting its earnings and revenue guidance.
Asia Pacific Markets
Most major Asian markets closed lower Friday after Chinese data showed economic growth slowed in recent months, with performance mixed across the region over the week. The Shanghai Composite index closed down 1.3 percent on the day, extending its losses on the week to 1.8 percent. Australia’s All Ordinaries index fell 0.5 percent on the day and advanced 0.5 percent on the week, while Hong Kong's Hang Seng index also fell 0.5 percent on the day and gained 1.6 percent on the week. Japan’s Nikkei and Topix indices were little changed on the day, up 0.2 percent and down 0.1 percent respectively, but posted strong gains on the week, up 4.4 percent and 2.6 percent respectively. Chinese data showed weaker GDP growth in the three months to September but some improvement in monthly data for September. China's economy expanded at a 6.0 percent year-on-year pace in the three months to September, moderating from 6.2 percent in the three months to June and just below the consensus forecast of 6.1 percent. This extends the downward trend in year-on-year growth rates seen since early 2018 but remains within the government's 6.0 to 6.5 percent growth target range for 2019. GDP grew 1.5 percent on the quarter, down slightly from the 1.6 percent increase recorded previously. Chinese industrial production advanced 5.8 percent on the year in September, picking up strongly from 4.4 percent in August. This rebound was driven by by strong activity in manufacturing and mining, with growth in utilities output steady. Retail sales grew 7.8 percent on the year in September, up moderately from 7.5 percent in August and reflecting offsetting moves among key categories. Fixed asset investment grew 5.4 percent year- to-date in September, unchanged from August, with growth similarly steady in the manufacturing, mining, power production, and property sectors. Japanese inflation data published Friday showed declines in headline and underlying measures of inflation in September, providing more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process. The headline consumer price index rose 0.2 percent on the year in September, down from 0.3 percent in August and its lowest level since February, largely driven by weaker transportation and communication prices. Core CPI, which excludes fresh food prices, rose 0.3 percent on the year, down from 0.5 percent previously, while the BoJ’s preferred measure of underlying inflation, CPI excluding fresh food and energy prices, rose 0.5 percent, down from 0.6 percent previously. BoJ officials have in recent weeks advised that monetary policy will be eased further "without hesitation" if they consider that the "momentum" towards meeting their inflation target is "lost". Headline inflation has now fallen in four of the last five months. and this latest decline may be enough for them to reach this conclusion ahead of their next policy meeting at the end of the month.
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US equities rose Friday as reports suggested progress toward an interim US-China trade accord, and toward an EU-UK agreement for an orderly Brexit. The Dow industrials rose 1.2 percent, the S&P 500 gained 1.1 percent, and the NASDAQ rose 1.3 percent. Each of the major indexes ended well below the day’s highs on evident position-squaring after a big week of gains.
The Brexit talks appeared to gather momentum after the UK conceded on the controversial Irish customs backstop, though any deal must be ratified by Parliament. In the US, President Trump confirmed late in the day an interim China trade accord, including a delay in US imposition of the next round of tariffs on Chinese goods scheduled for Oct 15, and Chinese purchases of US farm goods.
Cyclical stocks outperformed, with materials, industrials, and energy sectors leading, while defensive sectors underperformed. Apple, up 2.7 percent, continued its run to new highs after analysts upgraded the iphone- maker’s sales outlook this week. Bank stocks advanced as interest rates rose, with money center banks leading. Citigroup rose 2.2 percent, while JP Morgan Chase rose 1.7 percent.
Among companies in the news, Fastenal, the construction supplies company, rallied 17 percent after reporting an earnings beat and maintaining guidance as it managed to raise prices despite slowing economic conditions. Fast-food company Wendy’s rose 3.9 percent after raising its guidance. Boston Beer, maker of Sam Adams, rose
4.0 percent after an analyst upgrade because of strong sales of alcoholic seltzer.
In US economic news, consumer sentiment bounced up in October, to a much stronger-than-expected 96.0 that easily exceeds Econoday's consensus range. The assessment of current conditions is the strong point in October's report, up nearly 5 points to 113.4 in what is a positive indication for consumer spending this month. Expectations are also higher, up 1.4 points to 84.8. Separately, the Fed announced technical steps to address liquidity shortages in the banking system. The Fed said it would purchase Treasury bills starting October 15 at least through the second quarter of next year, at an initial pace of around $60 billion per month. In addition, the Fed said it would conduct term and overnight repos at least through January 2020 to ease money market pressures.
European markets
European equities rallied Friday on reports of progress toward an EU-UK Brexit deal, and reports suggesting the US and China are nearing an interim trade pact. The Europe-wide STOXX 600 jumped by 2.3 percent, the German DAX rose 2.9 percent, the French CAC gained 1.7 percent, and the UK FTSE-100 rose 0.8 percent. UK domestic shares outperformed their export-oriented counterparts as the market upgraded domestic economic prospects,
while export-oriented shares underperformed as sterling rallied on hopes for a more orderly Brexit.
The EU and the UK have begun a more intense round of talks, and UK and Irish prime ministers said they saw a pathway to an accord. EU Brexit negotiator Michel Barnier told member states that the UK has changed its position to now accept that the proposed replacement to the backstop cannot erect a customs border in Ireland. The UK parliament would be obliged to approve any deal hammered out by Prime Minister Boris Johnson, who lacks a majority.
Asia Pacific Markets
Major Asian markets advanced Friday, extending gains made earlier in the week, after President Trump announced that the first day of US-China trade talks starting Thursday had made good progress and that he would meet Chinese Deputy Premier Liu He on the second day. Investor sentiment in the region was also supported by reports Thursday that a Brexit deal might be achievable, news that officials from Korean and Japan will meet to discuss their recent trade disputes on Friday, and indications from protestors in Hong Kong that civil unrest this weekend may be less severe. The regional trade calendar was light except for Indian industrial production data published after the close of most regional markets. The Shanghai Composite index closed up 0.9 percent on the day Friday and up 2.4 percent relative it its level before national holidays last week. Japanese shares also reacted positively to the US-China trade news, with the Nikkei and Topix indices up 1.2 percent and 0.9 percent respectively on the day, and up 1.8 percent and 1.4 percent on the week. Australia’s All Ordinaries index posted similar gains, up 0.9 percent on the day and 1.3 percent on the week. Hong Kong’s Hang Seng index outperformed on the day with a 2.3 percent gain but underperformed on the week with a 0.9 percent gain after sharp losses earlier in the week. India's industrial production index fell 1.1 percent on the year in August, down sharply from growth of 4.3 percent in July and weaker than the consensus forecast for an increase of 1.8 percent. This is the first year-on- year fall in industrial production since June 2017 and was mainly driven by weaker output in the manufacturing sector. Officials at the Reserve Bank of India lowered their GDP forecasts for the current fiscal year at their policy meeting earlier in the month, cutting policy rates for the fifth time in a row. Ahead of inflation data next week, this weakness in industrial production will likely reinforce the bias for officials to remain in favor of further policy rate cuts in coming months.
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US equities advanced Friday on a US jobs report that assuaged worries about a sharp slowdown while leaving
open prospects for Federal Reserve easing. The Dow industrials, the S&P 500, and the NASDAQ all rose 1.4
percent.
Among sectors, technology, financials, and healthcare outperformed, while energy shares underperformed, even
though NYMEX WTI crude oil prices rose. Apple (up 2.8 percent) and its suppliers led technology shares higher
on positive iPhone news.
Among other companies in the news, retailer Costco rose 1.0 despite an earnings shortfall, while HP, the
computer hardware company, fell 9.6 percent after cutting its guidance and announcing a restructuring plan.
In US economic news, the jobless rate fell unexpectedly to 3.5 percent from 3.7 percent, but wage pressures
eased in September for a 2.9 percent year-on-year growth rate that is the lowest since July last year. Payroll
growth itself is running a notch or two below last year and is well under 200,000, but it is still very solid. Nonfarm payrolls rose 136,000 in September with August revised sharply higher, up an additional 38,000 to 168,000.
Yet manufacturing, the economy's weak link due to slowing global trade, is showing weakness, down 2,000 in
September versus expectations for a 3,000 gain.
European markets
European equities rose Friday on relief over moderate job growth in the US employment report. The Europewide STOXX 600 and the German DAX both rose 0.7 percent, the French CAC was up 0.9 percent, and the UK
FTSE-100 rose 1.1 percent. UK shares outperformed as headlines suggested the UK may get more time to
arrange an orderly Brexit.
Among shares in the Stoxx 600, outperformers were mostly defensive sectors, including health care and utilities,
though technology saw gains, along with energy stocks. Notable winners included supermajor oil companies
British Petroleum, up 2.1 percent, and Royal Dutch Shell, up 1.3 percent, as oil prices gained. Underperformers
included autos & parts, banks, real estate, and basic resources.
Among companies in the news, Norwegian Air Shuttle rose 1.9 percent on positive September traffic.
Electromagnetic Geoservices, a Norwegian oil technology company, rose 6.3 percent on positive usage data.
Asia Pacific Markets
Major Asia markets posted mixed results Friday, with regional data and events providing only limited trading direction ahead of the release of US payrolls data. Chinese markets were again closed for national holidays. Japan’s Nikkei and Topix indices both closed up 0.3 percent on the day Friday, finishing the week down 2.1 percent and 2.0 percent respectively. Australia’s All Ordinaries index all closed moderately higher Friday, up 0.4 percent, but was the worst regional performer on the week with a 2.7 percent decline. investor sentiment in Hong Kong remains fragile after PMI survey data showed economic conditions were again very weak in September and ahead of another weekend in which serious civil unrest is expected, with the Hang Seng index closing down 1.1 percent on the day and 0.8 percent on the week. The Reserve Bank of India's Monetary Policy Committee cut the benchmark repurchase rate by 25 basis points to 5.15 percent at its policy review Friday, in line with the consensus forecast. This follows a cut of 35 basis points at its last meeting in August and cuts of 25 basis points at its previous three meetings. This rate is now at its lowest level since mid-2010. Officials downgraded their near-term growth forecast and continue to forecast headline inflation will remain below the mid-point of their target range of 2.0 percent to 6.0 percent over the next few quarters. Until headline inflation moves decisively higher, it appears likely that the bias for officials will remain in favor of further policy rate cuts in coming months.
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US equities declined Friday after a report the Trump administration is weighing new limits on US capital flows
into China. The Dow industrials eased by 0.3 percent, the S&P 500 fell 0.5 percent, and the NASDAQ dropped
1.1 percent.
The report, along with defiant rhetoric from the Chinese foreign minister in a UN speech, spurred a risk-off move
out of trade-sensitive, cyclical shares, especially technology stocks. A selloff was already under way in
semiconductors after US chipmaker Micron (down 3.5 percent) warned late Thursday its profits would fall short
of expectations because of the US-China trade war. Software, internet, and telecom shares were hit hardest,
while banks, steel, retail, and parcels/logistics fared better.
Among companies in focus, Progress Software fell 7.0 percent after an earnings beat but revenue miss. Box, a
business technology company, dropped 6.4 percent after an analyst downgrade. Wells Fargo, the bank, rose 3.8
percent after announcing Charles Scharf would be its new CEO. Scharf was CEO at another bank, BNY Mellon,
which fell 4.5 percent on the news.
In US economic news, fizzling capital goods orders are the unwelcome key to what at the headline levels, at plus
0.2 percent overall and plus 0.5 percent ex-transportation, look like a better-than-expected durable goods orders
report. But core capital goods orders (nondefense ex-air) fell 0.2 percent, which misses Econoday's consensus
for no change and include a major downward revision to July. Meanwhile, personal income and consumer
spending corrected in August what were uneven readings in July, with income up 0.4 percent versus only a 0.1
percent July gain and with spending up only 0.1 percent in August following July's revised 0.5 percent rise.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 98 cents to US$61.76, while
gold fell by US$7.80 to US$1,503.60. The US dollar fell against most major currencies but ended higher versus
the British pound. The US Treasury 30-year bond yield fell 2 basis points to 2.13 percent while the 10-year note
yield fell 1 basis point to 1.68 percent.
European markets
European equities rose Friday on upbeat US-China trade headlines, with UK shares leading the way after sterling
weakened on a signal from the Bank of England that it is considering a rate cut. The Europe-wide STOXX 600
rose 0.5 percent, the German DAX gained 0.8 percent, the French CAC was up 0.4 percent, and the UK FTSE100 jumped 1.0 percent.
Mining shares listed in London led the FTSE 100 higher, along with other export-oriented shares, which benefit
when sterling declines. Anglo American Group, the UK miner, rose 2.5 percent. Ashmore Group, a UK asset
manager, rose 3.2 percent after an analyst upgrade. Among shares in the Stoxx 600, outperformers included
basic resources, travel & leisure, autos & parts, and banks, while underperformers included utilities, real estate,
and health care.
In economic data, Eurozone economic sentiment was surprisingly weak in September. A 101.7 headline reading
on the EU Commission's measure was 1.4 points short of its unrevised August reading and well below the market
consensus. It was also the worst outturn since February 2015.
Asia Pacific Markets
Major Asian markets were again mixed Friday but generally closed lower on the week, with the regional data calendar very light at the end of the week and US-China trade developments still the major focus of attention. CNBC reported that US-China trade negotiations will resume in Washington D.C. on October 10. Chinese data published Friday showed profits in the industrial sector fell 2.0 percent in year-on-year terms in August after they rose 2.6 percent in July, likely reinforcing support among officials for more policy measures to support domestic activity and offset the impact of weaker external demand. The Shanghai Composite index rose marginally Friday, up 0.1 percent on the day, but finished the week down 2.5 percent, with local investors reported to have reduced their risk exposure ahead of national holidays next week. Hong Kong’s Hang Seng index fell 0.3 percent on the day and 1.8 percent on the week. Japanese shares were among the weakest regional performers Friday, with the Nikkei and Topix indices down 0.8 percent and 1.2 percent respectively, resulting in weekly losses of 0.8 percent and 0.7 percent respectively. Australia’s All Ordinaries index outperformed on both the day and the week with a gain of 0.6 percent and a modest drop of 0.2 percent respectively, with many investors anticipating another cut in policy rates at the Reserve Bank of Australia’s meeting next week.
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US equities slipped Friday after some unpleasant US-China trade headlines, and comments from Federal Reserve officials. The Dow industrials declined 0.6 percent, the S&P 500 fell 0.5 percent, and the NASDAQ was down 0.8 percent.
Markets reacted badly to news that a delegation of Chinese agriculture officials had cancelled a trip to Montana and other farm states. Meanwhile, President Trump said he wants a full-blown trade pact with China, not just a small deal involving a purchase of US farm goods. Separately, Dallas Fed President Robert Kaplan, a non-voter this year, said he has penciled in no more rate cuts in 2019, while Boston Fed President Eric Rosengren, who voted against the rate cut this week, argued that the economy is doing fine, and rate cuts are unwise.
Among sectors in the S&P 500, consumer discretionary, technology, and communications services underperformed, while defensive sectors health care, utilities, consumer staples, and energy did better. Among companies in focus, chipmaker Texas Instruments declined 1.8 percent after raising its quarterly dividend. Xilinx, another chipmaker, fell 6.9 percent on news its CFO is stepping down. Big pharma Merck rose 1.4 percent on FDA approval for its anti-virus drug. And Netflix dropped 5.6 percent after its CEO cited concern over competition from other streaming video services, including Walt Disney and Apple.
European markets
European equities ended narrowly mixed Friday, with support from pharmaceuticals, oil, and bank stocks, and UK markets weaker on confusing Brexit news. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX edged up 0.1 percent, the French CAC rose 0.6 percent, and the UK FTSE-100 declined 0.2 percent.
UK markets were hurt by a report Prime Minister Boris Johnson had conceded no Brexit deal is likely before Oct. 31, which followed a more hopeful report that European Commission President Jean-Claude Juncker was showing flexibility on the Irish backstop, and predicted a deal.
Among shares in the Stoxx 600, outperformers included oil & gas, retail, health care, and telecom, while underperformers included industrial goods, autos & parts, basic resources, and media.
Danish pharma Novo Nordisk was a leader, up 2.9 percent, on US regulatory approval for its diabetes drug. Oil
& gas shares perked up on rising oil prices, with Italy’s ENI up 1.2 percent. German bank Commerzbank rose
0.4 percent after it announced huge layoffs and other cost-cutting measures.
Asia Pacific Markets
Major Asian markets closed Friday little changed but posted mixed results on the week. Japanese inflation data and adjustments by the People’s Bank of China to lending rates were the main focus of investor attention but had little market impact. Japan’s Nikkei and Topix indices closed up 0.2 percent and flat on the day respectively but outperformed on the week with gains of 1.5 percent and 1.3 percent respectively. Australia’s All Ordinaries index also advanced 0.2 percent on the day and 0.9 percent on the week. The Shanghai Composite index closed up 0.2 percent Friday but finished the week 0.8 percent lower, while Hong Kong’s Hang Seng index fell 0.1 percent on the day and was the worst performer in the region for the week with a drop of 3.4 percent. Japanese inflation data published Friday showed a further fall in headline inflation and little change in measures of underlying inflation in August. The headline consumer price index rose 0.3 percent on the year in July, down from 0.5 percent in July, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, was unchanged at 0.5 percent. This provides more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process and follows comments from officials at the BoJ's policy meeting earlier in the week advising that they may need to consider whether the “momentum" toward meeting this target will be “lost”. BoJ Governor Haruhiko Kuroda has promised in recent months and again after this week's policy meeting that monetary policy will be eased further "without hesitation" if this momentum is assessed to have been lost. The drop in headline inflation shown in today's data may be enough to satisfy officials that this condition has been met ahead of their next policy meeting late October. The People’s Bank of China published updated lending rates Friday, though adjustments to these rates were limited. As part of recent changes to lower borrowing costs and improve the operation of monetary policy, officials have designated the loan prime rate -- the rate domestic banks charge their most credit-worthy borrowers -- as an additional policy instrument. The 5-year loan prime rate was left unchanged at 4.85 percent but the 1- year loan prime rate was reduced by 5 basis points from 4.25 percent to 4.20 percent after being cut by 6 basis points last month. These cautious moves suggest that officials are open to providing more policy support to the domestic economy but remain wary about the the impact larger moves could have on debt levels and financial stability.
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US equities were mixed Friday, with support from hopeful news on US-China trade talks, but weakness in Apple Inc. depressed the major stock indexes, and trading turned cautious ahead of next week’s Federal Reserve policy announcement. The Dow industrials rose 0.1 percent, the S&P 500 edged down 0.1 percent, and the NASDAQ eased by 0.2 percent. Apple fell 1.9 percent after Goldman Sachs cut its price target for the tech company’s shares.
More conciliatory gestures from the US and China on trade -- including Chinese tariff exemptions for certain US farm goods -- plus a moderately strong US retail sales report, supported risk appetite, and hit US Treasuries hard. The more positive fundamentals appeared to diminish prospects for the Fed to follow up the expected 25 basis point rate cut next week with more rate cuts later in the year. Selling in US Treasuries accelerated after 10-year notes broke below support at a yield of 1.79 percent to trade around 1.90 percent late Friday.
Markets took note of reports that global macro hedge funds have piled into short US Treasuries/long equities positions this week and are hunting for stop-loss orders to force long Treasuries positions out. Meanwhile, many long/short funds rotated into cyclical stocks this week, especially technology and banks, while shorting telecom and other defensive sectors.
The more hopeful mood on US-China trade Friday helped materials, energy, and industrial stock sectors outperform. On the downside, consumer discretionary shares, telecom, and consumer staples were laggards. Among companies in focus, Broadcom, the semiconductor and software maker, was off 3.4 percent after an earnings miss, and saying its chip business would remain depressed. Tyson Foods, the meat company, rose 2.4 percent on news of Chinese tariff exemptions for some US meat.
In US economic data, strong auto sales lifted retail sales in August, which rose 0.4 percent but were unchanged excluding autos. Sales excluding autos and gas (where sales fell sharply on a drop in pump prices) managed only a 0.1 percent rise. But for another important core reading, which is the control group that besides autos and gas also excludes food services and building materials, sales rose a respectable 0.3 percent in the month. Autos led the components with a 1.8 percent August gain that lifts this year-on-year rate to very strong 6.8 percent sales growth. Separately, consumer sentiment rebounded moderately in the September preliminary report to 92.0, up 2.2 points on the month, but still 8 points below the recent high in May.
European markets
European equities firmed and fixed income markets retreated on Friday, continuing their recent trend, on continued positive US-China trade news, and suggestions of progress in UK-EU talks toward a Brexit deal. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX gained 0.5 percent, and the French CAC edged up
0.2 percent. The UK FTSE-100 was up 0.3 percent.
Sentiment on Brexit improved as UK Prime Minister Boris Johnson appeared to edge closer to a Brexit deal, though prospects remained unclear. On the positive side were reports the Irish Democratic Unionist Party, part of the Conservative coalition, might allow more flexibility to facilitate compromise on the vexed Irish backstop issue.
Meanwhile, markets continued to react to Thursday’s ECB announcement, and banks outperformed, as aspects of the ECB package appear supportive for the sector. These include a smaller-than-expected interest rate cut, expanding the range of bank holdings eligible for ECB refinancing, and “tiering,” to allow exemption from negative rates for some bank deposits.
Among shares in the Stoxx 600, outperformers, in addition to banks, included basic resources, financial services, and autos & parts, while underperformers included defensive shares -- food & beverages, utilities, and personal & household goods. Spanish banks were among the top performers, with Caixa Bank up 7.3 percent, and Banco de Sabadell up 7.8 percent.
Asia Pacific Markets
Markets in China and Korea were closed for holidays Friday but markets elsewhere in the region closed higher, extending gains made earlier in the week. Investor sentiment was supported by the ECB’s rate cut Thursday as well signs of improvement in US-China trade tensions. Speaking late Thursday, President Trump indicated that he might consider an “interim" trade deal with China, though officials stressed that the administration prefers a more complete agreement. The regional data calendar was light Friday and provided no major news to guide sentiment. Japanese markets posted strong gains Friday and were the clear regional outperformers on the week, with the Nikkei and Topix indices up 1.1 percent and 0.9 percent respectively on the day and up 3.7 percent and 4.7 percent respectively on the week. Hong Kong’s Hang Seng index also rose 1.0 percent on the day to extend its weekly gain to 2.5 percent, with concessions made to protesters last week by the government appearing to reassure investors. Australia’s All Ordinaries index was the underperformer for the region, increasing just 0.2 percent on the day and 0,4 percent on the week. With trading closed for the day, the Shanghai Composite index gained 1.1 percent on the week.
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US equities were ending mixed Friday as US jobs data and comments by Fed Chair Jay Powell left intact expectations for slowing growth and a Fed 25 basis point rate cut in September. The Dow industrials rose 0.3 percent; the S&P 500 rose 0.1 percent, and the NASDAQ was off 0.2 percent.
Risk assets were bolstered by other signs of central bank accommodation, but uncertain about how aggressive the stimulus will be. Signs of easing included a well-telegraphed Chinese cut in bank reserve ratios, and a comment from Bank of Japan Governor Haruhiko Kuroda, who said the BOJ could push interest rates further below zero. Additionally, most expectations ahead of next week’s ECB policy meeting call for a cut in the deposit rate and a restart to the bank’s bond purchases.
Among stocks in the S&P 500, materials shares outperformed, with help from chemicals. Consumer staples rose, led by tobacco. Health care outperformed, with pharma leading. Communications shares lagged, with Google (down 0.6 percent) and Facebook (down 1.8 percent) hurt by news about US antitrust investigations. Automakers were hit by a report that the Justice Department is probing whether there was collusion on emissions standards linked to California’s air quality rules.
Among companies in the news, Lululemon Athletica, a sports clothing store, rose 7.8 percent after an earnings beat and it raised its full-year guidance. Discount retailer Costco rose 2.3 percent as its same-store sales beat expectations. Docusign, an electronic signature company, rallied 22 percent on unexpectedly strong billings, despite an earnings miss.
In economic news, US employment report showed weakness in payroll growth, at a headline 130,000 for nonfarm payrolls, which is 20,000 short of the bottom of Econoday's consensus range. Private payrolls, which exclude a Census-driven 34,000 rise in government payrolls, came in at only 96,000 which is 40,000 short of the low estimate. Manufacturing reached the consensus range but the 3,000 total was 5,000 short of the median with July revised a very steep 12,000 lower to growth of only 4,000. On the upside, there was an outsized 0.4 percent rise in average hourly earnings, a result that speaks to wage pressures tied to a narrowing supply of labor. Earnings have now posted four straight elevated readings, at 0.3 percent in July, June and May as well. The participation rate was up a sharp 2 tenths to 63.2 percent. The unemployment rate did not move in August, holding at a low 3.7 percent.
European markets
European markets edged up Friday after news China would cut bank reserve requirements to stimulate lending. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX was up 0.5 percent, and the French CAC gained
0.2 percent. The UK FTSE-100 rose 0.2 percent.
On the negative side for sentiment, US and European data came in mixed to weaker, with German industrial dropping unexpectedly, and a mixed US jobs report, featuring weaker than expected payroll gains but stronger earnings growth. Expectations for next week’s ECB policy council meeting have been clouded by comments from policy-makers casting doubt on the need for aggressive stimulus, but markets generally expect outgoing ECB President Mario Draghi to force through a final set of pro-growth measures.
Outperforming sectors in the Stoxx 600 included retail, media, and basic resources. Underperformers included utilities, oil & gas, and food & beverages. UK water utilities attracted attention after a ratings downgrade for United Utilities, which fell 2.9 percent. German manufacturer Thyssenkrupp rallied 4.7 percent on news about private equity buyers for its elevator business.
Asia Pacific Markets
Major Asian markets closed higher Friday, extending gains made earlier in the week. The regional data calendar was light Friday ahead of the US employment report, while US-China trade developments were also limited. Hong Kong’s Hang Seng index was among the strongest performers in the region on both the day and the week with gains of 0.7 percent and 3.8 percent respectively, though investors remain concerned about the potential for further unrest over the coming weekend after the government’s decision mid-week to withdraw controversial legislation. The Shanghai Composite index made similar gains, up 0.5 percent on the day and 3.9 percent on the week. Both the Hang Seng and the Shanghai Composite indices were boosted late in the session by sharp gains in telecommunications shares after news that the Italian government would impose conditions but still allow the involvement of Chinese companies in the development of 5G networks. Japanese shares also rose further Friday, with the Nikkei index up 0.5 percent on the day and 2.4 percent on the week and the Topix index up 0.2 percent on the day and 1.7 percent on the week. Major exporters were among the strongest performers after the Japanese yen weakened against the US dollar. Australia’s All Ordinaries index rose broadly in line with other regional markets Friday with a gain of 0.5 percent but underperformed on the week, closing up just 0.8 percent.
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Most major US stock indexes were flat to lower Friday on mixed US economic data, including a drop in consumer sentiment, and caution ahead of a long weekend with new US tariffs set to take effect on Chinese goods. The Dow industrials rose 0.1 percent, the S&P 500 was flat, the NASDAQ fell 0.1 percent, and the Russell 2000 fell
0.1 percent.
Weak US consumer sentiment data caught the market’s attention, and tech stocks in particular were soft Friday
on worries about new tariffs set to take effect Sunday. Energy stocks were soft as oil prices fell.
Among companies in the news, Ulta Beauty, a cosmetic firm, dropped 30 percent after lowering its 2019 guidance. Tesla, the automaker, rose 1.8 percent on favorable news related to China’s auto purchase tax. Campbell Soup was a leader as it rose 3.8 percent on news of strong organic sales growth.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 59 cents to US$60.43, while gold fell US$2.60 to US$1532.70. The US dollar gained against most major currencies. The US Treasury 30-year bond yield was steady at 1.96 percent, while the 10-year note yield was unchanged at 1.50 percent.
In economic news, US consumer sentiment fell to multi-year lows, falling well below low expectations to 89.8 for final August and the lowest reading since October 2016. The expectations component fell more than 10 points in the month to 79.9 with the current conditions component down more than 5 points to 105.3. The report cites consumer apprehension over rising tariffs. In other US data, consumer spending was reported very strong and inflation very flat. Consumer spending jumped an outsized 0.6 percent in July to hit the top end of Econoday's consensus range. All components for spending were very strong led by a 1.1 percent rise for nondurable goods and including respective 0.6 and 0.5 percent monthly gains for durable goods and services.
European markets
Major European equities ended higher Friday on better mood music from the US-China trade dispute, and talk of ECB easing. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX gained 0.9 percent, and the French CAC rose 0.6 percent. The UK FTSE-100 rose 0.3 percent. The FTSE MIB Italian index fell 0.4 percent on worries that a proposed Italian government coalition was coming apart.
The euro moved sharply lower, below $1.10, in part on weak Eurozone inflation data, and after President Trump tweeted that the Eurozone was manipulating its currency to gain advantage in trade.
Outperforming sectors in the Stoxx 600 included basic resources, real estate, financial services, and industrial goods and services. Underperformers included media, telecom, banks. Among companies in the news, German real estate firms bounced back on a report that Berlin’s strict rent control measures would be scaled back. Deutsche Wohnen, a property firm, rose 9.7 percent.
In economic news, Eurozone inflation was provisionally unchanged this month. A 1.0 percent annual rate matched both July's final outturn (flash 1.1 percent) and market expectations and so equalled the lowest print since November 2016. More importantly, the core rates were similarly steady. Hence, the narrowest measure
which excludes energy, food, alcohol and tobacco was flat and lower than expected at just 0.9 percent.
Asia Pacific Markets
Major Asian markets recorded mixed results Friday, with moves on the week also varying across the region. US- China trade tensions remain the key focus of attention after comments from Chinese officials late Thursday, while Japanese data published Friday provided mixed signals about economic conditions. The Bank of Korea left it policy rate on hold on Friday, in line with expectations. Investors remain concerned about the potential for more civil unrest in Hong Kong over the weekend. Australia’s All ordinaries index was among the strongest performers both on the day and on the week, with gains of 1.4 percent and 1.3 percent respectively. Japanese shares also advanced Friday, erasing losses made earlier in the week. The Nikkei index rose 1.2 percent on the day and finished flat on the week, while the Topix indices advanced 1.5 percent on the day and 0.6 percent on the week. The Shanghai Composite index posted modest falls of 0.2 percent on the day and 0.4 percent on the week, while Hong Kong’s Hang Seng index rose 0.1 percent on the day but was the worst regional performer on the week, dropping 1.7 percent. Japan's industrial production index rose 1.3 percent on the month in July after falling a revised 3.3 percent in June, above the consensus forecast for an increase of 0.3 percent. This was broadly in line with PMI survey data which indicated that conditions in the manufacturing sector improved slightly but remained weak that month. Stronger growth in auto output helped boost headline growth. Labour market data were also positive, with Japan’s unemployment rate falling from 2.3 percent in June to 2.2 percent in July, below the consensus forecast of 2.4 percent, and matching the multi-decade low recorded last year. Retail sales, however, slowed in July, falling 2.0 percent on the year after an increase of 0.5 percent in June, weaker than the he consensus forecast for a fall of 0.8 percent. Food and fuel sales were the main drivers of the weaker headline number.
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US stock indexes plunged Friday in a big risk-off move as the US-China trade dispute escalated, with China announcing retaliatory tariffs, as it promised, and President Trump following suit with more tariffs on China in response. Trump ordered US companies to curtail business with China and to move their operations in China back into the US, though it was unclear what effect the statement would have. The Dow industrials dropped 2.4 percent, the S&P 500 lost 2.6 percent, the NASDAQ fell 3.0 percent, and the Russell 2000 was down 3.1 percent.
Markets reacted with disappointment that Fed Chairman Jay Powell did not make a more dovish statement at the Fed’s Jackson Hole conference, even though expectations for a 25-basis point cut in September remain largely intact. Powell reiterated the Fed will "act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective." But he stopped short of sending the kind of aggressive easing signal many were hoping for. Powell told Jackson Hole participants further rate cuts will depend on how he and fellow policy-makers assess the economy and an array of domestic and international influences.
Technology shares, including semiconductors, which are highly sensitive to the US-China trade war, led the declines. Oil, autos and consumer discretionary shares were also among the worst performers. Defensive stocks including utilities held up better but still weakened, while Treasuries rallied, and the dollar fell, in particular vs. the yen, in a flight from risk.
Stocks in focus included Pivotal Software, up 9 percent, after it agreed to be acquired by VMWare, a software company. Carbon Black, another software firm, rose 6 percent after news it too would be acquired by VMWare. Red Robin Gourmet Burgers rose 6 percent after an earnings and revenue beat. Salesforce.com rose 2.3 percent after an earnings beat and improved guidance.
Notable losers included Foot Locker, the shoe retailer, down 19 percent after its earnings, revenue, and sales missed expectations. Kemper Insurance was off 11 percent on an analyst downgrade. VMware fell 10 percent on concern over its acquisitions.
In economic news, data showed US new home sales, much like existing home sales, are struggling to gain traction. July's annual sales rate of 635,000 is slightly below Econoday's 645,000 consensus but is upstaged by a very sharp upward revision to June which is now, pending further revisions, at a 728,000 rate and a new expansion high. Yet the three-month average, which is central when discussing home sales, actually declined in July, to 655,000 versus 663,000 in June. This average peaked at roughly 670,000 in March and April, which were the best months so far this year for home sales.
European markets
European stocks reversed initial gains to end down Friday as the US-China trade war escalated. The Europe-wide STOXX 600 fell 0.8 percent, the German DAX fell 1.2 percent, the French CAC was off 1.1 percent, and the FTSE- 100 was off 0.5 percent.
Markets also reacted poorly to comments from Fed Chairman Jay Powell that were judged insufficiently dovish, even though Powell suggested the Fed was likely to cut rates in the fall.
Autos and parts led the declines on the US-China news, along with oil and gas, chemicals, and banks. All sectors except real estate closed lower, while utilities and travel and leisure shares also held up better. Oil supermajors Shell (down 0.9 percent), and BP (down 1.3 percent) were big downers for the European stock indexes. In corporate news, metals distributor Kloeckner rallied 7 percent after a report it may be acquired by Thyssenkrupp, the industrial engineering and steel firm, which rose 1.0 percent.
Asia Pacific Markets
Major Asian markets recorded moderate increases Friday to close the week with solid gains. Upcoming comments from Federal Reserve Chair Jerome Powell remained a key focus for investors with incoming regional data doing little to shift market sentiment. Tensions between Japan and South Korea escalated after the South Korean government announced it would scrap an intelligence-sharing agreement between the two countries in response to recent trade restrictions imposed by the Japanese government. The Shanghai Composite index and Hong Kong’s Hang Seng index were among the strongest regional performers on the day, both up 0.5 percent to extend their gains on the week to 2.6 percent and 1.7 percent respectively. Australia’s All Ordinaries index also rose on the day, up 0.3 percent, and finished the week 2.0 percent higher. Japan’s Nikkei and Topix indices advanced 0.4 percent and 0.3 percent respectively on Friday and closed the week up 1.4 percent and 1.1 percent respectively. Japanese inflation data released today showed a fall in headline inflation and little change in measures of underlying inflation in July, providing more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process. The headline consumer price index rose 0.5 percent on the year in July, down from 0.7 percent in June, while the BoJ’s preferred measure of underlying inflation, CPI excluding fresh food and energy prices, rose 0.6 percent on the year, up slightly from 0.5 percent. At their most recent meeting, held late July, BoJ officials left policy settings on hold, reflecting their assessment that inflation is still "likely to increase gradually" towards 2.0 percent. BoJ Governor Haruhiko Kuroda argued that there has not been a loss of momentum towards meeting the inflation target but promised that additional policy easing would be delivered "without hesitation" if this momentum were lost. It remains unclear, however, what officials would consider to be a loss of momentum.
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Major US stock indexes recovered from oversold conditions Friday amid talk of government stimulus to boost flagging economies. The Dow industrials rose 1.2 percent, the S&P 500 gained 1.4 percent, and the NASDAQ gained 1.7 percent.
Markets eyed a report that the German government was willing to boost deficits to support its economy. Also in focus: news of a Chinese government plan to lift incomes, and expectations for ECB policy accommodation after dovish policy-maker comments. Market sentiment remains subdued, in light of weaker corporate earnings, the global growth slowdown, and ongoing tensions, especially the situation in Hong Kong. There’s also talk that an improving US-China trade picture gives the Fed less room to cut rates.
In corporate news, Nvidia was up 7.3 percent to boost chip stocks after an earnings beat and favorable guidance. General Electric rebounded by 9.7 percent to help lift industrials after plunging Thursday on a report of questionable accounting practices. On Friday buyers stepped in after GE rebutted the report, and the CEO bought
$2 million in shares.
These data reflect observations at 4:00 PM US ET: Dated Brent spot rose crude 25 cents to US$58.64, while gold fell US$9.40 to US$1523.60. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield rose 8 basis points to 2.04 percent while the yield on the 10-year note rose 6 basis points to
1.56 percent.
European markets
European equities rose Friday, with bank shares leading, on talk of German fiscal stimulus and hopes for ECB easing. The Europe-wide STOXX 600 rose 1.2 percent, the German DAX was up 1.3 percent, the French CAC rose 1.2 percent, and the UK FTSE 100 gained 0.7 percent.
German news magazine Der Spiegel reported the German government was ready to use deficit spending to boost the economy if it is in recession. And Olli Rehn, the Finnish central banker, Thursday called for a big stimulus package from the ECB to boost the Eurozone.
Banks outperformed, along with utilities, retail, technology, and media. Real estate, oil and gas, basic resources, and chemicals underperformed. Among bank shares, Royal Bank of Scotland rose 2.5 percent, while Barclays rose 1.9 percent.
Asia Pacific Markets
Most major Asian markets traded in relatively narrow ranges Friday but there was considerable variation in their performance over the week. The Shanghai Composite index closed up 0.3 percent on the day and was the strongest performer on the week with a gain of 1.8 percent, with investor sentiment boosted by suggestions that recent weakness in the economy will prompt additional policy measures. News of extra policy support from Hong Kong’s government also provided some boost to the Hang Seng index, closing up 0.9 percent on the day and limiting the weekly loss to 0.8 percent. Hong Kong airline Cathay Pacific announced after the close of trading Friday that its chief executive officer, Rupert Hogg would step down after pressure from Chinese authorities about airline staff who had participated in recent protests. Japanese shares were little changed on the day, with the Nikkei and Topix indices both up 0.1 percent on the day and falling 0.8 percent and 0.9 percent on the week respectively. Australia’s All Ordinaries index fell 0.1 percent on the day and was among the weakest performers in the region over the week with a decline of 2.7 percent. Singapore trade data for July showed some improvement in exports, broadly in line with Chinese data published last week showing a moderate rebound in external demand. Singapore's non-oil domestic exports fell 11.2 percent on the year in July after falling a revised 17.4 percent in June and increased 3.7 percent on the month after falling 7.8 percent previously. Export growth improved for seven of Singapore's top ten trading partners in July, including the United States, China and the European Union, though exports to Japan were weaker.
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ajor US stock indexes weakened Friday but ended up from the day’s worst levels amid US-China worries after President Trump said he is not ready to make a trade deal with China, and that trade talks may not go forward in September. The Dow industrials eased 0.3 percent, the S&P 500 fell 0.7 percent, and the NASDAQ fell 1.0 percent.
Risk appetite was also hurt by the latest Chinese yuan fixing, well above 7 per dollar, which renewed worries about a rapid depreciation in the Chinese currency. Mixed statements from the White House on prospects for allowing US firms to do business with Huawei added the disquiet over the US-China dispute.
Most sectors in the S&P 500 were lower. Weakest were oil services, semiconductors, the FAANGs, apparel, auto suppliers, machinery, trucking. Doing relatively better were restaurants, hospitals, hotel/leisure, exchanges, and pharma.
Among companies in focus, ride-share leader Uber dropped 6.8 percent after a big revenue miss. Software company Activision Blizzard was off 2.6 percent on an earnings miss. Business IT firm DXC Technology plunged 30 percent after cutting its guidance and on analyst downgrades.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude rose 96 cents to US$58.34, while gold fell US$5.00 to US$1509.80. The US dollar rose against the British pound, the Australian dollar and the yuan but weakened against most other major currencies. The yield on the US Treasury 30-year bond yield was up one basis point at 2.25 percent while the yield on the 10-year note was up one basis point at 1.73 percent.
European markets
European equities fell Friday as US-China worries depressed risk appetite, and Italian political turmoil added to the gloom. The Europe-wide STOXX 600 fell 0.9 percent and the German DAX dropped 1.3 percent, the French CAC fell 1.1 percent, and the UK FTSE 100 fell 0.4 percent.
The Italian FTSE MIB dropped by 2.5 percent and Italian yield spreads widened on news that Deputy Prime Minister Matteo Salvini called for elections and submitted a motion of no confidence in the government. Banks
were among the worst performers on the Italy news, and trade-sensitive sectors such as basic materials and autos were hit by the China worries.
Attention focused on US-China tensions after a report the White House is holding off on granting waivers to firms wishing to do business with Huawei. News that China fixed the yuan well above 7 per dollar added to talk of a currency war on top of the trade war.
In the Euro Stoxx 600, outperformers included health care, food and beverage, and real estate, while underperformers were basic resources, auto and parts, telecom, chemicals, and banks. In corporate news, German pharma and chemicals firm Bayer rallied 4.4 percent on a report it was proposing to settle its exposure to US lawsuits over its Roundup herbicide.
Asia Pacific Markets
Major Asian markets posted mixed results Friday but all ended the week well down, with global trade tensions and policy uncertainty likely to remain key factors driving near-term moves. The Shanghai Composite index and Hong Kong’s Hang Seng index both closed down 0.7 percent Friday, extending their losses on the week to 3.6 percent and 3.2 percent respectively, while authorities set the yuan reference rate above the key level of 7 against the dollar for the second time this week. Chinese inflation data published Friday showed slightly stronger consumer price pressures, with headline inflation CPI increasing from 2.7 percent in June to 2.8 percent in July, mainly reflecting a bigger rise in food prices. Producer prices, however, weakened, with PPI inflation falling from no change in June to a drop of 0.3 percent in July. Japanese shares rose moderately on the day after better-than-expected GDP data, with the Nikkei and Topix indices closing up 0.4 percent and 0.3 percent respectively and both losing 1.9 percent on the week. Japan’s economy grew 0.4 percent on the quarter in the three months to June, down from revised growth of 0.7 percent in the three months to March but above the consensus forecast for an increase of 0.2 percent. Although headline GDP growth fell due to weaker net exports, domestic demand picked up in the three months to June, up 0.7 percent on the quarter compared with growth of 0.3 percent previously, with stronger growth in household consumption, private non-residential investment and public spending.
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US stocks extended a global selloff Friday on fallout from President Trump’s abrupt resumption of the US-China
trade war, though major US indexes were ending above their worst levels of the day. The Dow industrials fell
0.4 percent, the S&P 500 declined 0.8 percent, and the NASDAQ fell 1.3 percent.
Trump said on Thursday he would impose 10 percent tariffs on the final $300 billion segment of Chinese imports,
effective Sept. 1, but that he could do more, or less, depending on how bilateral trade talks unfold. The trade
story dominated the market’s attention and swamped the positive effect of a decent quarterly earnings season
and the latest economic data, including an in-line showing in the latest US jobs report, with nonfarm payrolls up
164,000, at the upper end of expectations.
Among sectors, cyclical plays underperformed, while defensive sectors, especially utilities and real estate, did
better. Tech fared the worst, with hardware off on a negative preannouncement by NetApp (down 20 percent)
after the storage and data company said its sales and earnings would be below expectations due to a global
slowing in hardware spending. Cisco, another network hardware company, was off 3.9 percent. Chip stocks were
big losers, with Advanced Micro Devices off 1.3 percent and breaking below key trendlines. Chipmaker Qualcomm
was off again Friday, down 0.1 percent, after dropping Thursday on poor earnings due to the Huawei fiasco. The
FAANGs were off on the risk-off move, with Apple and Amazon both down about 2 percent.
Energy and materials were both notable decliners, while autos, toys, and travel stocks led consumer discretionary
stocks down. Square Inc., a digital payments company, was a notable loser, down 14 percent, as its third-quarter
forecast was way below expectations. Engineering firm Fluor plunged by a whopping 27 percent after an
unexpected quarterly loss and downgrade to its guidance.
With more than 75 percent of S&P 500 companies now reporting FactSet put earnings growth at minus 1.0
percent, better than the expected minus 2.7 percent. FactSet said nearly 75 percent have exceeded expectations,
just below the 76 percent average.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude rose 36 cents to US$61.40 while gold
fell US$1.40 to US$1453.10. The US dollar dropped against major currencies, as measured by the ICE dollar
index contract, DXY. The yield on the US Treasury 30-year bond yield dropped 5 basis points to 2.39 percent
while the yield on the 10-year note fell 4 basis points to 1.85 percent.
European markets
European equities markets dropped Friday as markets reacted to President Trump’s move to impose 10 percent
tariffs on $300 billion in Chinese exports to the US. Fixed-income markets rallied, with the German 29-year bund
yield going negative for the first time, while the Swiss franc and gold surged on a flight to quality. Markets see
a rising likelihood of a no-deal Brexit, another negative for risk assets.
The Europe-wide STOXX 600 dropped 2.5 percent, the German DAX dropped 3.2 percent, the French CAC fell
3.7 percent, and the UK FTSE 100 was down 2.4 percent.
Cyclical stocks, and shares with the most exposure to trade, led the declines, while defensive shares including
real estate, health care, and utilities outperformed, but were generally caught in the downdraft. Worst-hit sectors
included basic resources, technology, and autos and parts. Among shares in focus, two Italian auto sector icons
downgraded their guidance: tire maker Pirelli dropped 7 percent, while luxury carmaker Ferrari fell 4 percent.
One of the biggest losers was Robit PLC, a UK mining driller, off 19 percent after cutting its 2019 guidance.
Dutch professional services company Brunel dropped 16 percent after reducing its guidance too. Royal Bank of
Scotland fell 6.5 percent after cutting its dividend.
Asia Pacific Markets
Most major Asian market posted heavy falls Friday after President Trump announced higher tariffs would be imposed on Chinese goods starting next month. These declines extended losses on the week. In response to President Trump’s tariff decision, Chinese officials warned they would take countermeasures but expressed hope that negotiations could resume. Meanwhile, trade tensions between Japan and South Korea showed no sign of resolution Friday with Korean officials indicating that retaliatory measures could be introduced in response to recent and prospective export restrictions imposed by Japan. Hong Kong’s Hang Seng index was among the weakest regional performers Friday, closing down 2.4 percent on the day and down 5.2 percent on the week, with the impact of external developments on investor sentiment augmented by concerns about ongoing civil unrest. Japanese shares also weakened sharply Friday after receiving some support from currency weakness Thursday. The Nikkei index fell 2.2 percent on the day and 2.6 percent on the week, while the Topix index dropped 2.2 percent on the day and 2.4 percent on the week. The Shanghai Composite index also extended losses Friday, down 1.4 percent on the day and 2.6 percent on the week. Australia’s All Ordinaries index outperformed with more modest losses of 0.4 percent on the day and 0.5 percent on the week, though the impact of global trade tensions was evident on the Australian dollar, which weakened to levels not seen since 2008. Australian retail sales and producer price data were the main focus of the regional data calendar Friday. Retail sales increased 0.4 percent on the month (seasonally adjusted) in June after advancing 0.1 percent in May, mainly reflecting stronger growth in sales of food and clothing. Producer price inflation rose slightly from 1.9 percent in the three months to 2.0 percent in the three months to June after consumer price data earlier in the week showed a slightly bigger rise in headline inflation from 1.3 percent to 1.6 percent.
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US stocks rose Friday after a strong US GDP report, and on favorable quarterly earnings results, with a huge
rally in Google leading communications services higher. Equities gains were limited by concern that better data
might limit the Federal Reserve’s hand in cutting rates. The Dow industrials 0.2 percent, the S&P 500 rose 0.7
percent, and the NASDAQ gained by 1.1 percent.
Consumer staples outperformed, led by beverage, grocers, and food products. Financials also did well, led by
banks. Health care underperformed, with weakness in medical technology, biotech, and pharma. Energy shares
were laggards, with exploration and production firms the big losers.
Google soared 10.4 percent after reporting a rebound in website ad revenues, better margins, surging cloud
computing business, plus a huge share buyback. Results for other big tech-oriented firms were mixed, with
Amazon off 1.5 percent on weaker profitability due to rising delivery costs. Twitter rocketed 9 percent after an
earnings beat. Dow member McDonalds rose 0.5 percent after reporting earnings in line with expectations, but
same store sales well above expectations.
In economic news, personal consumption expenditures and government spending lifted US second-quarter GDP
to a 2.1 percent annual rate that beat Econoday's consensus by 2 tenths. Beating Econoday's consensus by 4
tenths is inflation-adjusted consumer spending, which came in at a very hot 4.3 percent pace. This is directly
tied to the strong labor market. Government purchases, here tied to heavy government spending, grew at a 5.0
percent pace. Consumer spending contributed 2.85 percentage points to the quarter's growth while government
purchases contributed 0.85 points. All other major components pulled down GDP, which is what Federal Reserve
policy makers, who are now biased strongly toward a rate cut, will have to underscore at their meeting next
week.
European markets
European equities rose Friday on earnings results, with telecom and media shares leading the way. The Europewide STOXX 600 gained 0.3 percent, the German DAX was up 0.5 percent, the French CAC rose 0.6 percent, and the UK FTSE 100 rose 0.8 percent. Vodafone rose 11.6 percent on plans to spin off its towers business, and expand its 5G offerings. Telecom Italia was up 4.1 percent on news of its joint 5G rollout with Vodaphone. Among media shares, Vivendi was up 3 percent, and Pearson rose 5.4 percent, both on positive earnings surprises. Media, telecom, and food and beverages outperformed, while retail, miners, and real estate underperformed in the Euro Stoxx 600. Among other top names reporting results, chocolatier Nestle rose 1.5 percent after reporting stronger earnings and fast sales growth. Building materials company Saint-Gobain rose 1.2 percent on a positive earnings surprise, amid cost cutting. Tiremaker Michelin was off 2.7 percent on an earnings miss despite better revenues. In economic news, French producer prices fell for a fourth successive month in June. A 0.5 percent monthly slide reduced annual PPI inflation to just 0.2 percent, its lowest reading since November 2016. Separately, Italian business confidence improved in July. A near-2 point bounce versus an unrevised June outturn put the Istat measure at 101.2, its highest since last October. However, the headline gain was not mirrored in manufacturing where morale declined a further 0.6 points to 100.1.
Asia Pacific Markets
Most major Asian markets closed Friday moderately lower on the day but held onto gains over the week. The regional data calendar was light Friday, keeping much of the focus on the outlook for US and European monetary policy. The Nikkei and Topix indices fell 0.5 percent and 0.4 percent on the day, respectively, and finished the week up 0.9 percent and 0.5 percent, respectively, while Australia’s All Ordinaries index fell 0.3 percent on the day and outperformed on the week with a 1.3 percent gain. Hong Kong’s Hang Seng index was the weakest major market both on the day and the week, down 0.7 percent and 1.3 percent respectively, with ongoing political unrest still weighing on sentiment. The Shanghai Composite index was the main exception to market declines Friday, rising 0.2 percent on the day and advancing 0.5 percent on the week. Singapore's manufacturing output fell 6.9 percent on the year in June after falling 2.0 percent in May and rose 1.2 percent on the month after falling 0.1 percent previously. Industrial production has now fallen on the year for four consecutive months and did so in June at the fastest pace since December 2015, in line with similar results for Singapore's exports over this period. Excluding the volatile biomedical industry, manufacturing output fell 9.9 percent on the year in June after dropping 4.6 percent in May and fell 2.9 percent on the month after dropping 2.2 percent previously.
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US stocks slipped Friday as the market appeared to price out a 50 basis point rate cut in favor of a 25 basis point cut at the Federal Reserve’s July policy meeting. The Dow industrials fell 0.3 percent; the S&P fell 0.6 percent, and the NASDAQ was off 0.7 percent.
Markets were whipsawed by conflicting headlines from Fed officials on Thursday and Friday. Stocks rose on Thursday when New York Fed President John Williams said, as a general rule, the Fed should “take swift action when faced with adverse economic conditions,” but markets gave back the gains when the Fed later said Williams was making an “academic” argument. On Friday, St. Louis Fed President James Bullard, a noted dove among voters on the FOMC, said he supported only a 25 basis point cut, which seemed to confirm the Fed would deliver only 25 basis points. Boston Fed President Eric Rosengren later said policy-makers should “do what’s right” even when it means disappointing market expectations.
Among companies in focus, Microsoft rose 0.2 percent after an earnings beat, and news its cloud computing business was booming. American Express fell 2.8 percent after it reported an unexpected rise in expenses. Media company Gannett rose 20 percent on a report it may be acquired by GateHouse Media. Crowdstrike, a data security firm, rose 15 percent on an earnings beat. Red Robin Gourmet Burgers rose 12 percent on a report that it may be acquired.
In economic news, US consumer sentiment is holding steady this month, at 98.4 for preliminary July versus 98.2 for final June. The current conditions component, which is very solid, fell slightly to 111.1 while the expectations component, which is likewise positive, rose slightly to 90.1.
European markets
Most European equities markets were flat to higher Friday, with the notable exception of the Italian market, which plunged on worries about an impending collapse of Italy’s coalition government. Iran’s seizure of a UK-flagged oil tanker added to worries about potential conflict between Iran and western powers. On the positive side were ongoing expectations for US rate cuts.
The European STOXX 600 rose 0.1 percent, the German DAX rose 0.3 percent, the French CAC was up a marginal
0.03 percent, and the UK FTSE 100 rose 0.2 percent. The Italian FTSE MIB plunged 2.1 percent on new discord
between Italy’s governing League and Five Star parties, which could put Italy’s fiscal position in doubt.
Bank stocks were hit hardest by the Italy worry, with Italy’s Unicredit off 4.4 percent, and Intesa Sanpaolo off 2.8 percent. Industrial shares and auto shares did better on a report that US Treasury Secretary Steven Mnuchin saw high-level US-China trade talks resuming. Volvo jumped by 4.1 percent after the Swedish automaker announced
cost cuts to offset the impact of trade tariffs. Swiss machinery maker ABB rose 1 percent, and UK aerospace firm BAE Systems rose 0.5 percent.
Beer-maker Anheuser-Busch Inbev rallied 5.5 percent on news it would cut its debt burden by divesting its Australian unit.
Asia Pacific Markets
Major Asian markets closed higher Friday but were mixed over the week, with investor sentiment on Friday supported by comments late in the New York session from New York Fed President John Williams noting that officials need to “act quickly” to boost economic growth. (A Fed spokesman later said Williams was making an “academic” argument). Japanese shares were the strongest performers on Friday after heavy losses Thursday, with the Nikkei and Topix indices closing up 2.0 percent and 1.9 percent respectively, but finishing the week down 1.0 percent and 0.8 percent respectively. The Shanghai Composite index also finished up on the day and down on the week, with an increase of 0.8 percent and a decline of 0.2 percent respectively, while Hong Kon’s Hang Seng index rose 1.1 percent on the day and 1.0 percent on the week. Australia’s All Ordinaries index closed up 0.7 percent on the day and was flat on the week, with Friday’s gain boosted by a strong increase in shares of National Australia Bank after it announced the appointment of its new chief executive officer. Japanese inflation data published Friday showed no change in headline inflation and officials' preferred measure of underlying inflation in June, providing more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process. The headline consumer price index rose 0.7 percent on the year in June, unchanged from the pace recorded in May, with stronger price increases for food offset by weaker changes in utilities charges and transport and communication costs. Core CPI, which excludes fresh food prices, rose 0.6 percent on the year in June, down from 0.8 percent in May, while the BoJ's preferred measure, CPI excluding fresh food and energy prices, rose 0.5 percent on the year in June, as it did in May. At their most recent meeting, held last month, BoJ officials left policy settings on hold, reflecting their assessment that inflation is still "likely to increase gradually" towards 2.0 percent.
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US stocks slipped, but closed up from their worst levels US stocks rose Friday as bullish headlines from Federal Reserve officials continued to dominate. The Dow industrials rose 0.9 percent; the S&P gained 0.5 percent, and the NASDAQ rose 0.6 percent.
Among Fed officials making the case for more accommodative policy were New York Fed President John Williams, Chicago Fed President Charles Evans, and Fed Governor Lael Brainard, who all highlighted inflation below target and risks to the growth outlook in comments similar to those of Fed Chair Jay Powell on Wednesday and Thursday.
Health care stocks were losers Friday, with pharma hit by worries over new US government action to cut drug prices after the Trump administration pulled its health rebate plan. Pharma majors Pfizer and Merck were off 1.3 percent and 1.6 percent. Utilities and real estate also underperformed. Cyclicals, including industrials and consumer discretionary shares, outperformed on rate cut hopes.
Among shares in focus, Johnson and Johnson dropped 4.1 percent on a report the Justice Department is looking into whether company lied about cancer risks of its talcum powder. Illumina, a genome sequencing company, plunged by 16 percent on negative surprises in its quarterly earnings and guidance. US Xpress was off 11.3 percent as it cited bad economic conditions in making a gloomy earnings preannouncement. Milacron, a plastics maker, soared 24 percent on news it will be acquired by Hillenbrand, a machinery company, which fell 13 percent.
In economic news, US PPI-FD showed a 0.1 percent monthly gain, as expected. The ex-food ex-energy reading rose 0.3 percent, which is 1 tenth above expectations. Areas of weakness include energy, which fell 3.1 percent in the month and also finished goods, which dropped 0.4 percent and include a 0.8 percent decline for computers and no change for either autos or light trucks. Government purchases were also a negative at minus 0.4 percent.
European markets
European equities were flat to mixed Friday, with the STOXX 600 ending marginally higher. Daimler’s warning that its Q2 earnings would be below expectations was the big news, but market sentiment was bolstered by renewed expectations for central bank easing, based on the comments by Fed Chair Jay Powell and the ECB minutes.
The European STOXX 600 was up 0.01 percent, the German DAX was down 0.07 percent, the French CAC rose
0.4 percent, and the UK FTSE 100 fell 0.05 percent.
Among sectors in the Euro STOXX 600, chemicals and construction shares outperformed, while health care and food and beverages underperformed.
Daimler was off 1.2 percent after issuing a profits warning for the second quarter, its second in the last month, due to diesel emissions regulation, and vehicle recalls. UK big pharma firms AstraZeneca and GlaxoSmithKline fell after the Trump administration withdrew a plan to cut drug prices.
Among other companies in focus, travel company Thomas Cook, plunged by 59 percent after confirming it is in talks for a bailout by banks and China’s Fosun. SEB, the Swedish bank, rose 1.2 percent, while Elisa, a Finnish telecom, rose 5.2 percent, both on positive earnings.
Asia Pacific Markets
Major Asian markets were mixed on the day Friday but generally finished the week lower. The Shanghai Composite index closed up 0.4 percent on the day but was the worst performer in the region, down 2.7 percent, while Hong Kong’s Hang Seng index finished up 0.1 percent on the day and down 1.1 percent on the week. Japanese shares were little changed on Friday but closed lower on the week, with the Nikkei index up 0.2 percent on the day and down 0.3 percent on the week and the Topix index down 0.1 percent on the day and down 1.0 percent on the week. Australia’s All Ordinaries index lost ground both on the day and the week, down 0.3 percent and 0.7 percent respectively. Chinese trade data for June was the main focus of the regional data calendar Friday. China's trade surplus in US dollar terms widened from US$41.65 billion in May to US$50.98 billion in June, larger than the consensus forecast of US$43.2 billion. Exports fell 1.3 percent on the year in June after advancing 1.1 percent in May, while year- on-year growth in imports picked up from a fall of 8.5 percent to a decline of 7.3 percent. The fall in headline exports growth was mainly driven by the United States and the European Union, partly offset by stronger exports to Japan. Also published today, bank lending data showed new lending amounted to CNY1.66 trillion in June, up from CNY1.18 trillion in May. Indian data published Friday showed a small increase in headline inflation but weaker growth in industrial production. Inflation rose for a fifth consecutive month from 3.05 percent in May to 3.18 percent in June, still still well below the mid-point of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent. This was largely driven by food and beverage prices, which rose 2.37 percent on the year in June after increasing 2.03 percent in May. Industrial production index rose 3.1 percent on the year in May, moderating from growth of 3.4 percent in April. Manufacturing output, which accounts for almost 78 percent of the total index, rose 2.5 percent on the year in May after advancing 2.8 percent in April.
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US stocks slipped, but closed up from their worst levels Friday, while bond yields rose, as traders scaled back expectations for aggressive Federal Reserve rate cuts after US jobs data surprised on the upside.
The Dow industrials fell 0.2 percent; the S&P fell 0.2 percent, and the NASDAQ eased 0.1 percent. Markets remained at lofty levels after recent gains on expected progress on the US-China trade war and hopes for global rate cuts.
Bank stocks outperformed Friday on expectations for more stable US interest rates, with Bank America up 0.9 percent and Citigroup up 0.8 percent. Defensive shares such as health care and real estate under-performed, as rising US bond yields undercut their appeal. Chipmakers were hurt by fallout from a gloomy forecast from Korean industry heavyweight Samsung Electronics.
Oil prices rose on worries about conflict between Iran and the West, and news of an OPEC-Russia accord on output. The dollar rose on the revised US interest rate outlook.
In US economic data, nonfarm payrolls shot 224,000 higher in June and well beyond Econoday's consensus range where the high forecast was 205,000. There are no flukes in this report underscored by a 17,000 jump for what has been an uneven manufacturing sector that Federal Reserve policy makers are watching with concern. Payrolls at professional & business services jumped 51,000 as employers scramble to meet demand with contractors. Government payrolls, up 33,000, were also a large contributor to June's growth.
The unemployment rate edged higher to 3.7 percent but reflected not weakening for the labor force but strengthening as newcomers are looking for jobs. The participation rate rose 1 tenth to 62.9 percent to also beat out expectations. Wage news shouldn't be alarming for Fed policy makers. A 0.2 percent monthly gain, which missed expectations, is offset at least in part by an upward revision to May, which now stands at 0.3 percent.
European markets
European equities retreated Friday as unexpected strength in US jobs data obliged traders to scale back expectations for near-term US rate cuts.
The European STOXX 600 fell 0.7 percent, the German DAX fell 0.5 percent, the French CAC fell 0.5 percent, and the UK FTSE 100 fell 0.7 percent. Italy’s FT-MIB fell 0.6 percent.
Industrial shares were hit by news of weak German manufacturers’ orders, with Siemens off 2.8 percent and Sandvik off 5 percent. Hexagon, a Swedish industrial firm, dropped 11.6 percent after announcing layoffs and disappointing quarterly results.
UK shares were hurt by a selloff in homebuilders after SIG, a building supplier, (down 5.3 percent) reported weak results.
In economic news, German manufacturers’ orders were much weaker than expected, tumbling fully 2.2 percent in May, against which a minimally stronger revised 0.4 percent rise in April made little difference. Annual growth nosedived from minus 4.9 percent to minus 8.7 percent, its worst reading in almost a decade.
Asia Pacific Markets
Asia Pacific markets ended mostly flat Friday in hesitant trading ahead of US jobs data later in the day, but equities were holding onto recent gains scored on hopes for a US-China trade deal. Australia outperformed on ongoing response to the Reserve Bank of Australia’s policy easing. China’s Shanghai Composite edged up 0.2 percent, amid uncertainty about the next step in US-China trade talks, which are expected to resume next week. Hong Kong’s Hang Seng index eased by 0.1 percent in cautious trade. Japan’s Nikkei index rose 0.2 percent, and was up 2.2 percent for the week. The Singapore Straits Times index was down 0.1 percent, but still managed a sixth consecutive week of gains. Australia’s All Ordinaries index rose 0.5 percent, paced by banks and real estate stocks. Commonwealth Bank of Australia rose 0.9 percent to lead the way with help from news that Australia’s bank regulator eased mortgage lending rules again. Mining stocks weakened on profit-taking following recent advances. Korea’s KOSPI was flat, with index heavy-weight Samsung Electronics down 0.8 percent and LG Electronics off 5.2 percent after gloomy profits forecasts, which reflected US-China trade woes. The negative tech news contributed to risk-off sentiment during the Asian hours. India’s BSE Sensex index fell 1.0 percent despite market expectations of fiscal stimulus soon from the Modi government to offset recent slow growth.
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Gains in bank shares helped boost US equities Friday but markets remained in wait-and-see mode ahead of the weekend’s trade talks between President Trump and President Xi. Most expectations call for a resumption of trade negotiations and a delay in more US tariffs. Quarter-end portfolio rebalancing contributed to the day’s stock advance.
The Dow industrials rose by 0.2 percent; the S&P 500 rose 0.6 percent, and the NASDAQ gained 0.5 percent. US bank shares began rallying late Thursday after several announced buybacks and dividends increases after
the banks all passed the Fed’s annual stress tests. Big gainers included Bank America, up 3.2 percent, Citicorp,
up 2.8 percent, and JPMorgan Chase & Co., up 2.9 percent. Health care shares weakened on fallout from Joe Biden’s poor showing in the Democratic debate, as he is seen as a defender of private health insurance. United Healthcare was off 0.9 percent and Anthem off 0.1 percent.
Among other companies in focus: Apple fell 0.9 percent after announcing the departure of its chief design officer, Jony Ives. Nike rose 0.5 percent despite an earnings miss, as it kept its full-year guidance.
In economic news, US personal income rose 0.5 percent in May to beat expectations by 2 tenths while consumer spending rose an as-expected 0.4 percent with a 3 tenths upward revision to April, now at 0.6 percent. The core PCE price index rose 0.2 percent for a second straight month with the year-on-year rate steady at 1.6 percent. The Chicago PMI fell more than 4 points to 49.7 in June to miss Econoday's low-end expectations. Deterioration in June was wide with only employment showing improvement.
European markets
European equities rose Friday, with German markets lifted by good news for Deutsche Bank. Trade-sensitive shares, such as autos and tech, outperformed, despite uncertainty and mixed signals ahead of the Trump-Xi meeting expected Saturday.
The European STOXX 600 rose 0.7 percent, the German DAX rose 1 percent, the French CAC rose 0.8 percent, and the UK FTSE 100 gained 0.3 percent.
Deutsche Bank rose 3 percent to lead banks and German equities higher after the beleaguered German lender defied market expectations and passed its annual Fed financial stress test. Credit Suisse, on the other hand, fell
0.4 percent after the Fed imposed limits on the Swiss bank’s US operations, including its payouts to shareholders.
Asia Pacific Markets
Major Asian markets closed lower Friday but were generally little changed over the week, with a relatively light Asian data calendar and uncertainty about the upcoming G20 summit keeping price action subdued. Chinese shares underperformed, with the Shanghai Composite index down 0.6 percent on the day and 0.8 percent on the week, while Hong Kong’s Hang Seng index closed down 0.3 percent on the day and advanced 0.2 percent on the week. Japanese shares closed down on the day after steady unemployment and industrial production data and rose slightly on the week, with the Nikkei index dropping 0.3 percent on Friday and finishing the week up 0.1 percent, and the Topix index falling 0.1 percent on the day and advancing 0.3 percent on the week. Australia’s All Ordinaries index fell 0.6 percent on the day and dropped 0.5 percent on the week. Japan's seasonally-adjusted unemployment rate was unchanged at 2.4 percent in May, matching the consensus forecast and close to the multi-decade low of 2.2 percent recorded in May 2018. The unemployment rate has been at or below 2.5 percent since the start of 2018. Japan's industrial production index rose 2.3 percent on the month (seasonally adjusted), picking up from 0.6 percent in April and beating the consensus forecast for an increase of 0.3 percent. In year-on-year terms, the index fell 1.8 percent in May after falling 1.1 previously. Officials expect industrial output to fall 1.2 percent in June and then rise 0.3 percent in July.
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US shares ended a strong week marginally lower with both the Dow and S&P down 0.1 percent and the Nasdaq down 0.2 percent. Oil prices along with oil shares were bid higher on a report that President Trump pulled back from launching a limited strike against Iran yesterday. On trade, the US president and his Chinese counterpart Xi Jinping are expected to renew talks together at next week's Group of 20 summit.
Despite Friday's dip for the indexes, the week proved very positive boosted first by Mario Draghi's comments on Tuesday pointing to a possible rate cut by the European Central Bank that was followed on Wednesday by the Federal Reserve's shift away from a neutral to an accommodative bias. The Dow gained 2.4 percent on the week and is up 14.5 percent so far this year and the Nasdaq up 3.0 percent in the week for a year-to-date gain of
21.0 percent.
Economic data on Friday were mixed led by a sharp rise in existing home sales that included a jump in both prices and supply. Averages in the data were also positive but less so, however. Nearly flat was the signal from the June PMI flashes with manufacturing at a standstill and growth in services continuing to slow significantly.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up US$0.73 at US$65.30 while gold jumped US$7.20 to $1,404.10. The US dollar fell versus most major currencies, especially against the euro; it rose against the yuan and the Canadian dollar. The yield on the US Treasury 30-year bond was up 5 basis points at 2.59 percent while the yield on the 10-year note was up 4 basis points at 2.06 percent.
European markets
European shares were little changed Friday with the DAX down 0.1 percent and the FTSE down 0.2 percent. On the week, the DAX gained 2.0 percent and the FTSE 0.8 percent.
Technology shares were on the defensive after UK chipmaker IQE issued a sales warning tied to the blacklisting of China's Huawei. IQE shares fell 26 percent dragging others in the sector lower including STMicroelectronics and Dialog Semiconductor.
Economic news was mostly favorable with the Eurozone composite PMI flash for June edging higher to 52.1 as growth in services continues to offset contraction in manufacturing. France put in an especially good showing and posted growth for both manufacturing and services. Yet Germany shows continued troubles with manufacturing where the June flash index, at 45.4, remains deep in the sub-50 contraction column.
Asia Pacific Markets
Most major Asian markets closed lower on Friday but held onto gains over the week, with investors focused on a mix of global monetary policy developments, trade issues, and concerns about the potential for conflict between the US and Iran. Chinese shares outperformed on the day, with the Shanghai Composite index closing up 0.5 percent and extending its weekly gain to 4.2 percent. Hong Kong’s Hang Seng index fell 0.5 percent but remained the strongest regional performer on the week, up 5.0 percent after the government suspended plans to allow residents to be extradited to mainland China. Australia’s All Ordinaries index fell 0.5 percent on the day but finished up 1.5 percent on the week. Japanese shares closed down on the day after subdued inflation and PMI data and also underperformed on the week, with the Nikkei index dropping 1.0 percent on Friday and finishing the week up 0.7 percent, and the Topix index falling 0.9 percent on the day and 0.1 percent on the week. Japanese inflation data released Friday showed a small dip in both headline and underlying measures of inflation in May, providing more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process. The headline consumer price index rose 0.7 percent on the year in May after advancing 0.9 percent in April. This fall in headline inflation in May was largely driven by a weaker increase in utilities charges, and a bigger drop in transportation and communication costs, with the change in food prices and housing costs relatively steady. Core CPI inflation, which excludes fresh food prices, moderated from 0.9 percent to 0.8 percent, while the BoJ's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, moderated from 0.6 percent to 0.5 percent.
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US equities declined Friday as risk-off sentiment returned after chipmaker Broadcom warned of weakening demand linked to US sanctions against Huawei.
Sentiment was hurt by economic data pointing to a wider slowdown in the Chinese economy in response to the US-China trade dispute, and worries continued about the prospect of Mideast conflict after two tankers were set ablaze Thursday in the Persian Gulf.
The Dow industrials fell 0.1 percent; the S&P 500 fell 0.2 percent, and the NASDAQ was off 0.5 percent.
Broadcom was down 6 percent. Advanced Micro Devices, down about 4 percent, and Nvidia, down about 3 percent, were also notable decliners in the semiconductor sector. Apple fell 1 percent, a big negative for the main market indexes.
On the positive side, pet product retailer Chewy shares rallied 59 percent in its first day of trading after its IPO priced Thursday.
US retail sales data were relatively upbeat, with a 0.5 percent gain in May. Ex-auto sales, ex-auto ex-gas sales, and control group sales all rose 0.5 percent and all beat their respective consensus forecasts by 1 tenth. US industrial production proved mixed in May, up a stronger-than-expected 0.4 percent at the headline level but up only a modest and as-expected 0.2 percent for manufacturing. The overall capacity utilization rate was a bit stronger than expectations, up 2 tenths to 78.1 percent.
European markets
European shares slipped Friday with chipmakers and other tech shares dropping on chipmaker Broadcom’s
warning of falling demand due to US blacklisting of Huawei Technologies.
Poor Chinese industrial data contributed to the darker mood, as it suggested the US-China trade war is starting to hit the domestic Chinese economy. News that China would raise duties on US and European steel tubes and pipes added to negative sentiment.
The European STOXX 600 fell 0.4 percent, the German DAX was down 0.6 percent, the French CAC declined
0.1 percent, and the UK FTSE 100 was down 0.3 percent.
European chipmakers STMicroelectronics, Infineon, and Dialog Semiconductor were off 2 percent to 6 percent.
Consultancy DKSH Holdings dropped 10% after Credit Suisse downgraded it to “underperform”.
Asia Pacific Markets
Asian markets posted mixed results Friday but most closed higher on the week as investors priced in a greater chance of Fed rate cuts in coming months. Japan’s Nikkei and Topix indices closed up 0.4 percent and 0.3 percent on the day and advanced 1.1 percent and 0.9 percent on the week, respectively. The Shanghai Composite index fell 1.0 percent on the day after the release of weak industrial production and investment data, but finished the week up 1.9 percent. Hong Kong’s Hang Seng index fell 0.6 percent on the day as protesters announced that more protests against the government’s extradition policy would take place over the weekend, with the index also underperforming other regional markets over the week, up 0.6 percent. Australia’s All Ordinaries index closed up 0.2 percent on the day and 1.7 percent on the week. Chinese data published Friday indicates that trade tensions with the United States are having an impact of domestic activity, particularly in the manufacturing sector. Industrial production grew 5.0 percent on the year in May, down from 5.4 percent in April, mainly reflecting a drop in manufacturing output growth from 5.3 percent to 5.0 percent. Auto production fell 21.5 percent on the year in May after falling 15.8 percent in April. Fixed asset investment growth also slowed from 6.1 percent year-to-date in April to 5.6 percent in May, with investment slowing in both property and infrastructure. Retail sales, in contrast, grew at a faster pace in May, up 8.6 percent on the year after increasing 7.2 percent in April, with most categories of spending recording stronger growth.
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US shares advanced Friday as markets priced in near-term Federal Reserve rate cuts after a surprisingly poor showing in the US employment report, with nonfarm jobs up only 75,000, well below expectations centering on a rise of 180,000.
Equities also drew support from hopes for a settlement in US-Mexico talks intended to avoid US imposition of tariffs on Mexican imports, or at least a delay in the tariffs. President Trump tweeted there was “a good chance” of a deal with Mexico, and other officials said the talks were advancing. There was also favorable response to reports suggesting a possible delay in imposition of tariffs on certain Chinese imports.
The Dow industrials rose 1.0 percent; the S&P 500 gained 1.0 percent, and the NASDAQ was up 1.7 percent.
Microsoft and Apple, both up about 3 percent, led the gains, along with other big tech firms. Healthcare and Internet shares did well, with Johnson & Johnson up 1.5 percent, and Facebook up 3 percent. Bank stocks lagged, with JP Morgan down about 1 percent.
The May employment report showed declining growth in the labor market and topping pressure for wages. Nonfarm payrolls, with a gain of 75,000, came in below Econoday's forecast range and include a total of 75,000 in downward revisions to April and March. Data on wage inflation were at the bottom of forecast ranges -- only a 0.2 percent monthly increase for average hourly earnings and, in the lowest reading since last September, a slumping 3.1 percent gain for the year-on-year rate.
European markets
European shares rose with US shares in response to the poor US jobs report on hopes for Fed rate cuts. Weak European data earlier contributed to expectations that the ECB, in addition to the Fed, will soon be obliged to ease.
The European STOXX 600 rose 0.9 percent. The German DAX rose 0.8 percent, the French CAC rose 1.6 percent, and the UK FTSE 100 rose 1.0 percent.
French pharma Sanofi jumped 4% on news it named Novartis executive Paul Hudson as its new CEO. Other notable movers included Danish biotech Novozymes, which dropped 7 percent after an outlook downgrade, and
ASR Nederland, an insurance company, which rose 6 percent.
Asia Pacific Markets
Markets in China and Hong Kong were closed Friday for a local holiday. The Shanghai Composite closed the week down 2.4 percent, while Hong Kong’s Hang Seng index closed up 0.2 percent on the week. Japanese markets were modestly higher Friday with both the Nikkei and the Topix indices closing up 0.5 percent on the day and up 1.4 percent and 1.3 percent respectively on the week. Australia’s All Ordinaries index advanced 0.9 percent on the day and 0.5 percent on the week. The Asia data calendar was light Friday. Japanese data showed year-on-year growth household spending slowed from 2.1 percent in March to 1.3 percent in April, well below the consensus forecast of 3.0 percent, with a sharp drop in spending on housing the main factor weighing on headline growth. Australian data showed the number of home loans fell 1.2 percent on the month in April, with the value of loans also falling 0.8 percent on the month.
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US shares slumped Friday as markets reacted to President Trump’s threat to raise tariffs on Mexican imports. US Treasuries rallied on a flight to quality, with the long end outperforming, typically a signal of an economic slowdown. Gold and the yen gained as safe-havens.
The White House announced after markets were closed Thursday that the US will apply tariffs to Mexican goods beginning June 10, starting at 5 percent, then climbing each month to 25 percent by October. The move is aimed not at balancing trade, but at pressuring Mexico to stop migrants from crossing the US border.
In other trade actions, China said it will compile an "unreliable entities list" of companies that harm its interests. This follows the US blacklisting earlier this month of Chinese telecom equipment maker Huawei.
The Dow Jones industrials fell by 1.4 percent, while the S&P 500 dropped 1.3 percent, and the NASDAQ was off 1.5 percent.
US automakers and manufacturers were the worst performers, but the losses were across the board, apart from defensive sectors like real estate and utilities.
In US economic news, the PCE price index excluding food and energy hit expectations at a 0.2 percent monthly gain in April with the year-on-year also hitting expectations at 1.6 percent. The overall PCE price index rose
0.3 percent with this yearly rate also rising 1 tenth, to 1.5 percent.
Personal income rose a stronger-than-expected 0.5 percent in April though growth in the wages & salaries component was softer at 0.3 percent. Consumer spending proved a little less modest than expected, at 0.3 percent though the increase is centered in non-durable goods which reflects price effects for oil.
European markets
European shares sank Friday on President Trump’s threat to raise tariffs on Mexican imports, with automakers
leading the selloff. US-Europe trade talks have been stalled over US threats against European automakers, and market concerns have been aggravated by the Mexico tariff threat.
The European STOXX 600 fell 0.8 percent, and lost 5.7 percent for the month. The German DAX was off 1.5 percent, and the French CAC and UK FTSE 100 were both down 0.8 percent.
Banks with exposure to Mexico suffered, with Santander, Bilbao, and Sabadell off 2 percent to 4 percent. Automakers also were hit, with Volkswagen down 3 percent, and Fiat Chrysler down 5 percent.
German economic news came in on the gloomy side Friday. German retail sales surprised on the downside in April, and significantly so. Although March's modest 0.2 percent monthly fall was revised away, the second quarter began with a hefty 2.0 percent decline, the second steepest drop in more than five years.
Having climbed sharply in April, German inflation declined almost as steeply in May. Consumer prices rose a smaller than expected 0.2 percent on the month, reducing annual inflation from April's final 2.0 percent mark to 1.4 percent. Taken together, the large falls already announced in France, Italy and Spain, today's German update all but guarantees a sizeable drop in overall Eurozone inflation this month. This suggests underlying inflation trends are still both flat and worryingly low.
Asia Pacific Markets
A broadening of US tariff actions now targeting Mexico sent Asian indexes sharply lower Friday, especially Japanese automakers. The Nikkei fell 1.6 percent on the session for a 2.4 percent loss on the week, with Mazda, Nissan, Honda and Toyota posting losses ranging from 7 percent to 3 percent. On the year, the Nikkei is now up 2.9 percent. Only a month ago, on April 25 and just before the extended Golden Week break, the Nikkei was up 11.5 percent. Underscoring the threat to global trade, manufacturing data continue to slump. China's CFLP Manufacturing PMI index fell to a lower-than-expected 49.4 in May to indicate slight contraction for the sector. Hong Kong's Hang Seng fell 0.8 percent Friday as did Singapore's Straits Times though Australia's All Ordinaries was unchanged. Like the All Ordinaries, the Shanghai composite continues to outperform, down only 0.2 percent on the day and still up a very strong 16.2 percent higher year-to-date.
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US markets were closed in observance of Memorial Day.
European markets
Losses for the center and gains for wings in the European Parliament Elections did not pull down share prices as most indexes posted gains including the CAC and DAX, up 0.4 and 0.5 percent respectively. The Swiss Market Index as well as the Ibex in Spain also gained 0.5 percent. Italy's MIB slipped 0.1 percent while the FTSE was on bank holiday.
Anti-European parties gained seats in the elections as did pro-European parties, both at the expense of the center. The newly formed Brexit party took nearly 1/3 of the UK vote at the same time that Liberal Democrats also gained.
In immediate repercussions, Greek Prime Minister Alexis Tsipras has called a snap election following a poor showing by his Syriza party. The Athens General Index jumped 6.1 percent. News late Monday that Austria's parliament has voted to remove Chancellor Sebastian Kurz and his government from power, in reaction to the Ibiza-gate bribe scandal, had little impact on trading. The Austrian Traded Index ended fractionally higher on the session.
In company news, Chrysler Fiat and Renault are discussing a $35 billion merger of equals that would create the world's third largest auto maker behind Toyota and Volkswagen. Shares of Fiat Chrysler and Renault both gained on the news.
Asia Pacific Markets
Asian shares were mixed Monday in mostly narrow trading that included a 0.4 percent gain for the Topix and a 0.3 percent gain for the Nikkei. The All Ordinaries were unchanged, the Hang Seng lost 0.2 percent, while the Shanghai, boosted once again by talk of increasing policy stimulus, jumped 1.4 percent. Volumes were thin. Trade talks between the US and Japan were headlined by a joint press conference in Tokyo in which President Trump pressed President Abe to narrow the trade deficit between the two countries. Trump said he hopes the US and Japan can put together a trade deal by August. In economic news, Chinese industrial profits fell 3.4 percent year-to-date in April, little changed from the drop of 3.3 percent in March, but in year-on-year terms, profits fell 3.7 percent, down from growth of 13.9 percent previously. Officials attributed the slowdown in headline growth in April partly to the impact of a cut in value-added tax rates at the start of the month, which encouraged many firms to boost output in March before returning production to more normal levels in April.
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Chinese officials went out of their way all week to downplay the outlook for compromise or even the possibility that trade talks will resume. Yet the US stock market remained largely upbeat with the Dow slipping 0.4 percent on Friday for a limited weekly decline of 0.7 percent and a still substantial year-to-date gain of 10.4 percent. Stocks ended off their lows on Friday after the US and Canada announced a bilateral trade deal that will suspend tariffs on aluminum and steel and which have raised expectations that Mexico will soon join the agreement.
On US-China trade, China's Ministry of Commerce described US trade tactics as "bullying behavior" while The People's Daily ran front page commentary saying China will withstand a trade war.
In company news, media site Pinterest fell sharply on earnings as did machinery maker Deere which cited concerns over lower Chinese soybean demand tied to the outbreak of swine fever. Chip-equipment maker Applied Materials rose sharply on earnings while automaker Tesla fell sharply on reports of cost-cutting plans.
A curious 3 tenths jump in year-ahead inflation expectations headlined Friday's economic data in the US, a burst higher that is likely tied to US-China tariff increases. The jump contrasts with the week's run of flat US data, especially retail sales and industrial production, and may raise talk of tariff-induced stagflation in the months to come.
European markets
European shares ended a positive week with mostly slight declines on Friday. France's CAC rose 2.1 percent in the week with the FTSE up 2.0 percent and the DAX up 1.5 percent. Year-to-date, the DAX is 15.9 percent higher with the CAC up 15.0 percent and the FTSE up 9.2 percent.
In the UK, the Labour Party broke off compromise talks on Brexit with Prime Minister's Theresa May's government in news that sent the pound lower.
Friday's economic news was light but did include April's final for Eurozone harmonised inflation which was unrevised at a 0.7 percent monthly increase for a 1.4 percent yearly rate. The rebound more than reversed a probable Easter-related 0.2 percentage point decline in March and made for the strongest reading since last
November.
Asia Pacific Markets
Asian shares were mixed Friday, with Chinese markets off sharply on the latest escalation in the US-China trade dispute. Japanese equities rose, led by tech shares, as Sony rallied on buyback news, and Australian markets remained buoyant on rising commodities prices and the weakening Australian dollar. Chinese markets suffered more fallout from US sanctions on Huawei and ZTE, and from harsher rhetoric from China on the trade dispute. The Shanghai composite dropped 2.5 percent, and was off 1.9 percent for the week. The Hang Seng index fell 1.2 percent as it tracked the Shanghai lower, with technology and property shares leading the declines. Singapore's Straits Times index fell 0.8 percent, with financials leading the downturn. Tech shares were the story in Tokyo as the Nikkei 225 rose 0.9 percent. Sony rallied by 10 percent on a share buyback, and other tech shares tracked Cisco higher after upbeat earnings. Tokyo shares retreated from highs late in the day on the selloff in Chinese stocks. The Nikkei was down 0.4 percent for the week. Australia's All Ordinaries rose 0.7 percent Friday as mining and energy shares continued their run higher, though the market gave up much of its gains at the close on China worries. Ongoing weakness in the Australian dollar has given the commodities-export market a lift, along with expectations for a rate cut from the Reserve Bank of Australia as soon as next month.
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Though a trade agreement is still distant, a cooling in US-China tensions helped the Dow post a 0.4 percent gain in Friday trading. Talks in Washington are continuing, described by President Trump as "congenial" with "no need to rush".
Beginning Friday, $200 billion of Chinese goods that were that were subject to 10 percent tariff are now subject to 25 percent tariffs. China has yet to announce any counter tariffs.
The session's economic data point to the rate-cut side of the Fed's wait-and-see approach. Consumer prices rose
0.3 percent with core prices, which exclude food and energy, up only 0.1 percent. Both missed expectations and contrast with Jerome Powell's confidence that core inflation would begin to climb back higher.
Reflecting the stock market's unsteady conditions in a week that saw the Dow fall 2.1 percent, Uber fell 7.6 percent on Friday in its initial public offering.
European markets
European stocks ended mostly higher led by the DAX with a 0.7 percent gain while France’s CAC and Italy’s MIB
rose 0.3 percent. The UK's FTSE, however, slipped 0.1 percent. But on week the FTSE had the lightest loss, at
2.4 percent, and the CAC the heaviest, at 4.0 percent.
It was a heavy session for economic data that included a solid 0.5 percent quarterly rise in UK first-quarter GDP which ran at a 1.8 percent yearly rate. In contrast, industrial production in both France and Italy posted sharp March declines. German trade data for March showed the strongest surplus since March last year.
British Airways owner IAG jumped after affirming full year guidance while Swiss cement maker LafargeHolcim rose after announcing the $2.2 billion sale of its Philippines operations. IT-systems provider Bechtle of Germany rose sharply on quarterly earnings.
Asia Pacific Markets
Chinese equities bounced back Friday, and most markets proved resilient as many traders expected ongoing US- China trade talks would lead to a favorable outcome despite an escalation in the trade war. The US raised its tariff to 25 percent from 10 percent on $200 billion in Chinese goods, effective at midday Friday in Beijing, and plans additional punitive measures. China has held off on threatened retaliation for now. There is widespread expectation that Chinese authorities would implement more economic stimulus if the trade talks fail. Trading was volatile Friday and Chinese shares were in negative territory after a positive start, before rebounding late in the day to close up 3.1 percent on the Shanghai composite. Hong Kong's Hang Seng rose 0.8 percent, Singapore's Straits Times index rose 0.1 percent, while Korea's KOSPI gained 0.2 percent and Australia's All Ordinaries 0.2 percent. Japan's Nikkei 225 fell 0.3 percent, led by losses in shipbuilding and marine transport stocks. Japanese markets recovered from the lows in the last hour as Chinese markets recovered. Bulls saw a moral victory that the Nikkei losses were not worse, given trade worries. Australia remained a bright spot despite the worrisome trade situation. Markets expect rate cuts ahead from the Reserve Bank of Australia after it signaled an easier stance this week. Gains Friday were led by telecom and energy shares. TPG Telecom led the way on merger-related news, and Woodside Petroleum gained as oil prices continued to rally.
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A very strong US employment report for April pointed on Friday to continued economic strength and helped to give a solid lift to the Dow, up 0.8 percent, and also the Nasdaq which jumped 1.6 percent. Treasuries held steady but the dollar did move lower Friday, down 0.4 percent to 97.21 on the dollar index.
Markets were closed when US President Trump on Sunday said tariffs on $200 billion of Chinese goods will be raised from 10 percent to 25 percent on Friday and threatened to impose 25 percent tariffs on a further $325 billion of goods if trade talks don't improve.
April's employment report underscored Jerome Powell's confidence at Wednesday's FOMC press conference in the strength of the labor market and also his hunch that inflation, based on the Fed's projections, may well be moving back toward the 2 percent goal. Not only did nonfarm payrolls surge a much higher-than-expected 263,000 but the unemployment rate ratcheted 2 tenths lower to 3.6 percent and a 49-year low. And tightening conditions were the signal from the pool of available workers which continues to be drained, down nearly 500,000 in the month to 10.9 million. But wage growth didn't show any effect from the strength, at least in April, coming in as expected for the monthly rate, at 0.2 percent, and 1 tenth under expectations for the year-on-year rate at 3.2 percent.
International trade in goods was also better than expected in March, at a deficit of $71.4 billion which was well under expectations and do not point to a downward revision for first-quarter net exports which were a major strength for GDP. Exports of goods, led by food, jumped 1.0 percent in March after increasing 1.4 percent in February. Imports of goods rose 0.9 percent in March also led by foods.
European markets
Strength in the US employment report lifted US shares and in turn helped lift European shares. European data released Friday also indicated strength. The DAX rose 0.5 percent, the FTSE 0.4 percent while the CAC gained 0.2 percent.
Eurozone inflation rebounded in April to a higher than expected annual 1.7 percent rate for a 0.3 percentage points gain from March. Core rates were also higher with the narrowest gauge, which excludes energy, food, alcohol and tobacco, at 1.2 percent from March's 0.8 percent to 1.2 percent. The latest readings are still well short of the European Central Bank's near-2 percent medium term HICP target.
Services business activity in the UK improved in April, at 50.4 the CIPS/PMI Services Index and in line with market expectations, the sector PMI was up 1.5 points vs March's 32-month low though still only 0.4 points on the positive side of the 50-expansion threshold. Yet Brexit worries remained in the fore and were partly
responsible for a fourth, though small, successive drop in new business, the longest period of declining
demand since 2009. But businesses were more optimistic about the future as sentiment climbed to its highest level since September last year.
Asia Pacific Markets
Asian shares were mostly weaker in holiday-thinned trading Friday, amid caution ahead of US jobs data and continued disappointment over Wednesday's Fed policy announcement. Korea's KOSPI index fell 0.7 percent, with Samsung Electronics and other industrials leading the way down. The Australia All Ordinaries and Singapore Straits Index posted fractional declines. Chinese and Japanese markets remained on holiday. Hong Kong shares were a notable exception to the muted trend as the benchmark Hang Seng index rose 0.5 percent to 30,081.55, just above the key 30,000 level. The gain came after GDP figures spurred hopes for easing by the Hong Kong Monetary Authority. It also reflected a 2.5% advance by HSBC, a major index component, after the big bank posted an earnings beat. On the data front, year-on-year growth in Hong Kong's economy slowed from 1.3 percent in the three months to December to 0.5 percent in the three months to March, the weakest since 2009. The fall in growth largely reflected weaker private consumption, up just 0.1 percent on the year compared with 2.7 percent previously, and business investment, down 7.0 percent on the year after dropping 5.4 percent previously. Growth in external demand and government spending also weakened on the year.
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US Stocks in the US posted solid gains on Friday led by the S&P up 0.5 percent and the Dow and Nasdaq at
0.3 percent each. On the week the Nasdaq, benefiting from strong gains for many technology shares, was up
1.9 percent to lift its year-to-date gain to 22.8 percent. Year-to-date, the S&P is up 17.3 percent with the Dow at 13.8 percent.
First-quarter US GDP was solid but not as strong as the 3.2 percent real annual growth rate may suggest. An inventory rise, which may be unwanted, contributed to the gain as did net exports where data for March still have yet to be released. Consumer spending was solid in the first quarter but did slow significantly to a 1.2 percent growth rate while residential investment posted its fifth straight quarterly contraction and continues to hold the economy back.
Amazon.com posted strong gains after posting quarterly earnings while Intel dropped very sharply after cutting its sales target. Discount chain Costco fell slightly despite raising its dividend and announcing a share buyback. General Electric rose sharply ahead of earnings which it will post on Tuesday.
European markets
European stocks were slightly higher to flat on Friday led by the DAX at a 0.3 percent gain and with the CAC up 0.2 percent, the FTSE down 0.1 percent, and Spain's Ibex 35 up 0.1 percent going to the weekend's national elections. Germany's DAX was the only one of this group with a weekly gain, at 0.8 percent. Year-to- date, Italy's FTSE MIB leads the major European averages with an 18.6 percent gain while the FTSE trails at a
10.4 percent increase.
Out of France, drug maker Sanofi and aerospace manufacturer Safran both rose sharply after posting better- than-expected earnings and sales. Auto parts maker Continental AG of Germany reiterated its full-year outlook and posted a strong gain.
European economic news was light but did include the CBI Trends Survey out of the UK which showed a surprise deterioration in manufacturing conditions during April. The headline orders balance was minus 5 percent, down 6 percentage points versus its March reading for its weakest level since last October. Exports in April fell sharply. Output expectations for the coming three months were marked down significantly as were
expected prices.
Asia Pacific Markets
News out of China at the beginning of the week held down Asian markets through the week on emerging expectations that future stimulus may be limited. Authorities in the country said they will continue to promote growth but cited "structural deleveraging" in order to cool the property market. On Friday, Asian shares were flat to lower with the Hang Seng and Singapore Straits Times both up 0.2 percent, the All Ordinaries unchanged and with other major markets down including the Kospi at minus 0.5 percent and the Shanghai Composite at minus 1.2 percent. The Shanghai was down 5.6 percent for its worst weekly showing of the year to trim its year-to-date gain to 23.8 percent. Trailing on Asia's year-to-date score is South Korea's Kospi at a gain of 6.8 percent. Japan's Topix slipped 0.1 percent on Friday with the Nikkei down 0.2 percent. Friday's economic news out of Japan was mixed. Japan's unemployment rate rose from 2.3 percent in February to 2.5 percent in March but is still close to the multi-decade low of 2.2 percent recorded in May 2018. Japan's participation rate increased to 61.9 percent in March, up from 61.4 percent in February and well above the 61.2 percent rate recorded 12 months earlier. Strong participation rates may reinforce the Bank of Japan's view that employment gains should eventually translate into stronger wage growth and help push inflation towards its 2.0 percent target.
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US stocks were little changed Monday in a narrow post-Easter session with the Dow Industrials down 0.2 percent, the S&P 500 up 0.1 percent, and the Nasdaq up 0.2 percent.
Oil rose sharply as did shares of oil companies. President Trump said waivers allowing China, India, Japan, South Korea and Turkey to import Iranian oil will not be extended when they expire on May 2. Countries continuing to import Iranian would be subject to US sanctions. In other White House news, Herman Cain, who faced questions over sexual harassment during his 2012 presidential bid, withdrew his name for nomination to the Federal Reserve Board.
Tesla fell sharply in reaction to a video of a parked Model S exploding in China. The carmaker will post its earnings on Wednesday. Boeing, which will also post its earnings on Wednesday, also fell sharply following a New York Times report, one denied by the company, questioning quality control at a 787 manufacturing plant in South Carolina. Bed Bath & Beyond fell sharply on news the home furnishings retailer plans to shake up its board, while Kimberly-Clark rose sharply after the Kleenex maker posted quarterly results and said it expects to sell assets in its consumer tissue business.
In economic news, sales of existing homes fell 4.9 percent to a 5.210 million annual rate in March which followed, however, an unusual 11.2 percent jump in February. In a plus, the 3-month average, at 5.207 million in March, rose 1.4 percent for the best showing since November. Nevertheless, home sales have been in a long slump as the current average compares unfavorably with a 5.563 million peak back in December 2017.
Also released Monday was the Chicago Fed's national activity index which did improve in March but, pulled down by broad weakness including for manufacturing, remained in the negative column at minus 0.15 to indicate that economic growth in the month was below average. The 3-month average, at minus 0.24, was deeper in the negative column to indicate possible trouble for first-quarter data. US GDP will be posted on Friday amid expectations for respectable annual growth of 2.2 percent.
European markets
Stock markets in the UK, France, Germany, Italy, Spain, Sweden, and Switzerland were all closed in observance of Easter Monday.
Asia Pacific Markets
Asian stocks were flat to negative Monday as Chinese policy makers, following last week's solid 6.4 percent showing for GDP, indicated that future stimulus measures, though substantial, may nevertheless be limited. The Shanghai Composite fell 1.7 percent, the Kospi was unchanged while both the Nikkei and the Topix posted thin 0.1 percent gains. China's politburo said it will continue to promote growth but cited "structural deleveraging" in order to cool the property market. The news raised talk that authorities are focusing their attention on limiting the risk of possible overheating. Losers among the Shanghai Composite included Aurora Optoelectronics, Koal Software, and Zhejiang Huayou Cobalt, all down roughly 10 percent. All rising 10 percent were Chengdu Xuguang Electronics, Beijing Jingcheng Machinery Electric, and Liaoning Hongyang Energy Resource Invest. Japan's Mitsubishi UFJ Financial Group declined on a report the firm will take a large write-off related to its credit-card unit. Shima Seiki posted a sharp loss after the maker of computerized knitting machines lowered profit guidance citing customer plans to limit their capital investment. Home builder Daiwa House rose sharply on earnings. Friday will be a heavy day for Japanese earnings with Hitachi, Komatsu, Sony, and Tokyo Electron all scheduled to report.
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US stocks, getting a lift from Chinese trade data, were up on Friday but mixed on the week. The Nasdaq rose
0.6 percent on the week driven by Friday's 0.5 percent rally but the Dow Industrials, despite a sharp 1.0 percent Friday jump, ended the week no better than unchanged. Bank shares mostly rallied on Friday after JP Morgan rose sharply on record quarterly profit in contrast, however, to Wells Fargo which sank sharply on caution over future income tied to low interest rates.
But China's trade news, headlined by a higher-than-expected $32.6 billion trade surplus in March that included a 14.2 percent yearly jump in exports, made for sharp gains at the U.S. opening. Other news out of China also helped as new yuan loans nearly doubled in February and raised the outlook for general economic growth. Yet however much the trade data boosted Friday's stock market, the improvement in the data may well have reflected the timing impact of lunar new year holidays. Though the holidays took place in February in both 2019 and 2018, they were around 10 days earlier in the month this year and suggest that less of the usual pre-holiday surge in activity would have taken place in February this year relative to last year. When combining January and February, the trade surplus for the two months was a less impressive $21.6 billion with combined exports in the two months actually down 4.6 percent compared with the same period in 2018.
US economic data in the session was led by consumer sentiment which came in well below expectations and reflected a dip in expectations which often reflects a dip in economic confidence. Inflation expectations, which are also part of this report, were also not positive edging to a year-and-a-half low for the 1-year outlook and consistent with slowing expectations for the economy.
European markets
European shares were helped Friday by data out of China which are easing concerns over global economic slowing. China's trade surplus in US dollar terms rose $4.1 billion in February to $32.6 billion in March, well above the consensus forecast for a surplus of $11.3 billion. Exports rose 14.2 percent on the year in March, rebounding from a fall of 20.7 percent in February and also above the consensus. Yet imports were perhaps overlooked, falling 7.6 percent after February's 5.2 percent drop and may not be pointing to acceleration for Chinese domestic demand.
Friday's economic news out of Europe was positive as Eurozone industrial production proved better than expected. Output excluding construction fell only 0.2 percent on the month following a 1.9 percent jump in January. As a result, yearly growth climbed from minus 0.7 percent to minus 0.3 percent which, though hardly robust, is nevertheless the strongest result since last October. February's report puts average Eurozone industrial production in the first two months of the first quarter sizably above the pace of the fourth quarter and, barring revision, points to a positive contribution for first-quarter GDP growth in the Eurozone.
Asia Pacific Markets
The Nikkei, at 21,870, posted a solid 0.7 percent gain on Friday to pull the average back into the positive column for the week at 0.3 percent. But the gain was narrow, getting a boost from Softbank Group after Uber Technologies in the US, in which it has a large interest, filed for an initial public offering. The Nikkei also got a lift from Uniqlo operator Fast Retailing on optimism over the company's business in China. The broader market showed less strength, reflected in a 0.1 percent Friday decline for the Topix which ended the week with a 1.3 percent loss. Raising caution in the Japanese market is the pending earning season as well as a coming 10-day holiday beginning on April 27 to celebrate the accession of Crown Prince Naruhito. The solid trade report out of China was a positive late in the session for the Shanghai and Hang Seng, both of which inched higher in reaction to the news. Yet the Shanghai ended unchanged on the day for a weekly decline of 1.8 percent while the Hang Seng ended up 0.2 percent on the day and down 0.1 percent on the week. But Australia's All Ordinaries had a good week, up 1.2 percent and continuing to reflect strength in energy companies amid ongoing strength in the price of oil. South Korea's Kospi also posted a gain on the week, up 1.1 percent, while India's Sensex slipped a weekly 0.2 percent.
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US stocks rose moderately Friday to close up on the week after employment data showed stronger-than- expected growth in US payrolls. The Dow rose 0.2 percent on the day and 1.9 percent on the week, the S&P advanced 0.5 percent on the day and 2.1 percent on the week, and the Nasdaq gained 0.6 percent on the day and 2.7 percent on the week. Chevron and Walgreens Boots Alliance were the strongest performers in the Dow Friday, while Dow Inc. posted a sharp fall, partly reversing gains made earlier in the week.
The US employment report showed a strong recovery in labour market conditions in March after weakness in February, consistent with other indicators. Nonfarm payrolls rose 196,000 in March, beating the consensus forecast of 170,000 and up from a revised increase of 33,000 in February. Professional and business services employment increased at a solid pace, offset by further weakness in retail and manufacturing hiring. The unemployment rate was steady at 3.8 percent, though the participation rate fell from 63.2 percent to 63.0 percent. Average hourly earnings rose 0.1 percent on the month, down from 0.4 percent previously, while year-on-year growth fell from 3.4 percent to 3.2 percent, with this moderation in wage pressures likely reinforcing the Federal Reserve’s assessment that policy settings can remain on hold despite strong employment growth.
Canada’s labour force survey, in contrast, showed a fall of 7,200 in employment in March after strong job gains in the first two months of the year, towards the lower end of the consensus range. Private sector employment fell 17,300, mainly reflecting weakness in the services sector, partly offset by an increase of 4,200 in public sector jobs. The unemployment rate was steady at 5.8 percent while year-on-year growth in average hourly wages rose from 2.2 percent to 2.3 percent. Despite the fall in March, the Canadian economy added 116,000 jobs in the first quarter of the year, the strongest gain since the fourth quarter of 2017.
European markets
European markets closed higher Friday and on the week. The FTSE rose 0.6 percent on the day and 2.3 percent on the week, the CAC advanced 0.2 percent on the day and 2.4 percent on the week, and the DAX closed up 0.2 percent on the day and 4.2 percent on the week.
German industrial production data published Friday were stronger than manufacturing orders data on Thursday, though this largely reflected the impact of the volatile construction sector. Headline industrial production rose 0.7 percent on the month in February, with January growth revised from a fall of 0.8 percent to no change, and fell 0.5 percent on the year in, up from a revised decline of 2.7 percent previously. This was mainly driven by a 6.8 percent increase in construction activity, with manufacturing output down 0.2 percent on the month and energy output falling 3.1 percent. Although output so far in the first quarter is above the average for the fourth quarter, there remains potential for further revisions and the weakness in orders and
business surveys suggests that the improvement seen in the February output data is unlikely to signal the
start of a new positive trend. The Halifax House Price Index for the United Kingdom showed a fall of 1.6 percent in March, better than the consensus forecast for a drop of 2.5 percent, but well down on the 6.0 percent increase in February, with the year-on-year change in the index picking up from 2.8 percent to 3.2 percent.
France recorded a seasonally adjusted trade defciit of €4.0 billion in February, narrowing from a minimally larger revised €4.21 billion in January. Exports rose 0.9 percent on the month, mainly reflecting strength in ships and refined petroleum products, while imports rose 0.4 percent. The February data suggest that net exports will make only a small positive contribution to headline GDP growth in the first quarter.
Asia Pacific Markets
Share markets were closed Friday in China, Hong Kong, and Taiwan. Most other Asian markets closed higher Friday and on the week. The Nikkei and the Topix indices both rose 0.4 percent on the day and advanced 2.8 percent and 2.1 percent respectively on the week. Australia’s All Ordinaries index underperformed, falling 0.8 percent on the day and up just 0.1 percent on the week. Japanese real household spending rose 1.7 percent on the year in February after advancing 2.0 percent in January, below the consensus forecast for an increase of 2.1 percent. Spending, in seasonally adjusted real terms, fell 2.0 percent on the month after increasing 0.7 percent previously. The fall in headline year-on-year growth in February was largely driven by weaker spending on housing, with growth improving for spending on food and utilities.
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US stocks rose Friday to close up on the week after incoming data showed mixed results but unexpected improvement in some parts of the economy. The Dow rose 0.8 percent on the day and 1.7 percent on the week, the S&P advanced 0.7 percent on the day and 1.2 percent on the week, and the Nasdaq gained 0.8 percent on the day and 1.1 percent on the week. Caterpillar, UnitedHealth Group, and Boeing were the strongest performers in the Dow Friday.
Investor sentiment Friday was also supported by signs of progress in a new round of US-China trade talks in Beijing. US Treasury Secretary Steven Mnuchin described the talks as “constructive” while Chinese state media also noted there had been progress and that both parties had discussed “relevant agreement documents”. High-level negotiations will continue in Washington this week.
The US data calendar was busy Friday. Consumer spending rose 0.1 percent on the month in January, while personal income rose 0.2 percent in February. The Chicago PMI survey showed weaker conditions in the regional economy, with the headline index falling sharply from 64.7 in February to 58.7 in March. Other indicators, however, were stronger than expected and provide positive signs for economic growth in the three months to March. The University of Michigan’s index of consumer sentiment rose sharply from 97.8 in February to 98.4 in March, well above the flash estimate and the consensus forecast, with survey respondents reporting stronger confidence about both current conditions and future prospects. New home sales also beat expectations, increasing 4.9 percent on the month in February, and indicate that residential investment, which fell in every quarter in 2018, may see some recovery in the first quarter of this year.
European markets
Most European markets closed higher Friday and on the week after regional data showed some positive signs.
The FTSE rose 0.6 percent on the day and 1.0 percent on the week, the CAC advanced 1.0 percent on the day and 1.5 percent on the week, and the DAX closed up 0.9 percent on the day and 1.4 percent on the week.
The United Kingdom parliament again rejected the government’s proposed Brexit agreement Friday. The European Union had agreed to extend the delay for the UK’s withdrawal until May 22 on the condition that parliament approve this agreement, but its rejection of the deal means that the UK is now set to exit on April
12. Parliament is scheduled on Monday to vote on a new round of proposals from legislators in another attempt to find an option that can secure the support of a majority.
Revised GDP data published Friday showed the United Kingdom’s economy expanded 0.2 percent on the quarter in the three months to March, unchanged from the preliminary estimate, and 1.4 percent on the year, up from the preliminary estimate of 1.3 percent but down from 1.6 percent in the three months to December. Business investment was revised higher but still contracted for a fourth consecutive quarter, while household consumption was revised lower but still indicated resilience. The UK’s house price index rose 0.2 percent on the month and 0.7 percent on the year in March.
Asia Pacific Markets
Most Asian markets closed higher Friday but were down on the week. The Shanghai Composite index rallied strongly on Friday on renewed confidence about progress in US-China trade talks, gaining 3.2 percent on the day to reverse most of the declines posted earlier in the week and to finish down just 0.4 percent on the week. Japanese markets also rose Friday, with the Nikkei and the Topix indices up 0.8 percent and 0.6 percent respectively on the day, but fell 2.0 percent and 1.6 percent respectively on the week. Hong Kong’s Hang Seng index gained 1.0 percent on the day and lost 0.2 percent on the week, while Australia’s All Ordinaries index rose 0.1 percent on the day and fell 0.3 percent on the week. Japanese data published Friday were mixed. Industrial production in February, advanced 1.4 percent on the month after falling 3.4 percent in January, though the headline increase reflected offsetting moves among the main categories and also contrasted with PMI survey data that showed conditions weakened that month in the manufacturing sector. Retail sales increased 0.4 percent on the month in February, down from 0.6 percent in January, below the consensus forecast, and the weakest growth since October 2017, with weaker spending on food and fuel the main factor. But labour market data showed renewed strength in February after some moderation in January, with the unemployment rate falling from 2.5 percent to 2.3 percent and the participation rate increasing from 61.2 percent to 61.4 percent.
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US stocks fell sharply Friday to close down on the week after PMI surveys indicated that conditions have weakened across several major economies. The Dow fell 1.8 percent on the day and 1.3 percent on the week, the S&P dropped 1.9 percent on the day and 0.8 percent on the week, and the Nasdaq fell 2.5 percent on the day and 0.6 percent on the week. Nike posted a large decline after it reported better-than-expected earnings for the fiscal third quarter but advised that fourth quarter revenue would likely be impacted by currency moves. DowDuPont, Caterpillar, JPMorgan Chase, and Goldman Sachs were also among the weaker performers Friday.
Special Counsel Robert Mueller submitted his report on Russian interference in the 2016 presidential election to US Attorney General William Barr after the close of trading Friday, with some of the details of the report made public a short time ago. In a summary letter, the Attorney General advised the report did not establish that President Trump’s campaign conspired or coordinated with the Russian government in its efforts to interfere with the election. Although the report did not resolve whether President Trump had obstructed justice by trying to influence the outcome of investigations, Attorney General Barr has found that there is no sufficient evidence to conclude that such an offense had been committed.
Preliminary PMI survey results for March indicate that conditions have weakened so far this month in both the manufacturing and services sectors. The manufacturing headline index fell from 53.7 in February to a flash estimate of 52.5 in March, while the services headline index fell from 56.2 to a flash estimate of 54.8. together this resulted in the composite headline index falling from 55.8 to a flash estimate of 54.3. If confirmed by final data scheduled for release early next month, this would be the lowest level in the composite index for six months. Hosing data published Friday, however, showed a much stronger-than-expected increase in existing home sales in February, up 11.8 percent on the month.
European markets
Most European markets closed lower Friday and on the week, with flash PMIs indicating further weakness in the manufacturing sector in key European economies. The FTSE fell 2.0 percent on the day and 0.3 percent on the week, the CAC fell 2.0 percent on the day and 2.8 percent on the week, and the DAX closed down 1.6 percent on the day and 2.8 percent on the week. Government bond yields also declined sharply on Friday, with the yield on the German 10-year bond falling below zero for the first time since 2016.
Flash PMI surveys for March showed a drop in the composite index for the Eurozone, Germany and France. In Germany, the surveys indicate that conditions in the services sector have weakened so far in March but remain relatively solid, whereas they point to a sharp contraction in the manufacturing sector, with the survey’s measure of manufacturing output falling to its lowest level in more than six years. The French survey showed a bigger contraction in the services sector and a renewed deterioration in manufacturing conditions. The Eurozone survey also indicates that the regional manufacturing sector has contracted at a sharper rate in March, with the headline index for the sector falling to its lowest level in nearly six years, though the headline index for the services sector was relatively strong and little changed from February. In aggregate, the PMI surveys for the region indicate that Eurozone real GDP will record growth of just 0.2 percent in the three months to March, suggesting that more aggressive policy support may be considered by the European Central bank in coming months.
Asia Pacific Markets
Most Asian markets closed higher Friday and advanced to varying degrees on the week. The Shanghai Composite index rose 0.1 percent on the day and outperformed all other major global markets with an increase of 2.7 percent on the week. Japanese markets also rose, with the Nikkei and the Topix indices up 0.1 percent and 0.2 percent respectively on the day, and 0.8 percent and 0.9 percent respectively on the week. Hong Kong’s Hang Seng index gained 0.6 percent on the day and 0.3 percent on the week, while Australia’s All Ordinaries index rose 0.4 percent on the day and 0.3 percent on the week. Japanese data published Friday showed headline and underlying measures of inflation remained steady and subdued in February, while the flash PMI survey indicates that conditions in the manufacturing sector have remained weak so far in March. Headline CPI inflation was unchanged at 0.2 percent in February, with the Bank of Japan’s preferred measure of underlying inflation also unchanged at 0.4 percent. Excluding food prices, the CPI index rose 0.7 percent on the year in February, down from 0.8 percent in January, and there is little evidence that price pressures are building significantly for any category of consumer spending. The PMI flash survey showed the headline index unchanged from February’s level and, if confirmed by final data early next month, indicates that the sector has contracted for a second consecutive month.
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US stocks closed higher Friday, extending gains made over the week. The Dow rose 0.5 percent on the day and 1.6 percent on the week, the S&P advanced 0.5 percent on the day and 2.9 percent on the week, and the Nasdaq outperformed with an increase of 0.8 percent on the day and 3.8 percent on the week. Reports of progress in US-China trade talks were cited as a factor supporting investor sentiment Friday, while the United Kingdom parliament’s decision late Thursday to seek a delay to Brexit eased concerns about a disorderly withdrawal by the UK from the European Union.
Boeing rose Friday, reversing only some of the sharp losses made earlier in the week after one of its 737 MAX planes crashed, with reports indicating that the company will upgrade the aircraft’s software. Chip-maker Broadcom rallied after reporting strong first quarter results and a positive outlook. Electric car manufacturer Tesla fell after the company announced details of a new model but indicated that it will be available for sale later than previously anticipated.
Industrial production data published Friday showed further weakness in the manufacturing sector. Output increased 0.1 percent on the month in February, rebounding from a revised decline of 0.4 percent in January but falling short of the consensus forecast of 0.4 percent. This headline increase, however, was mainly driven by a strong increase in the often-volatile utilities sector where output increased 3.7 percent on the month after sharp declines in each of the two previous months. Manufacturing output, in contrast, fell for a second consecutive month, down 0.4 percent after a revised decline of 0.5 percent in January, the first back-to-back contraction in the sector since mid-2017 and consistent with signals from recent regional surveys including the Philadelphia Fed and Empire State reports.
European markets
Most European markets closed higher Friday and on the week, with the likely delay to the UK’s withdrawal from the European Union reassuring investors that a disruptive no-deal Brexit will be avoided. The FTSE rose
0.6 percent on the day and 1.7 percent on the week, the CAC outperformed with an increase of 1.0 percent on the day and 3.3 percent on the week, and the DAX closed up 0.8 percent on the day and 2.0 percent on the week.
Deutsche Bank fell slightly while Commerzbank closed higher Friday as speculation continued about a merger between the two German banks. Both banks confirmed over the weekend that merger talks are underway, with the German government indicating its support but unions objecting on concerns about job losses. A merger between the two banks would likely result in the third largest European bank behind HSBC and BNP Paribas.
Asia Pacific Markets
Most Asian markets closed higher Friday and advanced to varying degrees on the week. The Shanghai Composite index rose 1.0 percent on the day and 1.7 percent on the week, while Hong Kong’s Hang Seng index gained 0.6 percent on the day and 2.8 percent on the week. These gains followed a report in Chinese state media stating that there had been further “substantive progress” on trade talks between China and the United States. Australia’s All Ordinaries index was the regional underperformer, closing flat on the day Friday and losing 0.4 percent on the week. Japanese markets also rose Friday after the Bank of Japan left policy setting unchanged, with the Nikkei increasing 0.8 percent on the day and 2.0 percent on the week and the Topix gaining 0.9 percent on the day and 1.9 percent on the week. The BoJ's short-term policy rate for excess reserves remains at minus 0.1 percent while the target level for the long-term 10-year yield remains at around zero percent. Officials expressed a more cautious view about the near-term external outlook but retained their assessment that the domestic economy will continue to expand moderately, and that inflation will gradually move towards their target level of 2.0 percent. Speaking after the decision, BoJ Governor Haruhiko Kuroda dismissed recent suggestions that officials should raise policy rates to assist the profitability of domestic banks even if this were to make it more difficult to hit the inflation target. Instead, he insisted that the current target remains appropriate and that policy will continue to be set with that target as the objective.
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US stocks rallied late in the session but closed lower Friday, extending losses made over the week. The Dow fell 0.1 percent on the day and 2.2 percent on the week, the S&P lost 0.2 percent on the day and also 2.2 percent on the week, and the Nasdaq retreated 0.2 percent on the day and 2.5 percent on the week. Retailer Costco Wholesale posted a solid gain Friday after reporting stronger-than-expected quarterly profits, with its performance boosted by lower fuel prices and an easing of pricing pressures from competitors. The company also announced it would increase its starting wages for US and Canadian employees in response to tighter labour market conditions.
February’s employment report published Friday showed payrolls rose only 20,000, well below the consensus forecast of 175,000 and sharply down from a revised increase of 311,000 in January. The impact of the US government shutdown and difficulties with the seasonal adjustment of data during the winter months may explain much of this volatility in the payrolls data in January and February, and the average increase of 166,000 for the two months is strong. Other indicators suggest that conditions in the labour market remain positive, with the unemployment rate falling from 4.0 percent to 3.8 percent, and average hourly earnings up
0.4 percent on the month and 3.4 percent on the year. Housing data suggest there has been a solid rebound in activity after weakness in December, which had partly reflected the impact of severe wildfires in California. Housing starts rose from a revised 1.037 million in December to 1.230 million in January, with permits, less impacted by weather conditions, also picking up from 1.345 million to 1.326 million.
Federal Reserve Chair Jerome Powell spoke Friday after the employment report and the after close of trading. His comments are to be the last from Fed officials until after the FOMC meeting next week but were in line with previous statements. He noted that officials are “well along” in plans to end the runoff of the Fed’s balance sheet and will seek to do so in a way that minimises market disruption. He also argued that incoming data were consistent with the FOMC’s patient “wait-and-see” approach to further policy moves but stressed that projections of policy rates should not be interpreted as promises.
Canada’s employment report showed payrolls rose 55,900 in February, down from an increase of 66,800 in January but well above the consensus forecast for an increase of 11,000. This puts the average for the first two months of the current quarter well above the average posted in the previous two quarters. Employment increases were largely concentrated in Ontario but broad-based across most sectors with the exception of construction. The unemployment rate was steady at 5.8 percent. Consistent with the data showing a drop in construction payrolls, housing starts data showed a sharp fall on the month.
European markets
Most European markets closed lower Friday and on the week. The FTSE fell 0.7 percent on the day and was flat on the week, the CAC lost 0.7 percent on the day and 0.6 percent on the week, and the DAX closed down 0.5 percent on the day and 1.2 percent on the week. Deutsche Bank and Commerzbank both closed lower Friday on reports that merger talks between the two banks had resumed. Such a merger would create Europe’s second largest bank. Further reports along these lines were published over the weekend but both companies have declined to comment.
German manufacturers’ orders data published Friday suggest that the manufacturing sector is unlikely to make a significant positive contribution to headline growth in the three months to March. Although orders were revised higher in December, up 0.9 percent compared with a previous estimate for a drop of 1.6 percent, they are estimated to have fallen by 2.6 percent in January, and to have fallen on the year for an eighth consecutive month. Both external demand and domestic demand were weak, while orders for capital goods, intermediate goods, and consumer goods were also uniformly weak.
French industrial production growth was stronger-than-expected in January but revised down in December. Output rose 1.3 percent on the month in January but was flat in December down from an initial estimate of 0.8 percent, with year-on-year growth picking up from a decline of 2.5 percent to an increase of 1.7 percent. Machinery and equipment goods, coke and refined petroleum products, and other manufacturing recorded solid increases, offset by weakness in transport equipment and the construction sector. France’s trade deficit widened from a revised 3.57 billion in December to 4.20 billion in January.
Asia Pacific Markets
Asian markets fell Friday with most closing down on the week. The Shanghai Composite index posted a particularly sharp decline Friday, slumping 4.4 percent on the day and unwinding all of the gains made earlier to close down 0.8 percent on the week. The fall on Friday followed trade data that showed a larger-than- expected fall in exports in February which, despite distortions in the data caused by the timing of lunar new year holidays, prompted renewed concerns about the outlook for the Chinese economy. Japanese markets also closed lower Friday, with the Nikkei falling 2.0 percent on the day and 2.7 percent on the week and the Topix losing 1.8 percent on the day and 2.7 percent on the week. Hong Kong’s Hang Seng index, Korea’s Kospi index and Singapore’s STI index also closed lower on the day and on the week. Australia’s All Ordinaries index was the region’s best performer, closing Friday down a comparatively less severe 0.9 percent and ending the week 0.2 percent higher.
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US stocks closed higher Friday. The Dow advanced 0.4 percent on the day but was flat on the week, the S&P gained 0.7 percent on the day and 0.4 percent on the week, and the Nasdaq outperformed with an increase of
0.8 percent on the day and 0.9 percent on the week. Auto-maker Tesla fell Friday after the company unveiled a cheaper model but advised it does not expect to make a profit in the first quarter, while clothing retailer Gap surged after announcing plans to split off one of its better-performing brands as a separate company.
ISM and PMI surveys both showed manufacturing conditions moderated in February. The ISM Manufacturing Index fell from 56.6 to 54.2, below the consensus forecast of 55.0, with the survey’s measures of output, new orders and employment all down on January levels. The PMI Manufacturing Index showed a similar decline from 54.9 to 53.0, with respondents reporting steady output but the weakest growth in new orders since June. Data delayed by the government shutdown earlier in the year showed changes in personal income and spending for December that had already been reflected in the previously-released GDP report but also showed that income fell 0.1 percent in January after increasing 1.0 percent previously, though this largely reflected the impact of non-wage components. Wages and salaries grew 0.5 percent in January after increasing 0.3 percent in December.
European markets
Most European markets advanced Friday but results were mixed on the week. The FTSE closed up 0.5 percent on the day but fell 1.0 percent on the week, the CAC gained 0.5 percent on the day and 0.9 percent on the week, and the DAX outperformed with an increase of 0.7 percent on the day and 1.3 percent on the week.
Regional manufacturing PMI surveys were the main focus of the European data calendar Friday. The Eurozone survey’s headline index fell from 50.5 in January to 49.3 in February, indicating contraction in the sector, extending the downward trend in the index seen since late 2017, and taking the index to its lowest level in more than five years. Germany was the major contributor to this weakness, with its index falling from 49.7 to 47.6, the lowest level in more than six years. The French manufacturing PMI, in contrast, showed a modest improvement in its headline index from 51.2 in January to 51.5 in February. Both the German and French surveys indicated price pressures moderated in the sector, as did the Eurozone survey. The UK’s manufacturing PMI survey indicates that the sector remains in positive territory, with the headline index falling
from 52.6 in January to 52.0 in February, though its measure of business confidence fell to a record low,
reflecting ongoing Brexit uncertainty.
Asia Pacific Markets
Asian markets advanced to varying degrees Friday with weekly changes also ranging widely. The Shanghai Composite index was the clear standout in the region, advancing 1.8 percent on the day and closing the week up 6.8 percent. The increase Friday followed the announcement late Thursday by index-provider MSCI that it would raise the weighting of Chinese stocks in its widely-followed emerging markets index from 0.7 percent to 3.3 percent, a move it estimates will increase flows into China’s US$6.7 trillion share market by US$80 billion. Japanese markets also closed the week higher, with investor demand for trade-related stocks supported by further weakness in the yen. The Nikkei closed up 1.0 percent on the day and 0.8 percent on the week and the Topix gained 0.5 percent on the day and 0.4 percent on the week. Australia’s All Ordinaries index closed Friday up 0.3 percent on the day and 0.5 percent on the week. Japan’s unemployment rate increased from 2.4 percent in December to 2.5 percent in January, with employment growth also slowing. Asian manufacturing PMIs surveys for February were mixed, showing conditions deteriorating in Japan, picking up but still weak in the China, and improving in India. The index fell from 50.3 to 48.9 in Japan, the lowest level since August 2016 and the first time since then that the survey has indicated contraction in the sector. This is broadly in line with other Japanese activity data that have shown a subdued start to the new year. The Chinese index rose from 48.3 to 49.9. Although the timing of lunar new year holidays typically impacts Chinese data early in the new year, the January and February data together show clearly that weakness in the Chinese economy seen in 2018 has extended into 2019. The India survey’s headline index, however, continued its recent upward trend, increasing for the fifth time in the last six months from 53.9 to 54.3.
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US stocks closed Friday higher on the day and the week as officials reported progress on US-China trade talks in Washington. The Dow advanced 0.7 percent on the day and 0.6 percent on the week, the S&P gained 0.6 percent on the day and on the week, and the Nasdaq outperformed modestly with an increase of 0.9 percent on the day and 0.7 percent on the week.
Kraft Heinz shares collapsed Friday after the food manufacturer reported late Thursday heavy fourth-quarter losses and a large write-down in the value of key brands and businesses. Executives also advised investors that US regulators are investigating the company’s procurement operations. Berkshire Hathaway, which owns more than 26 percent of Kraft Heinz, also posted a heavy fall on Friday, with executives advising that Kraft Heinz’s performance was the main factor driving weakness in its fourth-quarter results.
US-China trade talks continued in Washington on Friday and extended into the weekend. US officials reported progress on the issue of currency manipulation, but intellectual property protections and enforcement mechanisms for any deal are said to remain obstacles. US tariffs on Chinese imports are scheduled to increase from 10 percent to 25 percent later this week, but it appears likely that this increase will not go ahead with President Trump indicating that the deadline will be extended ahead of a possible meeting with President Xi next month.
Federal Reserve Vice Chairman Richard Clarida spoke Friday and provided details about some of the issues being considered in an internal review of the conduct and communication of monetary policy. Among these issues is whether officials should aim to hit the 2.0 percent inflation target every year or seek to meet this target on average over a longer time-frame if the target is not met in the short-term. Vice Chairman Clarida noted research that indicates the latter approach tends to yield better outcomes but also acknowledged that it can make the communication of policy more difficult. His speech also addressed whether the Federal Reserve should use other policy tools in addition to its main policy rate. Officials are conducting public consultation sessions in coming months, with the results of the review scheduled for release early next year.
European markets
European markets posted modest gains Friday but mixed results on the week. The FTSE closed up 0.2 percent on the day but fell 0.8 percent on the week. French and German indices, however, recorded similar gains, with the CAC up 0.4 percent on the day and 1.2 percent on the week, and the DAX up 0.3 percent on the day and
1.4 percent on the week. Trade-related stocks outperformed on confidence about the prospects of a US-China trade deal but European food and beverage manufacturers, including Nestle, Danone and Unilever, were among the underperformers on Friday after Kraft Heinz reported weak results on Thursday.
U.K. Prime Minister Theresa May confirmed over the weekend that a revised Brexit deal will not be put to parliament this week as previously planned but promised that a vote will be held by 12 March. The UK is scheduled to withdraw from the European Union at the end of March, but it remains unclear whether the EU
will agree to concessions required to secure the support of the UK parliament which leaves open the possibility
that the UK may withdraw without a deal in place. Three UK cabinet ministers announced on the weekend that they would favour a delay to Brexit if no deal can be reached in time.
Revised German data for the three months to December left headline economic growth unchanged from previous estimates, with GDP flat on the quarter and up 0.6 percent on the year. Revisions to components, however, indicate that underlying conditions, though still subdued, were better than previously estimated, with somewhat stronger consumer spending and business investment offset by a rundown in inventories. Also published Friday, the Ifo survey showed German business sentiment has deteriorated further in February, with respondents reporting current conditions are at their weakest since December 2014 and expectations at their gloomiest since December 2012. In line with flash PMI surveys published earlier in the week, the Ifo survey suggests economic growth in the current quarter will again be sluggish.
Asia Pacific Markets
Asian markets were mixed Friday, with solid gains in China and Hong Kong but little change elsewhere in the region. The Shanghai Composite index advanced 1.9 percent on the day and 4.5 percent on the week as investors priced in a stronger chance of a US-China trade deal, while Hong King’s Hang Seng index gained 0.7 percent on the day and 3.3 percent on the week. Japan’s Nikkei and Topix indices both fell 0.2 percent on low trading volumes Friday but advanced 2.5 percent and 2.0 percent respectively on the week. Australia’s All ordinaries index closed Friday up 0.4 percent on the day and up 1.5 percent on the week. The Australian dollar gained Friday after it had fallen sharply on Thursday on reports that Chinese authorities had placed restrictions on imports of Australian coal. Australian officials, however, have downplayed suggestions that any delays in the processing of coal imports have been motivated by political factors, allaying concerns that broader trading flows between China and Australia might be impacted. Japanese inflation data released Friday showed headline consumer price pressures in Japan remained subdued in January, mainly reflecting the impact of food prices. Measures of underlying inflation, however, picked up modestly, broadly in line with forecasts from the Bank of Japan for core inflation to pick up slightly in the coming fiscal year.
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US stocks finished the week with strong gains after President Trump approved legislation averting another government shutdown and noted progress in US-China trade talks. The Dow closed up 1.7 percent on the day and 3.1 percent on the week, the S&P closed up 1.1 percent on the day and 2.5 percent on the week, and the Nasdaq closed up 0.6 percent on the day and 2.4 percent on the week.
President Trump Friday signed legislation extending government funding through September and declared a national emergency in an effort to secure the funds necessary to meet his border security objectives. The Administration plans to divert US$6.7 billion in federal funds from the US Treasury forfeiture fund, a counter- narcotics program, and the military construction budget. Democratic congressional leaders and some state governments have challenged the constitutional validity of the president’s actions.
Industrial production data showed output fell 0.6 percent on the month in January after an increase of 0.1 percent in December 2018, weaker than the consensus forecast range. Vehicles and business equipment both fell on the month after solid gains previously, contributing to a fall in manufacturing production of 0.9 percent after December’s 0.8 percent gain. Modest gains in mining and utilities output partly offset the decline in manufacturing production. The University of Michigan’s consumer survey, also released Friday, showed a rebound in confidence in February after weakness associated with the government shutdown in January, while its measures of inflation expectations grew more subdued.
European markets
Major European markets closed higher Friday with sentiment boosted by signs a shutdown of the US government would be avoided, reports of progress on US-China trade talks, and comments from a senior official from the European Central Bank indicating more policy support may be forthcoming. The FTSE advanced 0.6 percent on the day and 2.3 percent on the week, the CAC gained 1.8 percent on the day and 3.9 percent on the week, and the DAX rose 1.9 percent on the day and 3.6 percent on the week.
Shares in regional banks gained and the euro weakened after Benoit Coeure, a member of the ECB’s Executive Board, indicated that additional long-term loans could be provided to banks. Acknowledging that the slowdown in the Eurozone economy is “stronger and broader” and inflation weaker than anticipated, Coure advised that officials are considering additional loans to regional banks in order to maintain current liquidity conditions once existing loans begin to mature. He stressed, however, that such a measure would only be implemented to provide policy support to the economy, not to assist individual banks to meet capital requirements.
Asia Pacific Markets
Most Asian markets lost ground Friday, with weak US retail sales data published earlier and subdued Chinese inflation data weighing on investor sentiment. The Shanghai composite index fell 1.4 percent on the day and closed the week up 2.5 percent compared with pre-holiday levels. Japan’s Nikkei index closed 1.1 percent down on the day and 2.8 percent up on the week, while the Topix closed 0.8 percent down on the day and 2.5 percent on the week. Australia’s All Ordinaries index outperformed on the day with a small increase of 0.1 percent but underperformed on the week with a gain of just 0.2 percent. US-China trade talks in Beijing concluded Friday, with a further round of negotiations now scheduled to take place in Washington in the coming week. President Trump and Chinese state media noted progress over the last week but few details about the terms of any agreement have been made public. US tariffs on Chinese imports are scheduled to increase from 10 percent to 25 percent at the start of March, but President Trump again indicated he may delay this increase and possibly meet with President Xi sometime next month to finalise an agreement.
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US stocks were mixed Friday and closed moderately higher on the week ahead of key negotiations this week aimed at preventing another government shutdown and averting a planned increase in tariffs. The Dow finished down 0.3 percent on the day and up 0.2 percent on the week, the S&P rose 0.1 percent on the day and was flat on the week and the Nasdaq advanced 0.1 percent on the day and 0.5 percent on the week.
Reports suggest that negotiations between the Administration and Congress have stalled over the weekend ahead of this Friday’s deadline for extending government funding. Border security issues remain the primary obstacle to agreement. President Trump’s interim chief of staff, Mick Mulvaney, told reporters that he could not rule out the possibility for another government shutdown and that it remains possible that the President could declare a national emergency to authorise funding for border security measures.
Canadian labour market data showed very strong jobs growth in January, with employment increasing by 66,800 after a revised increase of 7,800 in December. These gains were concentrated in the service sector, offset by declines in manufacturing, agricultural and construction payrolls. Despite the increase in employment, the unemployment rate rose from 5.6 percent to 5.8 percent in response to a similar increase in the participation rate to 65.6 percent. Wage growth also accelerated from 1.5 percent on the year in December to
1.8 percent in January. Although the Bank of Canada appears to be in no hurry to tighten policy, these data suggest that such a move remains a possibility later in the year if a tight labour market produces sustained upward pressure on inflation.
European markets
Major European markets lost ground Friday but were mixed on the week. The FTSE fell 0.3 percent on the day but outperformed other regional indices with an increase of 0.7 percent on the week. The CAC fell 0.5 percent on the day and 1.1 percent on the week, while German shares underperformed, with the DAX dropping 1.0 percent on the day and closing down 2.4 percent on the week.
Leaders of Italy’s coalition government spoke on the weekend criticizing Italy’s central bank for failing to prevent the collapse of domestic banks and its stock-market regulator for failing to protect small investors. Although the Bank of Italy is independent, the government can veto senior appointments, with the term for one of the bank’s deputy governors scheduled to expire Monday.
French industrial production data showed a modest rebound in December, with output up 0.8 percent on the month and year-on-year growth improving from a decline of 2.2 percent to a decline of 1.4 percent. Industrial production fell 0.5 percent on the quarter in the three months to December, with PMI survey data suggesting weakness has extended into the new year. Equivalent data for Italy showed industrial production in December fell 0.8 percent on the month, the fourth consecutive decline, and 5.5 percent on the year, the biggest drop since 2012, with output down 1.1 percent on the quarter in the three months to December.
Asia Pacific Markets
Markets remained closed in China and Taiwan on Friday for lunar new year holidays, with trading resuming on Monday. Japanese markets sold off sharply Friday and finished the week well down, with the Nikkei losing 2.0 percent on the day and 2.2 percent on the week and the Topix dropping 1.9 percent on the day and 1.6 percent on the week. Australia’s All Ordinaries index fell 0.4 percent on the day but outperformed on the week with a 3.4 percent gain. Trading resumed in Hong Kong on Friday, with the Hang Seng index closing up 0.1 percent on the week. US-China trade talks resume in Beijing on Monday and are expected to last until Friday. Chinese trade data for January are also scheduled for release later in the week. The US is set to increase tariffs on Chinese imports from 10 percent to 25 percent at the start of March if no deal is reached.
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US stocks were little changed Friday but closed higher on the week. The Dow finished up 0.3 percent on the day and 1.3 percent on the week, the S&P rose 0.1 percent on the day and 1.6 percent on the week and the Nasdaq fell 0.2 percent on the day but gained 1.4 percent on the week.
A drop in Amazon contributed to the fall in Nasdaq on Friday after reporting fourth-quarter earnings late Thursday. Although reported earnings of US$6.04 per share beat analysts’ expectations for US$5.68 per share, the company’s guidance about first-quarter revenues fell short of estimates, while plans for increased investment spending in 2019 also weighed on sentiment.
The January employment report released Friday showed very strong demand for labour at the start of the year, with nonfarm payrolls increasing by 304,000, well above the revised December increase of 222,000 and almost doubling the consensus forecast of 158,000. Job growth was broad-based across sectors, with the construction and trade and transportation industries seeing particularly strong hiring. The report’s household survey showed a small increase in the unemployment rate from 3.9 percent in December to 4.0 percent in January with the participation rate also picking up slightly. Growth in average hourly earnings slowed 0.1 percent on the month and was steady at 3.2 percent on the year, likely reinforcing the Federal Reserve’s assessment that price pressures remain subdued for now.
Survey data published Friday also indicated improved conditions in the manufacturing sector in January. The ISM manufacturing index increased from 54.3 in December to 56.6 in January, above the consensus forecast of 54.0, while the manufacturing PMI also showed an increase in the headline index from 53.8 to 54.9. Respondents to both surveys reported stronger growth in domestic new orders, offsetting weaker export orders.
European markets
Most European markets advanced Friday but were mixed on the week. The FTSE advanced 0.3 percent on the day and outperformed other major global indices with an increase of 3.1 percent on the week, while the CAC gained 0.5 percent on the day and 1.9 percent on the week. German shares, however, underperformed, with the DAX up just 0.1 percent on the day and closing down 0.9 percent on the week.
Regional PMI surveys were the main focus of the European data calendar Friday and generally indicated a
weak start to the year. The headline index for the Eurozone manufacturing PMI fell for a sixth consecutive month from 51.4 in December to 50.5 in January, its lowest level since November 2014. The headline index for the German manufacturing PMI fell from 51.5 to 49.7, indicating contraction in the sector for the first time in more than four years. The index for the equivalent French survey in contrast showed an improvement from
49.7 to 51.2 but still suggests that activity is subdued. Meanwhile, the provisional estimate for the headline HICP measure of inflation for the Eurozone showed a decline from 1.6 percent in December to 1.4 percent in January, though the underlying measure picked up slightly from 1.0 percent to 1.1 percent. Together, these data releases provide further support for the view that the European Central Bank may need to deliver additional policy easing in coming months.
Asia Pacific Markets
Most Asian markets closed Friday flat or slightly lower on the day and were mixed on the week. The Shanghai Composite index was the main exception to regional weakness on Friday, closing 1.3 percent higher on the day and gaining 0.6 percent on the week. Japanese stocks finished the week little changed. The Nikkei increased 0.1 percent on the day and on the week, while the Topix closed down 0.2 percent on the day and down 0.1 percent on the week. Australia’s All Ordinaries index was flat on the day and down slightly on the week, while Hong Kong’s Hang Seng index was flat on the day but up 1.3 percent on the week. Major banks were among the weaker performers on the Australian stock market Friday ahead of the publication Monday of a government report into misconduct relating to banks’ lending practices. The report is expected to recommend tighter credit procedures and stricter rules on the range of financial products banks offer to consumers.
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US stocks ended the week with solid gains Friday after the Administration and Congress reached a short-term deal to re-open the government. The Dow closed 0.7 percent higher on the day, with the S&P up 0.8 percent and the Nasdaq outperforming with an increase of 1.3 percent. For the week, the Dow rose 0.1 percent, as did the Nasdaq, while the S&P fell 0.2 percent.
The Nasdaq’s outperformance Friday partly reflected strong gains from Starbucks after it reported fourth- quarter earnings of US$0.75 per share, well above analysts’ expectations for US$0.65 per share. Same-store sales were reported to have risen 4.0 percent, beating forecasts for 2.9 percent growth. The company also raised its guidance for fiscal 2019 earnings from a range of US$2.61-2.66 per share to US$2.68-2.73 per share.
Intel, however, fell sharply on Friday after reporting weaker-than-expected revenue and earnings guidance after Thursday’s market close. The chip manufacturer expects to earn US$0.87 per share in the first quarter, falling short of analysts’ expectations for US$1.01 per share.
European markets
Major European indices were mixed on the day. The FTSE fell 0.1 percent, while the SMI lost 0.2 percent on the day, but the CAC and DAX recorded strong gains of 1.3 percent and 1.4 percent respectively. On the week, the FTSE fell 2.3 percent, the CAC advanced 1.0 percent, the CAX gained 0.7 percent, and the SMI fell 1.1 percent.
Renault advanced after comments from Japanese trade minister Hiroshige Seko urging the auto-maker to retain its alliance with Nissan, despite the resignation of chief executive and chairman, Carlos Ghosn, who remains detained by Japanese authorities on financial misconduct charges. Renault currently owns a 43 percent stake in Nissan, while Nissan has a 15 percent stake in Renault. Speaking on the weekend, French President Emmanuel Macron also spoke of the need to preserve this alliance. Swedish telco Ericsson advanced after reporting strong sales growth, reinforcing confidence that it will be able to win market share from Chinese rival Huawei, but UK telco Vodafone fell sharply on disappointing earnings.
Asia Pacific Markets
Most Asian markets finished the week with gains on Friday. Japan’s Nikkei and Topix indices advanced 1.0 percent and 0.9 percent respectively, Australia’s All Ordinaries index rose 0.5 percent, and Hong Kong’s Hang Seng index gained 1.7 percent. On the week, the Nikkei, Topix and All Ordinaries indices all rose 0.5 percent, with the Hang Seng index up 1.8 percent. Tech company Tencent, listed in Hong Kong, posted solid gains on Friday on news that Chinese authorities have approved two new video game products. This is the first time the company has had new products approved for distribution in mainland China since March 2018, though the products approved are not expected to be very profitable, with some of the company’s more popular global products still not permitted. Authorities have restricted distribution of video games on concerns about their impact on children.
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US stocks advanced Friday and for the week. The Dow Jones industrials were up 1.4 percent Friday and 3.0
percent on the week. The S&P added 1.3 percent and 2.9 percent while the Nasdaq advanced 1.0 percent and
2.7 percent. The rally reflected traders’ optimism about trade talks between the US and China. Adding to
positive sentiment, a report from Bloomberg said China has offered to go on a six-year buying spree to ramp up
imports from the US. The people said the aim of easing the tariffs is to advance trade talks and win China's
support for longer-term reforms.
The positive news on trade overshadowed the preliminary consumer sentiment report for January — it showed a
substantial deterioration in US consumer sentiment. The index plummeted to 90.7 from the final December
reading of 98.3. The consumer sentiment index tumbled to its lowest level since hitting 87.2 in October of
2016. "Consumer sentiment declined in early January to its lowest level since Trump was elected," said Surveys
of Consumers chief economist Richard Curtin. "The decline was primarily focused on prospects for the domestic
economy, with the year-ahead outlook for the national economy judged the worst since mid-2014." Curtin
attributed the loss “to a host of issues including the partial government shutdown, the impact of tariffs,
instabilities in financial markets, the global slowdown and the lack of clarity about monetary policies."
JB Hunt Transportation and Kansas City Southern climbed after their fourth-quarter reports. Deere also gained.
Among technology companies, Microsoft and Cisco Systems advanced. Tesla declined after the company said it
would cut 7 percent of its jobs. CEO Elon Musk said the cuts are meant to reduce costs as the company lowers
the price for its cars. He said in a note to staff that the road ahead is "very difficult."
European markets
European stocks advanced Friday with many indices rising to multi-week highs as investors indulged in buying
amid increasing signs of progress in US/China trade talks and fairly good earnings reports from US companies
so far. Brushing off concerns about Brexit the FTSE rallied 2.0 percent to end the week 0.7 percent higher. The
CAC gained 1.7 percent and 2.0 percent. The DAX jumped 2.6 percent and 2.9 percent and the SMI added 1.2
percent and 2.2 percent on the week.
Automobile and resources gained with investors buying these stocks on optimism about a resolution to
US/China trade disputes. In the UK, Ashtead Group, Morrison Supermarkets, Antofagasta, Prudential Life
Insurance, Rolls-Royce Holdings, FBS, Barratt Developments and Hargreaves Lansdown gained. In France, Atos,
ST Microelectronics, Michelin, Technip FMC, Carrefour, ArcelorMittal, Accor, Kering and Valeo advanced while in
Germany, Wirecard, Continental AG, BASF, Covestro and Daimler gained. Infineon, Bayer, Fresenius, BMW,
SAP, Deutsche Post, Deutsche Bank and Siemens also rose sharply. In Switzerland Sika, Geberit, Compagnie
Financiere Richemont, Julius Baer and LafargeHolcim gained. Kering and LVMH rallied.
Asia Pacific Markets
Stock indices in Asia climbed Friday as reports of progress in US/China trade talks as well as stronger than expected economic data from the US helped ease global growth worries. The Shanghai Composite climbed 1.4 percent as investors waited for China's fourth-quarter GDP data. The Hang Seng was 1.3 percent higher. For the week, the former was up 1.7 percent and the latter, 1.6 percent. The Nikkei and Topix closed higher as the yen weakened on improved risk appetite after reports that the US could lift trade tariffs on China. The Nikkei was up 1.3 percent on the day and 1.5 percent on the week while the Topix added 0.9 percent and 1.8 percent. Exporters surged, with Canon, Nissan Motor, Panasonic and Sony rising. In the tech sector, Tokyo Electron and Advantest rallied. In December, the national consumer price index was up 0.3 percent on the year. Both the S&P/ASX and the All Ordinaries advanced 0.5 percent Friday. For the week, both indices were up 0.5 percent. The four big banks advanced. Rio Tinto edged up after it flagged a rise in Pilbara iron ore exports this year. BHP, which will unveil its second-quarter production figures next week, also advanced.
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US stocks were little changed Friday but closed well up on the previous week. Both the Dow and the S&P
finished flat on Friday, while the Nasdaq fell 0.2 percent. For the week, the indices advanced 2.4 percent, 2.5
percent and 3.5 percent respectively.
General Motors posted a sharp rise Friday after upgrading its outlook, with other auto makers also stronger on
the day. General Motors now expects adjusted EPS in 2018 will exceed the guidance it made in October, and
also forecast earnings to rise further in 2019, despite signs of flat or falling sales in the US and China.
CPI data published Friday showed a fall in headline inflation from 2.2 percent in November to 1.9 percent in
December, in line with the consensus forecast. Core inflation was steady at 2.2 percent, also matching the
consensus forecast. Energy prices fell 7.5 percent on the year in December, mainly reflecting a drop in
gasoline prices, with transportation costs also moderating. Housing and medical costs were up moderately.
Although the recovery on oil prices in recent weeks may put some upward pressure on inflation in the nearterm,
overall price pressures remain tame and do not suggest any urgency for Federal Reserve rate hikes.
The ongoing US government shutdown became the longest ever over the weekend, breaking the previous
record of twenty-one days back in 1995/96, and is now extending to its twenty-fourth day on Monday. There
are few indications at present that a deal between the Administration and Congress is close. Around 800,000
Federal employees on Friday missed their first pay check since the shutdown commenced.
European markets
Major European indices recorded moderate declines Friday, with the FTSE losing 0.4 percent, the CAC closing
0.5 percent lower, and the DAX down 0.3 percent. The SMI was down 0.8 percent. For the week, the FTSE
gained 1.2 percent, the CAC advanced 0.9 percent, the DAX added 1.1 percent and the SMI was 2.6 percent
higher.
European auto stocks were among the worst performers Friday, with auto-maker Renault down sharply on
news that Japanese authorities have made additional charges of financial misconduct against its CEO, Carlos
Ghosn, who remains in detention in Japan.
Brexit will again be a major focus this week, with the UK parliament expected to vote against the government’s
proposed deal with the European Union. Although the UK is scheduled to withdraw from the EU at the end of
March, anticipation that the deal will be rejected has increased speculation that exit will either be delayed or
disorderly. Speaking over the weekend, Prime Minister Theresa May urged legislators to support the deal,
arguing that failure to do so would represent a “breach of trust” with UK voters.
Asia Pacific Markets
Most Asia Pacific markets recorded moderate gains on Friday, with Australia and India the main exceptions. Japan’s Nikkei index was the strongest performer, up 1.0 percent on the day, with shares in Shanghai also doing better than most, up 0.7 percent. Australia’s All Ordinaries Index and India’s Sensex 30, however, both lost 0.3 percent, the latter following weak industrial production data. The Nikkei and Topix closed the week up 2.8 percent and 4.1 percent respectively, while stocks advanced 1.5 percent on the week in China and 2.8 percent in Australia. Indian industrial production data showed output grew just 0.5 percent on the year in November, slowing sharply from 8.1 percent in October and the weakest growth since June 2017. PMI survey data, in contrast, showed conditions improved in the manufacturing sector in November. Given this divergence in the data, officials at the Reserve Bank of India will likely wait for more clarity before making major changes to their assessment of the growth outlook.
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US stocks ended the week with strong gains on Friday after better
-
than
-
expected payrolls data and supportive
Fed comments booste
d investor confidence about the economic and policy outlook. The Dow closed 3.3 percent
higher on Friday, while the S&P advanced 3.4 percent and the Nasdaq gained 4.3 percent. For the week the
indices advanced 0.5 percent, 1.0 percent and 1.6 percent respe
ctively.
US nonfarm payrolls increased by 312,000 in December, the biggest monthly gain since February last year and
well above the consensus forecast range of 160,000 to 200,000. The unemployment rate increased from 3.7
percent in November to 3.9 percent
in December but this was driven by a significant increase in the number of
people actively looking for work, with the participation rate advancing from 62.9 percent to 63.1 percent.
Hiring was positive across most sectors of the economy, with gains in man
ufacturing payrolls and hours
worked pointing to a solid industrial production report for the month. The payrolls report also provided some
evidence of stronger inflationary pressures. Average hourly earnings increased 0.4 percent on the month, the
biggest
increase since December 2017, while the year
-
on
-
year increase picked up to 3.2 percent, matching the
cyclical high recorded in October.
Speaking shortly after its release, Fed Chairman Jerome Powell described the payroll report as strong and
consistent wi
th good momentum for the economy. However, he also stressed that officials are paying attention
to market conditions as well as incoming economic data and described recent inflation readings to have been
“muted”. As a result, Chairman Powell believes the F
ed has substantial flexibility to set policy this year and
that there is no “pre
-
set” path to raise the Fed funds rate. He also noted that changes to the rate at which the
Fed’s balance sheet in unwound could also be made if required.
European markets
Major European indices closed higher on Friday, receiving a boost from the release of the US payrolls data and
confirmation of US
-
China trade talks. The FTSE gained 2.2 percent, the CAC advanced 2.7 per
cent, and the
DAX closed the day up 3.4 percent. Trade
-
sensitive sectors contributed heavily to these gains on hopes that
US
-
China trade tensions may ease. For the week, the FTSE gained 1.6 percent, the CAC edged up 0.1 percent,
the DAX added 2.0 percent a
nd the SMI was 2.1 percent higher.
Civil unrest in France will likely remain a major focus in the coming week after another weekend of
disturbances in Paris and other major cities.
German labour market data published Friday showed the unemployment rate was
steady at 5.0 percent in
December, with the quarterly drop in the number of persons unemployed in the three months to December
also little changed from that seen in the three months to September. French inflation data showed a fall in the
headline rate fr
om 1.9 percent in November to 1.6 percent in December, matching the weakest outturn since
February 2018 while the flash estimate for the Eurozone HICP measures also showed a decline from 2.0
percent in November to 1.6 percent in December. If confirmed by f
inal data this would be the lowest outturn
since April and suggest that inflation expectations could also start to weaken. PMI surveys showed weaker
conditions in the Eurozone services sector in December but some improvement in the UK services sector.
Asia Pacific Markets
Japanese markets traded for the first ti me this week and posted declines as they caught up with moves in other major indices. The Nikkei fell 2.3 percent on the day while the Topix closed down 1.5 percent. Australia’s All Ordinaries Index also closed the day 0.3 percent lower and dropped 0.6 per cent for the week. Sentiment elsewhere in the region was boosted by confirmation that US - China trade talks will take place in the coming week. The Shanghai Composite climbed 2.0 percent Friday while the Hang Seng added 2.2 percent. On the week, the Shangh ai Composite advanced 0.8 percent but the Hang Seng was down 0.8 percent. PMI surveys released Friday showed mixed conditions in the region. The surveys indicate conditions were stronger in Japan’s manufacturing sector in December, steady in China’s servi ces sector, and slightly improved but still weak in Hong Kong, weaker but still robust in Singapore, and weaker in India’s services sector.
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Stocks moved sharply lower Friday with the Dow Jones industrials and the S&P tumbling to their lowest closing
levels in seven and eight months, respectively. The Dow retreated 2.0 percent while the S&P was 1.9 percent
lower. Nasdaq dropped 2.3 percent. For the week, the Dow was down 1.2 percent, the S&P declined 1.3 percent
and the Nasdaq was 0.8 percent lower.
The declines followed renewed concerns about the global economic growth outlook after disappointing Chinese
data for industrial output and retail sales growth. Industrial output grew at its slowest pace in nearly three
years, increasing only by 5.4 percent in November after growing by 5.9 percent a month earlier. Meanwhile,
retail sales in China grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales
were up 8.6 percent. The slower pace of industrial output and retail sales growth was partly due to the impact
of the ongoing trade dispute with the US.
European markets
European stock markets retreated Friday but were mostly higher for the week. On Friday, the FTSE and DAX
both lost 0.5 percent, the CAC retreated 0.9 percent and the SMI was 1.1 percent lower. However, for the
week, the FTSE added 1.0 percent the CAC gained 0.8 percent, the DAX was up 0.7 percent but the SMI lost
0.3 percent.
Disappointing Chinese economic data weighed on the markets at the start of the day. November industrial
output and retail sales were weaker than expected. Reports on industrial production in Germany and
manufacturing activity in the Eurozone, France and Germany also contributed to the negative mood among
investors.
New passenger car registrations in the European Union declined for a third straight month in November, the
European Automobile Manufacturers’ Association (ACEA) said Friday. Demand for new cars fell 8 percent on the
year following a 7.3 percent slump in October and a 23.5 percent plunge in September. Flash Composite PMIs,
which combines manufacturing and services, fell to a 49-month low of 51.3 from 52.7 in November. December
German composite PMI expanded at the slowest pace in four years during December amid slower growth in
manufacturing and services. The flash Composite Purchasing Managers' Index fell to a 48-month low of 52.2
from 52.3 in November. French composite PMI slid to 49.3 from 54.2.
Asia Pacific Markets
Asian markets ended lower Friday, hurt by the disappointing pace of November industrial output and retail sales growth in China. Worries about slowing global economic growth along with skepticism about the China and US trade deal weighed as well on Asian markets. The latest batch of economic data showed China's industrial output grew at its slowest pace in nearly three years, increasing by 5.4 percent in November. Retail sales grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was due to the impact of the ongoing trade disputes with the US. The Shanghai Composite was down 1.5 percent while Hang Seng tumbled 1.6 percent The Japanese market ended lower despite a fairly decent Tankan survey report. The Nikkei declined 2.0 percent while the Topix was 1.5 percent lower. Tokyo Dome along with Yahoo Japan, Tokyo Electron, Eisai and Trend Micro declined. Showa Denko KK, Mitsubishi Estate and Isetan Mitsukoshi Holdings moved up. The Bank of Japan said in its quarterly Tankan Survey that the index of business and manufacturing sentiment in Japan was steady in the fourth quarter of 2018. The large manufacturing index was unchanged with a score of +19, beating expectations for +18. The outlook came in at +15, shy of forecasts for +17 and down from +19 in the previous three months. The large non-manufacturing index came in at +24, topping forecasts for +21 and up from +22. The outlook was at +20, in line with forecasts and down from +22. All industry capex is seen higher by 14.3 percent, beating forecasts for 12.8 percent and up from 13.4 percent in the three months prior.
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After fluctuating early in the session, stocks moved sharply lower over the course of the trading day Friday. The
major averages climbed off their worst levels going into the close but remained firmly negative. The Dow
tumbled 2.2 percent, the Nasdaq plunged 3.0 percent and the S&P slumped 2.3 percent. For the week, the
Nasdaq nosedived 4.9 percent while the Dow and the S&P plummeted 4.5 percent and 4.6 percent,
respectively. Lingering skepticism regarding the US/China trade talks also weighed on sentiment.
The sell-off came after the release of the closely watched monthly employment report — employment increased
by much less than expected in the month of November. Non-farm payrolls rose 155,000 jobs in November after
surging by a downwardly revised 237,000 jobs in October. The report also said the unemployment rate in
November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since
hitting 3.5 percent in December of 1969. Average hourly employee earnings rose to $27.35 in November,
reflecting a 3.1 percent increase compared to the same month a year ago.
Oil prices jumped after OPEC broadly agreed to cut oil production by 1.2 million barrels per day. The agreement
had been reached between OPEC members with producers outside the cartel led by Russia. Iran has been
granted an exemption from the cuts as it is under sanctions from the U.S. Asian markets were already closed
when the agreement was reached. OPEC will cut supply by 800,000 barrels per day with the remaining 400,000
coming from non-OPEC allies.
European markets
The European markets staged a recovery Friday following three days of losses. However, the markets pared
gains in late trading after US markets turned definitively lower. Bargain hunting and the rebound in crude oil
prices fueled early gains in Europe. Traders continue to keep a close eye on the developments from the OPEC
meeting in Vienna. However, the weaker than expected US jobs report for November soured the mood among
traders in the afternoon.
The FTSE was up 1.1 percent, the CAC added 0.7 percent and the SMI was up 0.9 percent. However, the DAX
slid 0.2 percent. For the week, all indices retreated. The FTSE dropped 2.9 percent, the CAC tumbled 3.8
percent, the DAX plummeted 4.2 percent and the SMI slid 3.3 percent.
SAP rallied after it announced free access for SAP partners to SAP Cloud Platform. Fresenius plunged after
saying its ambitious Group targets for 2020 would not be met. Renault rose after the Nikkei business daily
reported that Tokyo prosecutors plan to indict former Nissan Motor Chairman Carlos Ghosn on December 10 for
financial misconduct. Land Securities Group jumped after the company expanded its presence in Southwark
with the acquisition of a 1.6 acre site. Berkeley Group Holdings rose after reporting its first-half earnings.
Asia Pacific Markets
Asian stocks ended a lackluster session mostly higher Friday after US stock markets recovered from an early plunge to end mixed overnight (Thursday), helped by hopes the Federal Reserve could pause its interest-rate increases. Investors looked ahead to the monthly US employment report which would be released after markets were closed in Asia. The Shanghai Composite added 0.71 point in thin trade after a sharp drop on Thursday. The arrest of Huawei CFO Meng Wanzhou dealt a blow to hopes of easing of US/China trade tensions. The Hang Seng index eased 0.4 percent. The former was up 0.7 percent while the latter was down 1.7 percent. The Nikkei added 0.8 percent while the broader Topix 0.6 percent higher. Tokyo Electric Power, Suzuki Motor, Fast Retailing, Fujitsu, Dentsu and Nippon Express rallied while Mitsui Mining & Smelting, Showa Shell Sekiyu KK and Takeda Pharma declined. Japan Petroleum and Inpex dropped as oil extended losses from the previous session after OPEC ended talks in Vienna without a deal on output cuts. Yamato Holdings jumped after issuing a positive trading update. Kurabo Industries advanced on a Nikkei report that ZOZO Inc will use threads made by Kurabo for their clothing brand. October household spending was down 0.3 percent.
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After recovering from an initial decline, stocks moved mostly higher Friday. The major averages more than
offset Thursday's modest losses, adding to the strong gains posted earlier in the week. The Dow Jones
industrials, S&P and Nasdaq were all up 0.8 percent. On the week, the Dow was up 5.2 percent, the S&P added
4.8 percent and the Nasdaq was 5.6 percent higher. The three indices were also up for the month of November.
The strength seen here seemed to reflect optimism ahead of a highly anticipated meeting between President
Donald Trump and Chinese President Xi Jinping.
The Chicago business barometer spiked to 66.4 in November after tumbling to 58.4 in October. The unexpected
jump reflected increases across all five of the barometer's subcomponents, with resurgent orders, solid output
and higher unfinished orders the month's key drivers.
Utilities and transportation stocks advanced. Semiconductor stocks also turned in a strong performance on the
day. Pharmaceutical, software and healthcare stocks also moved higher, while oil service stocks fell sharply
amid a pullback by the price of crude oil.
Leaders of all three North American nations on Friday signed the new U.S.-Mexico-Canada Agreement, meant to
replace the Nafta pact that has governed North American trade for more than 20 years. The agreement still
needs to be approved by the three countries legislatures before the deal can take effect.
European markets
Most European indices were down Friday but were mostly up for the week. Traders were reluctant to make any
major moves ahead of the weekend's G-20 summit. U.S. President Donald Trump and Chinese President Xi
Jinping will hold a highly anticipated meeting at the summit to discuss the trade dispute between the two
nations. Trump and Xi are due to hold a dinner meeting on Saturday on the sidelines of the G20 summit in
Buenos Aires, Argentina. On Friday, the FTSE lost 0.8 percent, the CAC was down 2.33 points, the DAX
stumbled 0.4 percent but the SMI added 0.2 percent. For the week, all indices advanced.
Rheinmetall Group declined after the defense contractor announced that it is on track for the best year in its
history, with a sales guidance of €6.2 billion euros, up 5 percent from prior year. Babcock International Group
declined after the company won a new 10-year contract for aerial firefighting from the Government of Manitoba,
Canada. Vodafone Group rose after collaborating with Sony Pictures for helping young adults make a connection
between their skills and future career opportunities. Altice Europe jumped in Amsterdam after it agreed to sell a
stake in its French fiber optic business.
Asia Pacific Markets
Asian stocks were mixed Friday as minutes from the most recent Fed meeting added weight to expectations for a rate increase in December. Investors were cautious prior to the highly-anticipated meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at the G-20 summit in Argentina this weekend. The Shanghai Composite advanced 0.8 percent despite some disappointing data that suggested China's manufacturing activity continued to worsen in November. The manufacturing PMI stood at 50.0 in November. The Hang Seng was up 0.2 percent. On the week, the former was up 0.3 percent and the latter added 2.2 percent. The Nikkei was up 0.4 percent and the Topix was 0.5 percent higher. Petroleum stocks led the surge after US crude oil prices rose more than 2 percent overnight. Inpex and Japan Petroleum advanced. Drug makers saw defensive buying, with Otsuka Holdings climbing as much as 4.5 percent. Murata Manufacturing gained 2.5 percent after announcing its mid-term business plan. October industrial output rose a seasonally adjusted 2.9 percent on the month in October. Overall consumer prices in the Tokyo region were up just 0.8 percent on the year in November. The unemployment rate came in at a seasonally adjusted 2.4 percent in October, exceeding expectations for 2.3 percent, which would have been unchanged from the September reading. The S&P/ASX and All Ordinaries tumbled 1.6 percent and 1.5 percent respectively. The big four banks fell as the banking royal commission reached its final round of hearings. Energy majors Santos and Origin Energy were lower even though Russia indicated a production cut. Coca-Cola Amatil slumped after the company said its SPC fruit and tomato business will likely record a loss in Fiscal year 2018.
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Stocks continued their daily gyrations Friday and dropped sharply. The Dow Jones industrials were down 1.2
percent Friday and lost US stocks meandered with a lack of direction Friday after Thursday’s rebound. The major averages spent much
of the day gyrated around the unchanged line before ending the session mixed. The Dow Jones industrials were
up 0.5 percent and the S&P added 0.2 percent. But the Nasdaq retreated 0.2 percent. For the week, the major
averages all posted steep losses. The Dow sank 2.2 percent, the Nasdaq tumbled 2.1 percent and the S&P
slumped 1.6 percent. Traders seemed reluctant to make more significant moves amid lingering uncertainty
about the global economic outlook and renewed anxiety about Brexit.
Regarding the China/US trade dispute, President Donald Trump told reporters China "wants to make a deal" on
trade. Trump said China has provided a "large list" of trade items the country is willing to compromise on but
argued any trade deal has to be "reciprocal." The comments generated optimism about a trade deal, although
White House officials subsequently told the media that they should not read too much into the president's
claims.
Markets were shaken by comments made by Fed vice chair Richard Clarida in an interview that US interest
rates were nearing Fed estimates of a neutral rate, and being at neutral “makes sense.” He also said there was
“some evidence of global slowing.” While the Fed is widely expected to raise rates in December, the number of
increases next year is a matter of debate. He also said there was “some evidence of global slowing.” While the
Fed is widely expected to raise rates in December, the number of hikes next year is a matter of debate.
PG&E posted a standout gain after California Public Utilities Commission President Michael Picker reportedly told
US analysts he could not imagine allowing the utility company to go bankrupt. Weighing on equity sentiment
and the Nasdaq was a disappointing forecast by chip company Nvidia. Nvidia's shares tumbled after the
chipmaker pointed to the decline in cryptocurrency mining as the cause of its declining sales. Facebook dropped
upon renewed concerns that the company could face regulatory scrutiny following a New York Times report on
Wednesday about the company's attempts to deflect criticism of its handling of Russian propaganda.
European markets
European markets were mostly lower on Friday. After a positive start the markets turned lower and entered
negative territory around midday. However, the markets staged a late recovery after US markets began to
recover from their weak start. Concerns over Brexit uncertainty and the Italian budget lingered along with
optimism over the trade talks between the US and China. The FTSE was down 0.3 percent, the CAC retreated
0.2 percent and the DAX slipped 0.1 percent. The SMI however was 0.4 percent higher. For the week, all
European indices were lower. The FTSE declined 1.3 percent, both the CAC and DAX lost 1.6 percent and the
SMI retreated 1.8 percent.
According to ECB President Mario Draghi, Eurozone's growth would continue at a gradual pace, but there was a
chance that core inflation may be slow if uncertainty regarding the economic situation persisted. "There is
certainly no reason why the expansion in the euro area should abruptly come to an end," Draghi said in a
speech at the Frankfurt European Banking Congress. "That said, if firms start to become more uncertain about
the growth and inflation outlook, the squeeze on margins could prove more persistent," he said. "This would
affect the speed with which underlying inflation picks up and therefore the inflation path that we expect to see
in the quarters ahead."
Asia Pacific Markets
Asian stocks ended mixed on Friday, with anxiety around Brexit and conflicting reports about progress in US/China trade talks keeping investors nervous. Investors remained focused on the political turmoil in the UK after four ministers, including Brexit Minister Dominic Raab resigned to protest Prime Minister Theresa May's draft Brexit agreement. The Shanghai Composite was up 0.4 percent to hit a fresh one-month high after Beijing reportedly delivered a written response to US trade demands, raising hopes of a thaw in trade relations. The Hang Seng was up 0.3 percent. On the week, the former was up 3.1 percent and the latter, 2.3 percent. Japanese shares fell as Nvidia's worse than expected earnings pulled down semiconductor-related stocks. Both the Nikkei and Topix closed 0.6 percent lower. On the week, they were both down 2.6 percent. Nintendo tumbled to post its biggest daily drop since July 2016 after Nvidia said that that demand for its Tegra chips from the game console market would be weak in the upcoming quarter. Advantest and Tokyo Electron also were lower. Fanuc and Jtekt declined. The Nikkei Asian Review reported that China's Ministry of Commerce has launched an investigation into alleged dumping of machine tools by them as well as two other Japanese companies.
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US stocks declined Friday. The Dow Jones industrials were down 0.8 percent but advanced 2.8 percent on the
week. The S&P declined 0.9 percent but added 2.1 percent and the Nasdaq dropped 1.6 percent and added 0.7
percent on the week. The weakness partly reflected renewed concerns about the outlook for interest rates
immediately after the Federal Reserve's monetary policy announcement Thursday. The Fed left interest rates
unchanged as widely expected but indicated it remains on track to gradually raise rates despite signs of a
slowdown in the pace of growth in business investment.
The Federal Reserve decision disappointed some investors who had hoped that the sharp share price decline
during what has been called “Red October” might have encouraged the US central bank to take a more dovish
approach toward monetary policy.
Adding to the concerns about interest rates, October producer prices increased a much greater than anticipated
0.6 percent. Excluding food and energy prices, the core PPI was 0.5 percent higher after edging up by 0.2
percent in September.
Oil prices fell nearly 1.0 percent on Friday, and have now seen the longest stretch of daily declines since 1984,
on rising global supply and evidence of a slowing world economy. The United States formally imposed punitive
sanctions on Iran this week, but granted eight countries temporary waivers allowing them to keep buying oil
from the Islamic Republic.
Apple declined and semiconductor stocks tumbled. Tobacco companies fell after an official said that the US Food
and Drug Administration would issue a ban on the sale of fruit and candy flavored electronic cigarettes in
convenience stores and gas stations. Both Altria Group and British American Tobacco's US retreated.
European markets
Most European share indices declined after investors had their first opportunity to react to Thursday’s Federal
Reserve statement. The Fed left interest rates unchanged as widely expected, but indicated it remains on track
to gradually raise rates despite signs of a slowdown in the pace of growth in business investment.
Only the DAX added 1.84 points while the FTSE and CAC were both down 0.5 percent and the SMI was 0.2
percent lower. On the week, the FTSE added 0.2 percent the CAC and DAX edged up 0.1 percent each and the
SMI was 0.9 percent higher.
ThyssenKrupp tumbled as the company lowered its profit outlook for the second time this year citing legal
provisions for a probe into steel-price fixing. Air France KLM rose after unveiling its October traffic figures.
Informa rallied — in a trading update for the 10-months ending 31 October 2018, the event manager and
publisher said that its performance is in line with expectations, leaving it on track to meet its ambition for
underlying revenue growth of 3.5 percent plus.
Asia Pacific Markets
Asian stocks were mostly lower Friday as disappointing third-quarter sales figures from Alphabet and Amazon released after the US market close on Thursday spurred fresh concerns about the outlook for US corporate earnings. A range of other factors such as trade tensions, concerns over Italian government finances and Brexit risks also dampened investor sentiment, heading into the weekend. The Shanghai Composite was down 0.2 percent but ended the week 1.9 percent higher on hopes for more government support to boost growth. The Hang Seng retreated 1.1 percent Friday and was 3.3 percent lower for the week. The Nikkei dropped 0.4 percent while the Topix index closed 0.3 percent lower. On the week, the former sank 6.0 percent and the latter was 5.7 percent lower. Canon tumbled after cutting its full-year outlook. Tech stocks ended mixed, with Advantest down while Tokyo Electron and Screen Holdings higher. Automakers Honda Motor, Toyota Motor and Suzuki Motor were higher even though the yen strengthened against the dollar. Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial also advanced. Australian shares ended little changed but ended the week in negative territory. The S&P/ASX and All Ordinaries finished marginally higher but ended the week down 4.7 percent. A recovery in copper prices helped lift miners including BHP Billiton and Rio Tinto higher. Fortescue Metals Group and New Century Resources jumped while gold miners Evolution and Newcrest retreated.
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US stocks retreated Friday. Apple dropped following a disappointing forecast and the White House dampened
optimism over US/China trade talks. The Dow Jones industrials were down 0.4 percent, the S&P declined 0.6
percent and the Nasdaq was 1.0 percent lower. For the week though, both the Dow and S&P were up 2.4
percent and Nasdaq added 2.6 percent.
Economic adviser Larry Kudlow’s comments on TV about the trade talks with China also dampened the mood.
While President Donald Trump will meet with Chinese President Xi Jinping this month, he has not asked US
officials to draw up a proposed trade plan, Kudlow said, contradicting a report earlier in the day that had
buoyed hopes of a trade dispute resolution. Analysts noted that tariffs are still a factor. October employment
growth rebounding sharply to 250,000 from 118,000 the month before and pointing to further labor market
tightening that could encourage the Federal Reserve to raise interest rates in December.
Apple tumbled a day after the company warned that sales for the holiday quarter may miss expectations. The
forecast dragged down shares of Apple's US suppliers, mostly chipmakers as well, and pushed the S&P
technology sector lower. Weak earnings from Kraft Heinz also had an effect on the broader market.
Kraft Heinz dropped after the company missed quarterly earnings estimates and cited steep commodity costs,
other expenses and pricing promotions that overshadowed higher-than-expected sales. Chevron gained after
reporting its quarterly profit doubled on record oil and gas production. Starbucks rallied a day after the coffee
chain reported strong sales in the United States and China. Netflix and Intel retreated along with Google parent
Alphabet and Facebook.
European markets
Most European shares advanced Friday. The exceptions were the FTSE and SMI. They lost 0.3 percent. The DAX
and CAC were up 0.4 percent and 0.3 percent respectively. For the week, the FTSE was up 2.2 percent, the CAC
advanced 2.7 percent, the DAX added 2.8 percent and the SMI was up 3.8 percent.
The European markets jumped at first on Friday as concerns over global trade relaxed. US President Donald
Trump and Chinese President Xi Jinping have expressed optimism about resolving their bitter trade disputes
ahead of a high-stakes meeting at the end of November in Argentina. However, the markets pared their gains
late in the afternoon, following early reversals in the US. Investors reacted positively to the better than
expected US jobs report for October, but weakness in shares of Apple pressured the US markets.
Sage Group jumped after the company's board appointed Steve Hare to the role of Chief Executive Officer with
immediate effect. Paddy Power Betfair advanced after its third quarter revenue rose 12 percent on a constant
currency basis. IAG was down. ArcelorMittal rose in Amsterdam after it agreed to the binding offer from Liberty
House Group for the acquisition of ArcelorMittal Dudelange (Luxembourg) and certain finishing lines at
ArcelorMittal Liège (Belgium).
Asia Pacific Markets
Asian stocks advanced Friday after reports that US President Donald Trump had asked officials in his administration to start drafting a potential trade deal with Beijing. Investors also looked ahead to the US employment report for October which would be released later in the global market day. The Shanghai Composite rallied 2.7 percent and the Hang Seng climbed 4.2 percent on easing trade tensions. For the week, the Shanghai Composite was up 3.0 percent and the Hang Seng soared 7.2 percent. The Nikkei climbed 2.6 percent — the highest closing level in nearly two weeks and marking the largest daily percentage gain since March. The index jumped 5 percent for the week, its best weekly gain since July 2016. The broader Topix closed 1.6 percent higher and advanced 3.9 percent on the week. Companies that benefit from China’s demand led the surge, with Fanuc, Komatsu and Yaskawa Electric rallying. Tech stocks such as Tokyo Electron and Advantest soared. Keyence gained after raising its annual dividend outlook. The S&P/ASX edged up 0.1 percent and the All Ordinaries added 0.2 percent. The former was up 3.2 percent on the week while the latter was up 3.0 percent. BHP Billiton and Rio Tinto gained as base metal prices rebounded. Gold miners Newcrest and Evolution Mining climbed after gold prices rose nearly 2 percent on Thursday. The big four banks declined while investment bank Macquarie Group jumped after posting strong half year results. A continued drop in oil prices caused energy stocks to suffer, with Santos, Woodside Petroleum, Oil Search and Origin Energy all retreating.
read moreUS Markets
Stocks continued their daily gyrations Friday and dropped sharply. The Dow Jones industrials were down 1.2
percent Friday and lost 3.0 percent on the week. The S&P retreated 1.7 percent and lost 3.9 percent while the
Nasdaq sank 2.1 percent and 3.8 percent from a week ago.
The retreat occurred when there was a negative reaction to corporate results from some major companies after
upbeat results from companies like Microsoft and Twitter. Amazon fell sharply after the company reported third
quarter earnings that beat estimates but revenues were weaker than expected and disappointing fourth quarter
guidance was provided.
Google parent Alphabet also closed lower after also reporting better than expected third earnings but revenues
were below expectations. Intel showed a strong move to the upside after the semiconductor giant reported third
quarter results that exceeded estimates and raised its full-year guidance. Western Digital declined after
reporting weaker than anticipated fiscal first quarter results.
Traders largely shrugged off the first estimate of third quarter gross domestic product even though it was
stronger than anticipated. GDP advanced an annualized 3.5 percent in the third quarter after increasing 4.2
percent in the second quarter. The slowdown in the pace of growth in the third quarter came after the jump in
the second quarter represented the fastest growth since a 4.9 percent spike in the third quarter of 2014. A
warning sign about the outlook emerged in the form of weak business investment. Tepid housing and auto sales
also continued to hang over the market ahead of Friday’s employment report. A separate report from the
University of Michigan showed October consumer sentiment deteriorated slightly more than initially estimated.
Sentiment was downwardly revised to 98.6 from the preliminary reading of 99.0.
These data reflect observations at 4:00 PM US ET. Gold was up US$3.40 to US$1,235.80.Copper futures were
down 0.49 percent to US$2.74. WTI spot crude was up 26 US cents to US$67.59. Dated Brent spot crude was
up 73 US cents to US$77.62. The US dollar was down against the yen, euro, pound, Swiss franc and the
Australian dollar. It was up against the Canadian dollar. The Dollar Index was down 0.20 percent. The yield on
the US Treasury 30 year bond was down 4 basis points to 3.31 percent while the 10 year note was down 5 basis
points to 3.08 percent.
European markets
European markets tumbled Friday and for the week — global markets were under pressure due to the continued
slide in US markets. The latest drop in the US came in reaction to disappointing earnings from companies like
Amazon.com and Google parent Alphabet. On Friday, the FTSE and DAX were down 0.9 percent, the CAC
retreated 1.3 percent and the SMI slid 0.5 percent. On the week, the FTSE tumbled 1.6 percent, the CAC and
SMI both retreated 2.3 percent and the DAX dropped 3.1 percent.
Volkswagen was unchanged after it struck a slew of deals to streamline its new Traton unit. BASF declined after
the chemicals company cut its fiscal year 2018 earnings view after reporting a 10 percent fall in third-quarter
net income. Valeo plunged after issuing its second profit waning in three months. Peer Faurecia sank after it
agreed to buy Japan's Clarion.
Altran Technologies soared after delivering a solid performance in the third quarter, with 10.4 percent organic
growth in revenue. Swatch Group and Richemont climbed but Novartis, Nestlé and Roche retreated. Royal Bank
of Scotland tumbled after it warned of an uncertain economic outlook after reporting lower-than-expected profit
for the third quarter. Glencore slipped after lowering its oil production guidance.
Asia Pacific Markets
Asian stocks tumbled across the board after the Federal Reserve reiterated its hawkish stance and the populist government in Rome flatly dismissed the EU's more pessimistic outlook for the Italian economy, deepening a rift with the European Union. The Shanghai Composite index fell 1.4 percent as policymakers struggled to dispel stock market gloom with promises of tax cuts and more bank lending. The Hang Seng slumped 2.4 percent. On the week, the Shanghai Composite was down 2.9 percent and the Hang Seng dropped 3.3 percent. Consumer prices in China rose 2.5 percent year-on-year in October and the producer price index climbed 3.3 percent after jumping 3.6 percent in September. The Nikkei and Topix were down 1.1 percent and 0.5 percent Friday. For the week, the former was up 6.59 points and the latter, 0.9 percent. Industrial robotics company Fanuc, cosmetics maker Shiseido and giant Nintendo shed retreated. Australian markets edged lower but scored their second week of gains. The All Ordinaries slipped 0.1 percent Friday but ended the week up 1.3 percent. BHP Billiton and Rio Tinto ended narrowly mixed on concerns that they might be hit by the new resource regulations to be unveiled by Australia's Queensland state next week. South32 and Bluescope Steel retreated. Energy stocks such as Woodside Petroleum, Santos, Origin Energy and Oil Search dropped after oil prices fell Thursday to extend losses to a ninth straight session on concerns over rising inventories and economic uncertainty.
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Global stocks were widely mixed to end the week; Traders remained cautious given the several
geopolitical concerns.
European markets
European shares fluctuated between small gains and losses Friday ending the session with mixed results.
Concerns over Italy's controversial budget plans weighed on investor sentiment and drove Italian government
bond yields to four-year highs. The Italian government has until Monday to respond to the European
Commission's letter that the nation's significantly higher deficit targets represented a deviation "unprecedented
in the history" of EU budget rules.
The FTSE was up 0.3 percent and the SMI rallied 1.2 percent. But the CAC and DAX were down 0.6 percent and
3 percent respectively. For the week, the FTSE was up 0.8 percent, the DAX added 0.3 percent and the SMI was
up 2.4 percent. The CAC slid 0.2 percent.
Software advanced after the business software firm confirmed its FY18 outlook after reporting a 13 percent
increase in third-quarter net income. Michelin sank after it cut full-year market forecasts, citing slowing Chinese
car demand and new emission standards. Bouygues tumbled after a profit warning over ongoing problems with
two biomass power plants in the UK and a data centre in Ireland. Nestle and Roche climbed along with Novartis.
Swiss Zurich Insurance and Swiss Life advanced. However, Julius Baer, Crédit Suisse and UBS retreated.
Asia Pacific Markets
Asian stocks were mixed Friday thanks to weak Chinese data that added to investor concerns over Italy's controversial budget, rising US interest rates and US/Saudi tensions. The euro hovered near a one-week low against the US dollar after the European Commission said Italy's 2019 budget draft is in serious breach of EU budget rules. Regional markets recovered from a weak start to close mixed after Chinese regulators stepped in to bolster investor confidence. The Shanghai Composite rebounded from early weakness to close 2.6 percent higher after the People’s Bank of China’s chief downplayed market fluctuations and the securities regulator said it would encourage funds to help resolve liquidity difficulties at listed companies. The Hang Seng was up 0.4 percent. On the week however, the Shanghai Composite tumbled 2.2 percent and the Hang Seng lost 0.9 percent. China’s third quarter gross domestic product was up 6.5 percent from a year ago — less than expected 6.6 percent and down from the second quarter of 6.7 percent. Industrial production climbed 5.8 percent on the year in September, less than forecast 6.0 percent and down from 6.1 percent in August. However, retail sales climbed an annual 9.2 percent and fixed asset investment gained 5.4 percent to beat forecasts. The Nikkei briefly fell more than 400 points before recovering some lost ground but still ended down 0.6 percent for the day. The Topix index ended 0.7 percent lower. For the week the Nikkei and Topix were down 0.7 percent and 0.6 percent respectively. Komatsu and Kubota declined. SoftBank dropped and Nintendo both were lower. Exporters, Honda Motor, Toyota, Sony and Panasonic declined after the yen strengthened overnight towards a one-month peak against the dollar reached on Monday.
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Stocks gyrated Friday but managed to end the day higher after a two day selloff. The Dow Jones industrials
were up 1.1 percent, the S&P added 1.4 percent and the Nasdaq rallied 2.3 percent. Bargain hunting
contributed to the higher close on Wall Street, with the major averages bouncing off the multi-month closing
lows set on Thursday. The rebound by stocks also came as strong Chinese merchandise trade data helped ease
concerns over slowing global growth. However, for the week, the Dow, S&P and Nasdaq lost 4.2 percent, 4.1
percent and 3.7 percent respectively.
The September import/export price report showed a much bigger than expected increase in US import prices.
Import prices climbed 0.5 percent on the month after retreating 0.4 percent in August. Export prices were
unchanged on the month after slipping a revised 0.2 percent in August. Export prices had also been expected to
increase by 0.2 percent. The University of Michigan report unexpectedly showed a modest decrease in
consumer sentiment in October. The preliminary report showed the consumer sentiment index dipped to 99.0 in
October from the final September reading of 100.1.
Amazon surged from the three-month closing low set in the previous session. Computer hardware,
biotechnology and semiconductor stocks also saw considerable strength, contributing to the jump in the
Nasdaq. JPMorgan Chase and Citigroup — the country’s largest and third-largest banks by assets — reported
better-than-expected third-quarter profits.
The week’s rout left the Dow, S&P and Nasdaq on course for their worst start to the quarter since early 2016.
With earnings season under way, a renewed focus on corporate results should help support stock prices in the
near term.
These data reflect observations at.
European markets
European stock indices tumbled Friday even though both Asian and US stocks rebounded from Thursday’s
heavy losses. The SMI however, managed to add 0.2 percent on the day. Europe’s heavily weighted banking
sector erased earlier gains to fall as their American peers showed a mixed reaction to earnings from JPMorgan
Chase and Wells Fargo. Oil stocks also pared gains following crude prices. Defensive industries from telecoms to
utilities -- which staged a relative comeback during this week’s selloff -- saw their losses deepen in the
afternoon. On the week, the FTSE was down 4.4 percent while the CAC and DAX lost 4.9 percent and the SMI
was 4.2 percent lower. On Thursday, stocks slumped to the lowest level since December 2016 as rising interest
rates led investors to sell equities while trade differences continued.
European stocks slumped to the lowest level since December 2016 on Thursday as rising interest rates led
investors to rotate out of their equity holdings and as concerns about the US/China trade spat remained in
focus. Although US economic growth remains robust, traders are wondering when the impact from the tax
reform will start dissipating, which would weigh on corporate earnings and stocks.
Asia Pacific Markets
Asian stocks rebounded Friday after recent heavy losses as investors cheered media reports suggesting that the US Treasury Department had not labeled China as a currency manipulator in an internal report. Sentiment was also bolstered after data showed China's exports have so far held up well despite escalating trade tensions with the US. China’s September merchandise trade exports were up 14.5 percent on the year after increasing 9.8 percent in August. Imports advanced an annual 14.3 percent. The trade surplus in U.S. dollar terms widened from $27.91 billion in August to $31.69 billion in September. The Shanghai Composite was up 0.9 percent Friday while the Hang Seng ended up by 2.1 percent. From a week ago, the Shanghai Composite tumbled 7.6 percent and the Hang Seng was down 2.9 percent. Japanese shares finished modestly higher as the yen held broadly lower and data showed Chinese exports strengthened unexpectedly in September. The Nikkei was up 0.5 percent while the Topix was up 0.59 point. On the week, the Nikkei dropped 4.6 percent and the Topix was down 5.0 percent. Both the S&P and All Ordinaries added 0.2 percent. However, on the week, both indices lost 4.7 percent. Miners BHP Billiton and Rio Tinto advanced after iron ore and copper prices edged up overnight. Fortescue Metals jumped after launching a share buyback program of up to A$500 million. Evolution Mining, Newcrest and Northern Star climbed after gold prices settled at a ten-week high overnight on safe-haven demand. Woodside Petroleum, Santos, Oil Search, Origin Energy and Beach Energy dropped after crude oil prices tumbled overnight, adding to big losses in the previous session.
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US stock and bond prices fell again Friday after the economy continued to add jobs at a strong pace and
investors worried about a three-day surge in yields. The Dow Jones industrials were down 0.7 percent, the S&P
retreated 0.6 percent and the Nasdaq declined 1.2 percent. For the week, the Dow slipped 11.26 points, the
S&P was down 1.0 percent and the Nasdaq was 3.2 percent lower.
According to the employment situation report, employers added significantly more jobs in July and August than
it previously thought, which made up for a slightly disappointing gain in September. That was another sign
economic growth is likely to continue. Although this is usually good news for shares, the market stumbled as
investors sold government bonds pushing yields to their highest level in more than seven years. The yield on
the 10-year Treasury note jumped to 3.23 percent, its highest since May 2011, from 3.19 percent.
While technology companies and retailers have been the biggest gainers on the S&P this year, they took steep
losses this week. Banks and industrial and energy companies, which have struggled for most of 2018, finished
with strong gains. Among technology companies, chipmaker Nvidia declined along with Apple. Netflix slumped.
Retailers declined and Amazon retreated. Costco declined after it said it discovered technology problems related
to its financial reporting processes. Costco said it hasn't found any mistakes in its earnings reports so far.
Tesla stock declined to end a particularly wild week for the electric car maker. Thursday evening, CEO Elon
Musk taunted the Securities and Exchange Commission on Twitter just days after he agreed to settle an SEC
lawsuit triggered by a tweet he sent in August. As part of that settlement, Musk agreed to step down as
chairman and submit to oversight when he is communicating company news. His criticisms of the SEC don't
appear to be company news, but they may have worried investors who hoped his feed would be a little more
boring from now on. Several major banks will report their third-quarter results late next week as the next round
of company earnings begins.
European markets
European stocks retreated Friday as upbeat US data and hawkish comments from Federal Reserve officials
boosted expectations for inflation and continued Federal Reserve rate increases in the coming months. Concerns
surrounding Italy and Brexit uncertainty also kept investors nervous. The FTSE was down 1.3 percent, the DAX
retreated 1.1 percent, the CAC declined 1.0 percent and the SMI was 0.6 percent lower. For the week, the FTSE
lost 2.6 percent, the CAC declined 2.4 percent, the DAX was down 1.1 percent and the SMI was 0.5 percent
lower.
Unilever was marginally higher. The company's board has decided to withdraw its proposal to simplify Unilever's
dual-headed legal structure. Danske Bank, which is facing a criminal investigation by US authorities over a
money laundering scandal, slumped. Centamin tumbled after reporting a 25 percent fall in quarterly output and
cutting its annual output target. Royal Mail was down on a broker downgrade. Kering declined on concerns
about the Chinese market.
Asia Pacific Markets
Asian stocks ended mostly lower Friday as a surge in US Treasury yields raised concerns about the outlook for interest rates. Only the All Ordinaries edged up 0.1 percent. The Shanghai Composite remained closed for a holiday on Friday. The Hang Seng declined 0.2 percent on the day and 4.4 percent on the week. Investors looked ahead to the US jobs report for September due after markets closed in Asia for the week. The Nikkei declined 0.8 percent and the Topix was down 0.5 percent. On the week, both indexes lost 1.4 percent. Tokyo Electron, Murata Manufacturing and Advantest were lower in the technology sector. Banks gained ground, tracking an uptick in global bond yields and amid news that Japan is considering consolidation of regional banks. Mitsubishi UFJ Financial Group advanced while Chiba Bank and Shizuoka Bank jumped. August household spending in Japan grew 2.8 percent on the year. Australian shares closed slightly higher as investors lapped up beaten-down financials for their high dividend yields. Both the S&P/ASX and All Ordinaries were up 0.1 percent Friday. For the week, the S&P/ASX was down 0.3 percent and the All Ordinaries was 0.4 percent lower. Banks ANZ, Commonwealth and Westpac were higher. Macquarie Group advanced, wealth manager AMP and insurer Suncorp advanced. Beach Energy tumbled after cutting its fiscal year 2019 production and core earnings guidance and announcing an asset sale. BHP Billiton and Rio Tinto rose but Alumina dropped after soaring the previous day. The Kospi slid 0.2 percent — a further spike in US Treasury yields fanned inflation concerns. Foreign investors extended their selling streak for the fifth consecutive session. For the week, the Kospi was 3.2 percent lower. The Sensex tumbled 2.3 percent on the day an 5.1 percent for the week.
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Stocks wavered between small gains and losses Friday and in the process erased some of the advances from
earlier in the day. Gains in health care and industrial companies outweighed losses in technology stocks and
banks. Energy companies were higher along with the price of US crude oil. The Dow Jones industrials added 0.3
percent while the S&P was down 1.08 points and the Nasdaq retreated 0.5 percent. For the week, the Dow
gained 2.3 percent, the S&P was up 0.8 percent but the Nasdaq was 0.3 percent lower.
The trade dispute between the US and China will escalate Monday when an additional 10 percent tax on $200
billion of Chinese imports begins to be levied. The tariffs will rise to 25 percent on January 1. Beijing has said it
would retaliate by imposing tariffs of 5 or 10 percent on $60 billion of US goods including coffee, honey and
industrial chemicals. Chipmaker Micron Technology said Friday its profits would be hurt by the tariffs on Chinese
imports.
Several airlines advanced including American Airlines Group after the company said it will raise fees for checked
bags. The move came a day after Delta Air Lines announced its own plans to raise baggage fees. Delta and
Southwest Airlines also were higher. Edwards Lifesciences led a rally in health care sector stocks. Texas
Instruments climbed after the chipmaker raised its quarterly dividend and said it will buy back $12 billion in
stock. Mazor Robotics surged after the surgical guidance system maker agreed to be bought by Medtronic for
$1.54 billion. Duke Energy slid after floodwaters inundated a large lake near a retired coal-fired power plant,
raising concerns of a potential breach. Boeing and 3M were higher along with Caterpillar and McDonald’s.
The diverging performance of the telcos and tech sectors reflected the anticipated changes to the Global
Industry Classification Standard (GICS) classification system, the biggest such overhaul since its inception in
1999. Index provider S&P Dow Jones Indices is moving 16 stocks including Facebook, Alphabet and Netflix from
the information technology into a relabeled communication services sector.
European markets
The European markets were mostly positive to end the week. Investors continued to shrug off concerns over
global trade even though new tariffs will go into effect between the US and China Monday. The FTSE jumped
1.7 percent and the CAC and DAX added 0.8 percent each. The SMI slipped 0.1 percent. All European indices
advanced for the week with the FTSE and DAX climbing 2.5 percent, the CAC 2.6 percent and the SMI inching
up 0.3 percent.
Energy stocks benefited from the rise in crude oil prices at the end of the week and bank stocks added to their
recent strength. Alstom slipped after launching an online market place for the railway sector. Smiths Group
tumbled after disruptions at its medical unit hit its annual profit. Just Eat sank on a Bloomberg report that Uber
is in early discussions to buy food delivery upstart Deliveroo for several billion dollars. Nestle and Novartis
declined but Roche gained. Swiss Life, Swiss Re and Zurich Insurance all advanced.
Asia Pacific Markets
Stocks were mostly higher Friday as trade fears calmed. Chinese stocks had its best day in more than two years Friday with sentiment buoyed by a record close in New York and following reports of sweeteners pledged by Beijing to soften the hit from the US/China trade dispute. The Shanghai Composite was up 2.5 percent and 4.3 percent on the week. The Hang Seng jumped 1.7 percent Friday and 2.4 percent on the week. The Nikkei was up 0.8 percent and the Topix was 0.9 percent higher on the day. For the week, the indices were up 3.4 percent and 4.4 percent respectively. The Sensex was down 0.8 percent, weighed down by the financial sector as shares in Yes Bank and mortgage lender Dewan Housing Finance Corporation slumped. Yes Bank led the decline in the financial sector, plunging as much as 34 percent before trimming some of those losses, after the Reserve Bank of India ordered its chief executive to step down by the end of January. The Reserve Bank of India, which is seeking to clean up the financial sector’s bad loan problem, found that Yes Bank had underreported its bad loans. Analysts said the sharp drop in financial stocks also reflected investors’ growing concerns that the RBI may get tough with other institutions following its refusal to extend the tenure of Yes bank chief executive and billionaire founder Rana Kapoor. The Sensex was down 3.3 percent on the week. The S&P/ASX and All Ordinaries were both up 0.3 percent and up 0.5 percent for the week. Miners BHP Billion, Fortescue Metals Group and Rio Tinto climbed after copper prices jumped more than 1 percent on the London Metal Exchange. Banks ANZ, Commonwealth and Westpac eked out marginal gains, mirroring gains among their US peers overnight. Retailer Woolworths Group and energy major Woodside Petroleum also advanced. S&P Global Ratings raised Australia's sovereign rating outlook and said it expects the federal budget balance will return to surplus by early 2020s. The credit rating was affirmed at 'AAA' and the outlook was revised up to 'stable' from 'negative'.
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Stocks were barely changed Friday even though they fluctuated during the trading day. The Dow Jones
industrials edged up 8.68 points, the S&P crept up 0.80 points while the Nasdaq was 3.67 points lower. Despite
the lackluster end of the week, the three indices moved higher for the week. The Dow added 0.9 percent, the
S&P gained 1.2 percent and the Nasdaq was 1.4 percent higher. Financials rose with bond yields, while news
that President Donald Trump instructed aides to proceed with tariffs on about $200 billion of Chinese products
limited gains.
Traders digested a slew of US economic data, including a report showing retail sales increased by much less
than expected in August. Retail sales inched up a monthly 0.1 percent after climbing by an upwardly revised 0.7
percent in July. Excluding the decrease in auto sales, retail sales rose by 0.3 percent in August after jumping by
an upwardly revised 0.9 percent in July. A separate report from the University of Michigan showed a much
bigger than expected improvement in the preliminary reading of consumer sentiment in September. The report
said the consumer sentiment index jumped to 100.8 in September from 96.2 in August. The Fed said August
industrial production climbed a monthly 0.4 percent for a second month.
NiSource tumbled after fire investigators said they suspected a unit of the company, Columbia Gas, was linked
to a series of gas explosions in Boston suburbs on Thursday. Travelers was up as analysts cut loss estimates
from Hurricane Florence as the storm weakened. Walmart was down after a broker raised questions around the
purchase of a majority stake in India’s Flipkart. Adobe Systems rose a day after the company topped quarterly
revenue and profit expectations. Consumer companies declined after US retail-sales data showed American
consumers reined in their spending in August, taking a breather after very strong sales growth in July. Danske
Bank fell after a media report that US law enforcement agencies are probing Denmark’s largest bank over
allegations of massive money-laundering flows from Russia and former Soviet states.
European markets
European indices advanced in lackluster trading. Traders were encouraged by reports that another round of
talks between the United States and China could take place in the near future. Concerns about emerging
markets also eased somewhat after Turkey's central bank raised its key interest rate sharply in a dramatic bid
to control soaring inflation and prevent a currency crisis. The FTSE was up 0.3 percent, the CAC gained 0.5
percent, the DAX advanced 0.6 percent and the SMI edged up 0.1 percent. For the week, The FTSE was up 0.4
percent, the CAC jumped 1.9 percent and the DAX an SMI both gained 1.4 percent.
Investec jumped after announcing that it will spin off its asset management business. Close Brothers Group
rallied after the merchant banking group unveiled plans to sell Close Brothers Retail Finance to Swedish
payment solutions group Klarna Bank for an undisclosed amount. SThree, a specialist STEM staffing business,
jumped after its third-quarter group gross profit increased 13 percent from last year.
Ryanair advanced after it reached agreement with Italian unions on outline terms of a Collective Labour
Agreement. Taylor Wimpey rose but rival Barratt Developments declined after Bank of England Governor Mark
Carney warned of sharp house price declines in the event of a chaotic no-deal Brexit. Novartis and Nestlé
advanced but Roche declined in Zurich. Swatch and Richemont finished higher along with Crédit Suisse and
UBS.
Asia Pacific Markets
Asian stocks were mostly higher Friday after reports that the US and China might hold a fresh round of trade talks, a development that could help resolve the trade dispute between the two countries. Concerns around emerging market risks also eased somewhat after Turkey's central bank raised its key interest rate sharply in a dramatic bid to control rocketing inflation and prevent a currency crisis. Chinese stocks fluctuated before closing lower after the release of mixed economic data. The Shanghai Composite was down 0.2 percent while the Hang Seng was up 1 percent. August Chinese industrial output and retail sales figures topped forecasts, but real estate investment cooled and growth in fixed asset investment dipped to a historic low, raising risks to China's economic outlook as the trade conflict with the US escalates. On the week, the Shanghai Composite lost 0.8 percent while the Hang Seng added 1.2 percent. The Nikkei and Topix were up 1.2 percent and 1.1 percent respectively. Stocks rallied to hit their highest level in more than seven months as the yen dipped on expectations of a new round of US/China trade talks in coming days and easing concerns about the state of emerging markets. Fuji Electric, Mitsui OSK Lines, Showa Denko KK, Alps Electric, Fuji Film and Yaskawa Electric jumped. Chip-related stocks including Advantest, Tokyo Electron and Sumco surged. On the week, the Nikkei jumped 3.5 percent and the Topix gained 2.6 percent. Both the S&P/ASX and All Ordinaries added 0.6 percent Friday. Higher iron ore prices helped lift miners, with BHP Billiton and Rio Tinto rallying. The four big banks also gained. On the week, the S&P/ASX and All Ordinaries added 0.6 percent. The Kospi was up 1.4 percent Friday and 1.6 percent on the week. The Sensex was up 1.0 percent for the holiday shortened week but swooned 0.8 percent on the week.
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Speculation about a fresh round of tariffs on Chinese imports from the Trump administration weighed on US
stocks sending them lower on Friday. The Dow Jones industrials and Nasdaq both lost 0.3 percent while the S&P
was 0.2 percent lower. For the holiday shortened week, the Dow declined 0.2 percent, the S&P retreated 1.0
percent and the Nasdaq dropped 2.6 percent.
Shortly after noon US ET Friday, President Donald Trump signalled he was ready to impose new tariffs on a
further $267 billion of Chinese imports, sending the markets south. In the final hour of trading, Apple said in a
letter that planned US tariffs on China covered a wide range of its products, prompting shares to sink.
Canadian and US foreign affairs ministers will resume their talks on updating the North American Free Trade
Agreement next week. Canadian minister Chrystia Freeland has reportedly called the brief meeting she had with
the US minister on Thursday as constructive.
The positive August employment report left investors with hardened expectations of a Federal Reserve interest
rate rise later this month when the FOMC meets. August non-farm payroll employment advanced 201,000 jobs
after climbing by a downwardly revised 147,000 jobs in July. The report also said average hourly employee
earnings growth accelerated to 2.9 percent from a year ago, up from 2.7 percent in July.
European markets
European markets were mixed Friday. The FTSE was down 0.6 percent while the CAC added 0.2 percent and the
SMI was up 0.3 percent. The DAX edged up 4.38 points. On the week, the indices all retreated due to the
persistent worries about global trade. Traders are keeping a close eye on the Trump administration following
the expiration of a public comment period on new US tariffs on $200 billion worth of Chinese goods. For the
week, the FTSE declined 2.1 percent, the CAC retreated 2.9 percent, the DAX tumbled 3.3 percent and the SMI
lost 1.5 percent.
Asia Pacific Markets
Most Asian stocks fell further Friday extending recent losses as another round of US tariffs on China loomed and investors looked ahead to August jobs report which would be released after markets here closed for the week. The Shanghai Composite closed 0.4 percent higher in cautious trading, as a deadline for public comments on fresh US tariffs expired. The Hang Seng was down 1.35 points on the day. For the week, the former declined 0.8 percent and the latter tumbled 3.3 percent. The Nikkei was down 0.8 percent Friday as the yen strengthened against the US dollar — investors waited for the US tariff decision and the outcome of US/Canadian talks. Sentiment was also dented after US President Trump reportedly told a columnist that he was "still bothered by the terms of US trade with Japan.” For the week, the Nikkei was down 2.4 percent. Exporters saw widespread declines, with Toyota Motor, Panasonic, Canon and Kyocera closing lower. Tech stocks including Sumco, Tokyo Electron and Advantest tumbled. July household spending rose 0.1 percent on the year. The Topix was down 0.5 percent on the day and 2.9 percent on the week.
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US stocks advanced Friday and for the week. The Dow Jones industrials were up 0.5 percent Friday and 0.5 percent on the week. The S&P added 0.6 percent and 0.9 percent on the day and week respectively. The Nasdaq climbed 0.9 percent on the day and 1.7 percent on the week. The strength followed remarks by Federal Reserve Chairman Jerome Powell at the Kansas City Fed's economic policy symposium in Jackson Hole, Wyoming. Powell reiterated the Fed's stance that further gradual increases in interest rates will likely be appropriate if the strong growth in income and jobs continues.
Fed chair Powell told the annual Jackson Hole symposium that the Fed is attempting to navigate between twin risks — moving too quickly and needlessly shortening the economic expansion, and conversely lifting rates too slowly and risking a “destabilizing overheating”. But the Federal Reserve is not seeing risks of the US economy overheating or of signs inflation accelerating above its target as he defended the central bank’s gradual approach to lifting interest rates. While inflation has recently moved up near 2 percent, the Fed has seen no clear sign of acceleration above 2 percent, and there does not seem to be an elevated risk of overheating.
European markets
European stock markets advanced but traders were reluctant to make any major moves ahead of Friday’s speech by Federal Reserve Chairman Jerome Powell’s remarks at Jackson Hole. Traders also continued to keep a close eye on the trade dispute between the U.S. and China. The two-day trade talks between the Chinese delegation led by the country's Commerce Vice Minister Wang Shouwen and David Malpass, the US Treasury undersecretary for international affairs ended without any progress.
The FTSE, CAC and DAX advanced 0.2 percent each on Friday while the SMI added 3.18 points. For the week, the FTSE was up 0.3 percent, the CAC gained 1.6 percent, the DAX advanced 1.5 percent and the SMI 0.5 percent higher.
Asia Pacific Markets
Stocks were mixed Friday as trade war tensions and the prospects of a no-deal Brexit threatened to deepen the risks to global growth. The oil markets held steady while the US dollar remained buoyant after US/China trade talks ended without any tangible results. Investors looked ahead to US Federal Reserve Chairman Jerome Powell's Jackson Hole speech later in the global market day. The Shanghai Composite was up 0.2 percent while the Hang Seng was down 0.4 percent. On the week, the former was up 2.3 percent while the latter added 1.7 percent. The Nikkei and Topix were up 0.9 percent and 0.6 percent respectively Friday as the yen remained weak and a government report showed the country's annual inflation stalled in July, raising speculation the Bank of Japan may delay its exit from ultra-loose policy. On the week, the Nikkei was up 1.5 percent and the Topix added 0.7 percent. Australian shares reversed earlier losses to finish little changed after government lawmakers elected Treasurer Scott Morrison as the next prime minister, ending a week of political uncertainty. S&P/ASX ended up by 2.96 points after declining for three straight sessions. The All Ordinaries index slid 2.44 points. On the week, the S&P/ASX was down 1.4 percent and the All Ordinaries was 1.1 percent lower.
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US stocks advanced Friday. The Nasdaq turned positive on reports of progress in tariff disputes between the United States and its trading partners China and Mexico. Chinese and US negotiators are planning talks to resolve their trade disagreements ahead of meetings in November. Mexico's economy minister, Ildefonso Guajardo, said he hopes to wrap up outstanding bilateral issues on the North American Free Trade Agreement (NAFTA) by the middle of next week. The Dow Jones industrials were up 0.4 percent, the S&P added 0.3 percent and the Nasdaq edged 0.1 percent higher. For the week, the Dow was up 1.4 percent and the S&P added 0.6 percent. However, the Nasdaq retreated 0.3 percent.
Trade vulnerable industrial stocks led the S&P and the Dow advances. Caterpillar rallied but Nvidia and Applied Materials tumbled. Apple advanced but Netflix posted its sixth consecutive loss. In addition to Apple and Netflix, the FAANG group includes Facebook, Amazon.com and Google parent Alphabet. Tesla dropped for their worst day in over two years after Chief Executive Elon Musk's interview with the New York Times and a broker note estimating that the company could lose $6,000 on every base Model 3 sedan due to powertrain costs. Deere was higher after quarterly results missed estimates due to higher raw materials and freight costs.
European markets
European stock indices ended Friday with modest losses as investors were cautious heading into the weekend. Investors continued to monitor the situation in Turkey. The Turkish lira continued to recover from the sharp drop at the start of the week, despite an apparent threat of possible new sanctions by US President Donald Trump. While traders were relieved to hear that the US and China are set to resume trade negotiations, the uncertain outcome of those upcoming talks has put some investors on edge.
Asia Pacific Markets
Most Asian stock indices advanced Friday after a fresh round of Chinese- U.S. trade talks were announced. A Friday speech by Fed chair Jerome Powell was also anticipated. Asia-Pacific markets had been battered earlier in the week by a selloff in technology shares, a strong dollar and trade tensions. According to reports, the trade talks in Washington would take place on August 21 and 22 — just before the next round of levies targeting $16 billion worth of goods on both sides kick in on August 23. The Shanghai Composite was down 1.3 percent however while the Hang Seng rebounded 0.4 percent. But the two indices tumbled 4.5 percent and 4.1 percent respectively for the week. The Chinese yuan was buoyed by the resumption in trade negotiations. Turbulence in Turkey has crimped investor appetite for emerging-market assets, particularly in China and South Africa. Tencent Holdings trimmed losses this year to 17.4 percent. Handset maker Xiaomi and online insurer ZhongAn Online P&C Insurance advanced. The Nikkei added 0.4 percent while the Topix was 0.6 percent higher. For the week the Nikkei slipped 0.1 percent while the Topix lost 1.3 percent. Applied Materials issued weaker than expected guidance for the fiscal fourth quarter. Kawasaki Kisen Kaisha, Pacific Metals, Credit Saison, Kobe Steel, Mitsui OSK Lines and Nikon climbed but Tokyo Electron and Screen Holdings dropped.
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After a lackluster performance on Wednesday and Thursday, stocks retreated Friday. The Dow, S&P and Nasdaq were lower after closing mixed for two preceding days. The Dow lost 0.8 percent and 0.6 percent on the week. The S&P retreated 0.7 percent and slipped 0.2 percent for the week. The Nasdaq also declined 0.7 percent Friday but added 0.3 percent on the week.
The deepening turmoil in Turkey’s financial markets fuelled a wave of global risk aversion on Friday. The Turkish lira has declined sharply to a record low, contributing to considerable weakness in the overseas markets. In response, Turkish President Erdogan urged Turks to sell dollars and gold and buy the lira. President Donald Trump subsequently announced that he has authorized the doubling on steel and aluminium tariffs on Turkey. The president added that aluminium will now be 20 percent and steel, 50 percent.
July consumer price index was up 0.2 percent after inching up 0.1 percent in June. Excluding food and energy, the core CPI also edged up by 0.2 percent on the month.
News Corp’s stock plunged for its biggest intraday loss in five years. The company revealed on Thursday that it had booked a $1.4 billion loss for its fiscal year ending in June, more than double the $643 from a year earlier. The loss was mostly due to writedowns of News Corp’s investment in Australian pay TV operator Foxtel.
European markets
The European markets declined Friday — global trade worries and the banking crisis in Turkey weighed on sentiment. The Turkish lira plunged against the US dollar to an all-time low, following a news report that the European Central Bank has raised concerns over the impact of a weak lira on European banks. The ECB is more concerned about the exposure of some banks in France, Italy and Spain to Turkey's problems, according to news reports. The Turkish currency has been falling amid widening rift between the US and Turkey and intensifying worries about the state of the economy.
Asia Pacific Markets
Asian stocks ended lower Friday as investors fretted about rising trade tensions between the US and China as well as the new set of US sanctions on Russia. A diplomatic rift between the US and Turkey also kept underlying sentiment cautious. The Chinese Composite edged up 0.93 point Friday and gained 2.0 percent on the week with technology companies leading the surge after China revamped a national leadership group charged with planning and studying its key technological development strategies. The Hang Seng dropped 0.8 percent on the day but gained 2.5 percent on the week. The Nikkei and Topix tumbled 1.3 percent and 1.1 percent respectively thanks to a firmer yen and heavy selling in the technology sector weighing on markets. The yen rose against the US dollar as trade worries persisted and data showed the country's economy grew more than expected in the second quarter, driven by higher consumer spending and business investment. First estimate of second quarter gross domestic product expanded a quarterly 0.5 percent after retreating 0.2 percent in the first quarter. Tokyo Electron, Advantest and Sumco declined after a broker downgrade on the US chip sector. Fujifilm Holdings rallied after announcing a share buyback. On the week, the Nikkei declined 1.0 percent and the Topix was 1.3 percent lower.
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The three major US stock indices managed to close higher Friday — investors seemed to shrug off a further escalation in the trade war between the US and China and some initial disappointment with the July employment data. China threatened to impose new tariffs on $60 billion of US goods ranging from small and medium-sized aircraft and liquefied natural gas to soybean oil and auto parts in retaliation to US moves on China’s goods. Both the Dow Jones industrials and S&P advanced 0.5 percent while Nasdaq added only 0.1 percent. For the week, the Dow was virtually unchanged while the S&P was up 0.8 percent and the Nasdaq was 1.0 percent higher.
Investors spent part of the morning parsing the latest July employment data. Employment was up less than expected (157,000) but upward revisions to both May and June ameliorated the disappointment. The US trade deficit widened to $46.3 billion, its biggest increase since November 2016 from $43.1 billion in the previous month. The politically sensitive trade gap with China widened 0.9 percent to $33.5 billion. The Institute for Supply Management also released a report showing growth in US service sector activity slowed by much more than anticipated in the month of July. The ISM said its non-manufacturing index dropped to 55.7 in July after rising to 59.1 in June.
European markets
European indices were higher for the day Friday. An early weakness in the euro and the British pound provided a boost to exporters. Traders also overlooked the weaker than expected Eurozone retail sales data and the smaller than expected increase in US employment growth. The FTSE was up 1.1 percent, the CAC added 0.3 percent, the DAX gained 0.6 percent and the SMI was up 2.43 points. For the week however the changes were a different story. The FTSE was down 0.5 percent, the CAC declined 0.6 percent, the DAX tumbled 1.9 percent
and the SMI was 0.2 percent lower.
Allianz rose after its second quarter operating profit beat forecasts. Crédit Agricole advanced after its second-quarter core profit jumped 20 percent from a year ago helped by growing revenues in most business divisions. Royal Bank of Scotland rallied on news it would pay its first dividend in a decade. Mondi jumped after it reported a 25 percent rise in half-year underlying profit helped by higher selling prices and good demand. British Airways parent IAG sank after reporting its half-year results. William Hill retreated after it swung to a huge loss in the 26 weeks to June 27.
Swiss Re declined in Zurich after reporting a drop in first-half net profit. The reinsurance company said it is planning a stock market listing next year for its UK unit. Novartis and Roche declined while Nestlé finished higher. Crédit Suisse was lower while UBS and Julius Baer climbed. Dufry dropped to a four-month low after reporting lower-than-expected sales growth. Heineken advanced after the firm sealed a $3.1 billion tie-up with the owner of China’s largest brewer, China Resources Beer, under which Heineken will take a 40 percent stake in the Chinese company.
Asia Pacific Markets
Asian indices were mixed Friday with both the Shanghai Composite tumbling 1.0 percent and the Hang Seng slipping 0.1 percent. The renminbi was down in the morning session in Asia as fears over the US/China trade war continued to worry investors. China's private sector growth weakened at the start of third quarter with both manufacturers and service providers registering weaker increases in activity. The Caixin composite output index fell to 52.3 in July from 53.0 in June. The services PMI slid to 52.8 from 53.9 a month ago. On the week, the Shanghai Composite tumbled 4.6 percent while the Hang Seng was 3.9 percent lower. Investors remained wary after US President Donald Trump instructed his trade tsar to consider raising proposed tariffs on $200 billion of Chinese imports to 25 percent, from the 10 percent announced last month. The Nikkei was up 0.1 percent while the Topix declined 0.5 percent. Investors were jittery prior to the release of the US employment report which would occur after Asian markets were closed for the week. On the week, the Nikkei was down 0.8 percent and the Topix tumbled 1.9 percent. Suzuki Motor jumped after posting a record high operating profit in the first quarter. However, Toyota Motor was lower despite reporting a 19 percent rise in first quarter profit. July services PMI reading was 51.3, down from June’s 51.4. Minutes from the Bank of Japan's June 14 and 15 meeting showed that board members were worried about soft inflation and the rising cost of ultra-loose monetary policy.
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US stocks retreated Friday even though second quarter gross domestic product grew vigorously in the second quarter. The indices declined as investors became wary of several companies in the tech sector. The Dow Jones industrials declined 0.3 percent, the S&P was down 0.7 percent and the Nasdaq lost 1.5 percent. For the week, the Dow and S&P advanced 1.6 percent and 0.6 percent respectively while the Nasdaq lost 1.1 percent.
Although many industrials that reported earlier in the week beat earnings forecasts and boosted their full-year outlooks, Facebook’s poor result along with Twitter’s, sent markets lower when earnings failed to meet expectations. Telecommunications along with financials and consumer staples were the only sectors to end higher. Alphabet and Amazon.com reported earnings that blew past analysts’ estimates, sending their shares higher.
The weakness that emerged Friday reflected a negative reaction to earnings news from Exxon Mobil. Intel tumbled after missing estimates while AMD advanced. Netflix retreated. Shares of home builders such as PulteGroup and Lennar also struggled for traction after data showed home sales slipping in the second quarter, even as the broader economy continued to expand. Apple, which is set to report quarterly results on Tuesday, was lower. Microsoft and Alphabet, which had soared after both companies recently reported strong quarterly results, dropped. Alphabet shares touched an all-time high earlier in the session but reversed course.
European markets
European indices ended the week on a positive note. The gains capped the best weekly performance in four months. Easing trade tensions between Europe and the US were partly responsible for the strong week along with solid corporate earnings results. The FTSE was up 0.5 percent, the CAC added 0.6 percent and both the DAX and SMI were 0.4 percent higher. On the week, the indices also were higher. The FTSE edged up 0.3 percent while the CAC, DAX and SMI were up 2.1 percent, 2.4 percent and 2.0 percent respectively.
Asia Pacific Markets
Asian shares were mixed Friday even though growth concerns kept Chinese markets under pressure. Easing of US/EU trade tension supported underlying sentiment. Investors waited for the US second quarter GDP release which would come after markets here closed for the week and the Bank of Japan policy announcement on Tuesday Japan time. The Shanghai Composite retreated 0.3 percent while the Hang Seng edged up 0.1 percent. On the week, the former was up 1.6 percent and the latter, up 2.1 percent. The Nikkei and Topix added 0.6 percent and 0.4 percent respectively even though underlying sentiment remained cautious on speculation that the Bank of Japan might hint at signal to unwind its massive stimulus program when it meets Monday and Tuesday. Japan Tobacco, Eisai, Shin-Etsu Chemical, Yahoo Japan and Fuji Electric rallied. Nomura Holdings however dropped after reporting a 91 percent decline in its profit for the June quarter. Consumer prices in the Tokyo area advanced an annual 0.9 percent in July, exceeding expectations. Core CPI excluding food advanced 0.8 percent on the year.
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US shares slipped Friday as investors continued to be hit with a stream of Trump-related news, ranging from plans for more tariffs on Chinese imports and displeasure with the Federal Reserve raising interest rates to media reports about his personal life. Trade tensions with China were elevated after Mr Trump said he was ready to impose duties on $500 billion of Chinese imports. The Dow slipped 6.38 points and both the S&P and Nasdaq lost 0.1 percent. For the week, the Dow edged up 0.2 percent, the Nasdaq slipped 0.1 percent and the S&P added 0.52 point.
The president continued to criticize the Federal Reserve for raising interest rates and potentially jeopardizing US economic growth with a follow-up series of tweets since deleted on Friday morning in which he also accused China, Europe and others of manipulating their currencies.
Stocks were buoyed by good quarterly results from a handful of lenders and tech stocks. Amazon, Alphabet, Facebook and Microsoft — the four biggest listed companies in the world after Apple — all hit record highs during the week. Consumer staples advanced. Honeywell moved higher after reporting second quarter results that exceeded estimates and raising its full-year guidance. However, General Electric declined even though the industrial conglomerate reported second quarter results that beat expectations. Both Caterpillar and 3M declined. Skechers USA plunged after the shoemaker posted disappointing quarterly results and forecast.
European markets
Most European stock indices retreated Friday — renewed trade war concerns weighed on the markets after US President Donald Trump indicated a willingness to impose tariffs on all Chinese imports to the US. The news hit shares of European automakers hard. The FTSE slipped 0.1 percent, the CAC declined 0.3 percent and the DAX lost 1.0 percent, but the SMI gained 0.6 percent. On the week, both the FTSE and DAX added 0.2 percent and
the SMI advanced 1.5 percent. The CAC retreated 0.6 percent.
Suedzucker dropped after the company's CEO said the situation in the sugar market would normalize after a transition phase. Thales advanced after the company confirmed its full-year objectives after reporting a sharp jump in first-half net profit. Rémy Cointreau jumped after the company confirmed its 2018-19 guidance after posting muted growth in first quarter sales. Wessanen tumbled after posting weaker-than-expected second-quarter results.
Asia Pacific Markets
Most stock indices advanced Friday even though investors were concerned that an escalation of trade tensions could harm global growth. The Shanghai Composite jumped 2.1 percent after China's central bank — the People’s Bank of China — lowered its yuan midpoint for the seventh straight trading day. Investors believe the yuan's slide will cushion the impact on exporters from the planned next round of U.S. tariffs. The Hang Seng climbed 0.8 percent. For the week, the Shanghai Composite slipped 0.1 percent and the Hang Seng was 1.1 percent lower. Both the Nikkei and Topix were down 0.3 percent Friday in choppy trading after China allowed the yuan to slide further to its lowest level in a year and stirred concerns that China could turn a trade war into a currency war. Kobe Steel declined after it was indicted by prosecutors for allegedly violating competition law. Tokyo Electron and Sumco tumbled after Apple supplier TSMC trimmed its outlook for 2018 revenue. Dentsu slumped after its French rival Publicis Groupe reported a decline in revenue in the first half of 2018. June consumer prices were up 0.7 percent on the year.
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US stock indices managed to end the week on a positive note. The Dow Jones industrials were up 0.4 percent, the S&P edged up 0.1 percent and Nasdaq was 2.06 points higher. With an absence of rhetoric overnight about a US/China trade war industrial stocks contributed to the gain. Remarks on Thursday from US Treasury Secretary Steven Mnuchin also helped. He said that the United States and China might reopen trade talks. The Federal Reserve reiterated that it “expects that further gradual increases” in interest rates would be appropriate given “solid” growth. On the week, the Dow was up 2.3 percent, the S&P gained 1.5 percent and the Nasdaq was 1.8 percent higher.
Gains from Boeing, Caterpillar and 3M helped offset a drop in financials after three big Wall Street banks reported mixed quarterly earnings. Corporate earnings results have continued to impress, with PepsiCo shares soaring Tuesday after the firm posted a slight gain in quarterly revenue and JPMorgan Chase and Citigroup posting double-digit profit increases for the latest quarter Friday. Lockheed Martin and other defense contractors rallied after President Donald Trump pressed allies at a North Atlantic Treaty Organization meeting to double their military spending targets. Technology stocks continued to add to their gains for the year, with Microsoft’s market capitalization rising above $800 billion for the first time Thursday and software firm CA Technologies jumping after Broadcom agreed to buy it for $18.9 billion.
European markets
European markets mostly gained Friday. The FTSE inched up 0.1 percent, the SMI gained 0.5 percent and both the CAC and DAX were 0.4 percent higher. Only the IBEX declined 0.3 percent. For the week, the FTSE was up
0.6 percent, the CAC gained 1.0 percent, the DAX added 0.4 percent and the SMI jumped 1.9 percent.
Ryanair Holdings rose after it received EU approval to buy a 75 percent interest in Austrian airline, Laudamotion, in which it already owns 24.9 percent. Ashmore Group rallied after it reported a drop in assets under management despite net inflows in its fourth quarter. Hays jumped after its Group net fees for the fourth quarter increased 14 percent on a headline basis and 15 percent on a like-for-like basis against the prior year. Roche, Novartis and Nestle advanced as did Swatch and Richemont. Also gaining on the day were Swiss Re, Zurich Insurance, Credit Suisse, Julius Baer and UBS. Altran Technologies tumbled after the company said it had discovered a case of forged purchase orders within its recently acquired US design and engineering services firm Aricent.
Asia Pacific Markets
Asian stocks mostly extended gains from the previous session amid easing trade tensions after US Treasury Secretary Steven Mnuchin said the U.S. could reopen trade talks if Beijing was willing to make serious efforts to make structural changes. The Shanghai Composite declined 0.2 percent after data showed China's merchandise trade surplus with the United States swelled to a record in June, adding to fears the US may increase tariffs on Chinese products. The Hang Seng however inched up 0.2 percent. On the week, the Shanghai Composite was up 3.1 percent and the Hang Seng added 0.7 percent. June Chinese exports climbed 11.3 percent on the year in dollar terms while imports advanced 14.1 percent from a year ago. The trade surplus totaled $41.61 billion on the month. The Nikkei rallied 1.8 percent and the Topix was 1.2 percent higher. For the week, the former was up 3.7 percent and the latter added 2.3 percent — their best weekly gains since March as the dollar hit a fresh six-month high against the yen and Fast Retailing posted record third quarter profit thanks to brisk sales at its overseas Uniqlo stores. Tech shares followed US peers higher, with Tokyo Electron, Kyocera and Advantest all advancing.
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US stocks ended the day Friday and week higher — a solid employment report and gains in the tech sector distracted investors from Washington’s imposition of tariffs on US$34 billion Chinese goods. The Dow Jones industrials were up 0.4 percent (0.8 percent on the week), the S&P added 0.8 percent (1.5 percent on the week) and the Nasdaq gained 1.3 percent (2.4 percent for the week). However, the tariff concerns have mostly been priced in by the markets. Focus instead turned to Friday’s solid employment report — it reinforced expectations that the Federal Reserve will stick to its path of gradual rate tightening this year.
The US put a 25 percent tax on $34 billion worth of Chinese imports Friday. China retaliated with taxes on an equal amount of US products, including soybeans, pork and electric cars, calling the move the start of the "biggest trade war in economic history."
Asia Pacific Markets
Asian stocks rebounded from early losses to close mixed Friday as investors responded with calm to the US tariffs on $34 billion of Chinese imports that took effect after midnight Thursday. China said it was "forced to make a necessary counterattack" in equal measure. Chinese shares reversed early losses with both the Shanghai Composite and Hang Seng rising 0.5 percent. For the week, the former tumbled 3.5 percent and the latter was 2.2 percent lower. The Nikkei was up 1.1 percent and the Topix added 0.9 percent as China led a rebound in regional markets. On the week, the indices retreated 2.3 percent each. Toyota Motor and Honda Motor rose along with technology stocks Advantest and TDK. Eisai soared after its Alzheimer's drug succeeded in a mid-stage trial. May household spending tumbled 1.4 percent on the year. The S&P/ASX was up 0.9 percent while the All Ordinaries added 0.8 percent as investors bought depressed mining stocks. On the week, the S&P/ASX was up 1.3 percent and the All Ordinaries was 1.0 percent higher. BHP Billiton, Rio Tinto and Fortescue Metals Group climbed. Financials were higher, with the big four banks rising despite regulatory scrutiny about their pension products. Woodside Petroleum, Santos, Oil Search and Origin Energy rallied even though crude oil prices declined overnight. The Kospi was up 0.7 percent and was down 2.3 percent on the week. The Sensex added 0.2 percent and 0.7 percent on the week. read moreUS Markets
Unlike stocks in Asia and Europe, US shares managed to stage a rally in late afternoon to close higher on the
day. Investors continued to fret about an escalating trade war between Washington and its trading partners,
while gains in Apple and other stocks offset a slump in energy shares. Traders were eyeing a July 6 deadline for
US tariffs on $34 billion worth of Chinese goods to begin, posing danger of a strong response from Beijing. The
Dow Jones industrials were up 0.15 percent, the S&P added 0.3 percent and the Nasdaq advanced 0.7 percent.
The European Union has warned the United States that imposing import tariffs on cars and car parts would
likely lead to counter-measures on $294 billion of US exports, while Canada has vowed to take punitive
measures in response to US steel and aluminium tariffs.
Asia Pacific Markets
Asian stocks declined Monday as trade worries persisted. Oil prices declined on supply worries while Chinese manufacturing data were softer than expected and a resolution to Germany's government crisis proved elusive. Crude oil prices fell more than 1 percent in Asian trading after US President Donald Trump claimed that Saudi Arabia has agreed to raise oil production. The Shanghai Composite tumbled 2.5 percent after surveys showed deterioration in the outlook for Chinese manufacturing, adding to concerns over tighter government controls on lending. Hong Kong markets were closed for SAR Day holiday. The Nikkei and Topix dropped 2.2 percent and 2.1 percent respectively as the dollar pared back gains against the yen prior to the July 6 deadline when the United States is due to impose tariffs on Chinese exports. The second quarter Tankan which monitors business sentiment in Japan edged lower according to the Bank of Japan. The large manufacturers' index was plus 21, down from plus 24 in the previous quarter. June manufacturing PMI edged up to 53.0 from 52.8 in May. Kikkoman and Aeon declined. Sharp shares were lower on profit taking after climbing as much as 15 percent on Friday. Both the S&P/ASX and All Ordinaries dropped 0.3 percent as investors digested mixed data on consumer inflation, manufacturing and job advertisements and looked ahead to RBA's monetary policy decision Tuesday. While healthcare stocks rebounded after six straight sessions of losses, banks and realty stocks succumbed to selling pressure. read moreUS Markets
After declining in early trading, US shares managed to regain some — but not all — of the lost ground later in the day. The Dow Jones industrials were down 0.3 percent, the S&P slipped 0.1 percent and the Nasdaq retreated 0.2 percent. For the week, The Dow declined 0.9 percent, the S&P was virtually unchanged and the Nasdaq was 1.3 percent higher.
Stocks declined after renewed trade war worries sent shares tumbling after President Donald Trump announced plans to impose a 25 percent tariff on $50 billion worth of Chinese goods that contain "industrially significant technologies." Trump said he would impose additional tariffs on Chinese goods if China retaliates by imposing new tariffs on US goods and/or services, raising non-tariff barriers or taking punitive actions against American exporters. China announced new tariffs on 545 products imported from US anyhow including agricultural products, vehicles and aquatic products. Shares of agricultural and industrial companies, which some fear could be especially vulnerable to punitive trade measures, were hit by a fresh wave of selling.
May industrial production edged down 0.1 percent after climbing by an upwardly revised 0.9 percent in April. The unexpected decrease in production came amid a pullback in manufacturing output, which largely reflected a disruption in truck assemblies due to a major fire at a parts supplier.
World oil prices tumbled on fears of increased supply. The Organization of Petroleum Exporting Countries (OECD) is slated to meet during the week in Vienna with Saudi Arabia and Russia indicating they were prepared to increase output.
Caterpillar, Boeing and United States Steel retreated along with energy companies. .
These data reflect observations at 4:00 PM US ET. Gold was down US$29.80 to US$1,278.50. Copper futures were down 2.4 percent to US$3.14. WTI spot crude was down US$1.83 to US$65.06. Dated Brent spot crude was down US$2.50 to US$73.44. The US dollar was up against the yen, Swiss franc and the Canadian dollar. The pound and the Australian dollar were relatively unchanged while the euro was up against the dollar. The Dollar Index was down 0.1 percent. The yield on the US Treasury 30 year bond was unchanged at 3.05 percent while the 10 year note was down 1 basis point to 2.92 percent.
Asia Pacific Markets
Asian shares were mixed Friday thanks to a dovish ECB statement and the Bank of Japan’s weaker view on the inflation outlook. Trading concerns persisted ahead of likely announcement of US tariffs on Chinese goods. The Shanghai Composite declined 0.7 percent — a 20 month low — on worries that rising trade tensions could add pressure to the country's economic growth. The Hang Seng declined 0.4 percent despite Fitch Ratings affirming sovereign ratings of the country with a 'stable' outlook. The Hong Kong Monetary Authority adjusted its interest rate upward after the US Federal Reserve raised its key rate by 25 basis points. The Hong Kong dollar is pegged to its US counterpart and rates change in tandem with US rates. For the week, The Shanghai Composite was down 1.5 percent and the Hang Seng was 2.1 percent lower. The Nikkei and Topix were up 0.5 percent and 0.3 percent respectively. The yen weakened after the Bank of Japan kept its monetary policy unchanged as widely expected and downgraded its view on inflation. Fast Retailing, Mitsui Mining & Smelting, Fujitsu, Daiichi Sankyo, TDK and Taiyo Yuden gained. For the week, the Nikkei was up 0.7 percent and the Topix was 0.4 percent higher. read moreUS Markets
US shares advanced Friday as investors shrugged off concerns about global trade tensions building up to the Group of Seven summit. Both the Dow Jones industrials and the S&P added 0.3 percent while Nasdaq edged up
0.1 percent. For the week, the Dow was up 2.8 percent, the S&P gained 1.6 percent and the Nasdaq added 1.2 percent — their third consecutive week of gains.
Investors seemed to put aside worries about US relations with its major trading partners. The Group of Seven began a tense meeting after US President Donald Trump's decision to impose tariffs on steel and aluminum imports from Canada, the European Union and Mexico. The gains came as G-7 leaders kicked off their meeting in Quebec, with President Donald Trump’s hard line stance on tariffs against his counterparts looming large during the discussions.
Asia Pacific Markets
Asian stocks tumbled Friday as investors adopted a cautious stance ahead of G-7 summit beginning in Canada later in the global market day along with the looming Federal Reserve, European Central Bank and Bank of Japan policy meetings. The June 12 US/North Korea summit was high on investors' radar as well. The Shanghai Composite dropped 1.4 percent and was down for third consecutive week — this time 0.3 percent thanks to renewed trade worries. The Hang Seng tumbled 1.8 percent but was 1.5 percent higher on the week. The Nikkei and the Topix were down 0.6 percent and 0.4 percent respectively as caution set in ahead of G-7 talks and the historic US/North Korea summit. The former was up 2.4 percent on the week and the latter, 1.8 percent. Honda Motor declined on news that the company and General Motors have agreed to jointly develop next-generation batteries for electric vehicles. First quarter gross domestic product was down an unrevised 0.2 percent on the quarter or at an annualized rate of minus 0.6 percent. read moreUS Markets
US stocks advanced Friday as traders reacted to the upbeat May employment data. The Dow Jones industrials were up 0.9 percent, the S&P added 1.1 percent and the Nasdaq advanced 1.5 percent. For the holiday- shortened week, the Dow declined 1.0 percent while the S&P added 0.5 percent and the Nasdaq added 1.6 percent.
Markets got a reprieve as Italy installed a coalition government, removing the risk of a repeat vote dominated by debate on whether the country would quit the euro. Further calming geopolitical concerns, US President Donald Trump announced the resumption of plans for a summit with North Korea’s leader Kim Jong Un on June
12. However, investors monitored trade developments after Washington imposed steel and aluminum tariffs on imports from Canada, Mexico and the European Union. Canada and Mexico retaliated, targeting US steel and aluminum imports and products such as whiskey and blue jeans.
Asia Pacific Markets
Asian Pacific stock indices were mixed Friday thanks to trade war concerns and nervous investors looked ahead to the May US jobs report that would be released after markets here were closed for the week. The Shanghai Composite was down 0.7 percent even though global index provider MSCI added around 230 mainland-listed Chinese stocks to its flagship Emerging Markets Index and other indexes. The Hang Seng edged up 0.1 percent. On the week, the Shanghai Composite and Hang Seng lost 2.1 percent and 0.3 percent respectively. China’s May manufacturing PMI remained unchanged at 51.1. The Nikkei edged down 0.1 percent while the Topix inched 0.1 percent higher in choppy trading after fears of a global trade war resurfaced and US President Donald Trump downplayed the chances of reaching a quick resolution with North Korea in the upcoming summit. On the week, the Nikkei and Topix dropped 1.2 percent and 1.7 percent respectively. Fast Retailing dropped while Mazda and Toyota Motor climbed on a weaker yen. Olympus rallied after activist investor ValueAct Capital became a major shareholder in the medical equipment and camera maker. Upon his arrival for a meeting of finance ministers and central bank governors of the Group of Seven advanced economies, Bank of Japan Governor Haruhiko Kuroda called for "rational" debate to prevent protectionist trade measures from disrupting the global economy. Investors also looked ahead to a meeting between Trump and Japanese Prime Minister Shinzo Abe at the White House on June 7. read moreUS Markets
All U.S. markets were closed for the Memorial Day holiday.
These data reflect observations at 4:00 PM US ET. Gold was down US$6.30 to US$1,302.70. Dated Brent spot crude was down US$1.14 to US$75.30. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. It retreated against the euro and pound and was virtually unchanged against the Canadian dollar. The Dollar Index was up 0.15 percent.
Asia Pacific Markets
Asian stock indices were mixed Monday. Signs the United States and North Korea were still working towards holding a summit helped investors shrug off falling commodity prices. The Shanghai Composite retreated 0.2 percent while the Hang Sent added 0.7 percent. Chinese industrial profits in April surged 21.9 percent on the year, well above the 3.1 percent increase in March. In the first four months of this year, industrial profits advanced 15.0 percent from a year ago compared with an 11.6 percent rise in the first three months. read moreUS Markets
US stocks were mostly lower Friday in choppy trading with bank and chipmaker shares weighing on the indices. Investors also monitored the US/China trade talks. The Dow Jones industrials edged up 1.11 points, the S&P retreated 0.3 percent and the Nasdaq was 0.4 percent lower. All three major stock indices posted a weekly loss as the markets reacted to reports from the US/China trade summit, rising US government bond yields and increasing oil prices. On the week, the Dow and S&P each lost 0.5 percent and the Nasdaq declined 0.7 percent.
China denied accounts by some US officials that it had offered a package to slash the US trade deficit by up to US$200 billion, but said the consultations were “constructive,” in the latest salvo of tit-for-tat messages to emerge from the high-level meeting.
Boeing rose on hopes for a reduction in the bilateral trade deficit, after an American source said the company would be a major beneficiary of a narrowed trade gap. Boeing sells about a fourth of its commercial aircraft to Chinese customers. JPMorgan Chase, Citigroup, Bank of America and Wells Fargo were all lower. Alphabet slid. Applied Materials dropped after the chip equipment maker’s weak 2019 forecast added to concerns of softening smartphone demand. Deere jumped after the company raised its full-year earnings estimate. Campbell Soup tumbled after its chief executive officer abruptly stepped down and the company cut its full-year profit forecast saying it expects higher costs to weigh on margins.
Asia Pacific Markets
Asian stocks were mixed Friday with investors largely reluctant to make significant moves due to tensions in the Korean Peninsula and concerns about ongoing trade war between the US and China. Both the Nikkei and Topix were up 0.4 percent with the Nikkei reaching its highest close since early February 2018. A weaker yen and rising US bond yields contributed to the positive close. However, the market's gains were on relatively thin volumes. TDK, T&D Holdings, Dai-ichi Life Holdings, Honda Motor and Nissan Motor rallied. On the week, the Nikkei and Topix added 0.8 percent and 1.1 percent respectively. The Shanghai Composite was up 1.2 percent while the Hang Seng was 0.3 percent higher. For the week, the former added 1.0 percent and the latter slipped 0.2 percent. In Shanghai, energy, financial and insurance stocks were among the most prominent gainers. Both the S&P/ASX and All Ordinaries slipped 0.1 percent. NB Holdings, Galaxy Resources, IPH, A2 Milk Company, Nanosonics, Galaxy Resources, Vocus Group, Medibank, Bellamys Australia and Regis Resources all declined. Among the big four banks, ANZ Bank, Bank of Queensland and Westpac ended lower while Commonwealth Bank of Australia gained. On the week, the S&P/ASX was down 0.5 percent and the All Ordinaries was 0.4 percent lower. The Kospi was up 0.5 percent on the day but retreated 0.7 percent on the week. The Sensex declined 0.9 percent Friday and tumbled 1.9 percent on the week. read moreUS Markets
US stocks were mixed Friday with drug companies rallying after President Donald Trump unveiled his drug plan. Telecom shares also rallied but a sell-off in technology shares dragged the Nasdaq lower. The Dow Jones industrials were up 0.4 percent on the day and 2.3 percent for the week. The S&P was 0.2 percent higher and
2.4 percent for the week. Nasdaq however, slipped 2.09 points on the day but added 2.7 percent on the week.
Energy shares advanced for their best week in four, after Mr Trump delivered on his promise to pull the US out of the Iranian nuclear deal, sparking a rally in crude prices on expectations of Iranian oil export disruptions. Financials also advanced for their biggest weekly gain since March. Utilities recorded the biggest declines in seven weeks.
Johnson & Johnson, Pfizer and Merck jumped after Trump said foreign governments "extort" unreasonably low prices from US drug makers. His healthcare deputies released a series of proposals to address high drug costs. Apple retreated after rising for nine days. Nvidia declined on worries that a short-term surge in demand for graphics chips from cryptocurrency miners may be undermining the company's core business with computer gamers. Verizon was higher thanks to a broker upgrade. Symantec tumbled after the Norton Antivirus maker said it was investigating concerns raised by a former employee.
Asia Pacific Markets
Asian stocks were mostly higher Friday thanks to higher commodity prices and easing rate increase fears helping to boost investor sentiment. While the dollar index eased somewhat after the release of tepid US inflation data, oil prices hovered near multi-year highs reached the previous session. Geopolitical developments also remained in focus after US President Donald Trump said he had high hopes of "doing something very meaningful" to curtail North Korea's nuclear ambitions at a summit in Singapore on June 12. The Shanghai Composite retreated 0.4 percent while the Hang Seng was up 1.0 percent. For the week, the former was up 2.3 percent and the latter rallying 4.0 percent. The Nikkei was up 1.2 percent and the Topix added 1.0 percent. Technology stocks followed their US peers higher, with Tokyo Electron, Advantest and Murata Manufacturing advancing. Suzuki Motor and Panasonic rallied after posting strong results for the year ended March. SoftBank Group jumped on a Nikkei report that Japan's three megabanks will participate in the Vision Fund, an investment fund formed by the technology conglomerate in 2017. read moreUS Markets
US shares rallied Friday thanks in part to Apple — it jumped to a new record high. The markets shrugged off a mixed jobs report. However the day’s gains were not enough to keep the S&P and Dow Jones industrials from recording their second consecutive week of losses. The Dow was up 1.4 percent, the S&P gained 1.3 percent and the Nasdaq was 1.7 percent higher Friday. For the week however, both the Dow and S&P lost 0.2 percent while the Nasdaq added 1.3 percent.
Technology shares rallied with Apple closing at a record high. The rally began earlier this week after Apple announced a new US$100 billion share buyback plan, posted upbeat earnings and issued a confident outlook for iPhone sales in spite of recent concerns of a slowdown. However, telecoms and healthcare retreated. Chevron declined. Pandora media jumped after the music-streaming service provider reported a smaller-than-expected quarterly loss. CBS advanced after the media company topped revenue and profit estimates for the first quarter. Fluor sank after the company posted a surprise quarterly loss due to issues with a gas-fired power project.
April employment increased a less than anticipated 164,000 but the unemployment rate slid to 3.9 percent — its lowest level since December 2000 — after holding at 4.1 percent for six straight months. The drop in the unemployment rate was primarily due to a decrease in the size of the labor force. On the year, average hourly earnings were up by 2.6 percent, unchanged compared to the revised growth seen in March.
These data reflect observations at 4:00 PM US ET. Gold was up US$2.00 to US$1,314.70. Copper futures were up 0.2 percent to US$3.09. WTI spot crude was up US$1.25 to US$69.72. Dated Brent spot crude was up US$1.25 to US$74.87. The US dollar was up against the euro, pound and Swiss franc. It retreated against the yen and the Australian dollar. The dollar was virtually unchanged against the Canadian dollar. The Dollar Index was up 0.14 percent. The yields on the US Treasury 30 year bond and 10 year note were unchanged at 3.12 percent and 2.95 percent respectively.
Asia Pacific Markets
Asian stocks closed broadly lower Friday as investors kept a close watch on the trade talks between the US and China and waited the US employment report which would be released after markets here closed for the week. Markets in Japan were closed for a holiday. The Shanghai Composite slid 0.3 percent — traders were focused on the US-China trade talks as well as upcoming US employment data. The Hang Seng tumbled 1.3 percent. For the week, the Shanghai Composite managed to increase 0.3 percent while the Hang Seng was 1.2 percent lower. The S&P/ASX declined 0.6 percent while the All ordinaries was 0.5 percent lower. For the week, the former advanced 1.8 percent and the latter, 1.9 percent. Banks succumbed to selling pressure thanks to a weaker local currency and concerns that an extended period of low interest rates may weigh on their net interest rate margins. The big four banks were lower while investment bank Macquarie Group inched up after posting a record full year net profit. The Kospi was down 1.0 percent as investors sold off healthcare stocks on worries over their future growth. On the week, the index was down 1.2 percent. The Sensex declined 0.5 percent and was 0.2 percent lower for the week. read moreUS Markets
US shares gyrated from the plus to the minus side Friday following Thursday’s rally. The Dow Jones industrials were down 11.15 points while the S&P added 0.1 percent. The Nasdaq added a meagre 2.97 points. For the week, the Dow was down 0.6 percent, the Nasdaq declined 0.4 percent and the S&P was 0.23 point lower. The choppy trading followed a mixed batch of earning reports. While Amazon, Microsoft and Intel reported better than expected quarterly results, ExxonMobil reported first quarter earnings that were below estimates. US Steel declined after reporting better than expected first quarter earnings but providing disappointing guidance for the current quarter. Facebook declined. Sprint jumped following a report that the company was finalizing terms of a merger with T-Mobile. Uncertainty about the outlook for interest rates may have also kept traders on the sidelines following the release of first quarter growth data showing stronger than expected economic growth. First quarter gross domestic product slowed to an annualized rate of 2.3 percent down from 2.9 percent in the fourth quarter but higher than consensus estimates. Consumer spending slowed to just 1.1 percent to 4.0 percent in the fourth quarter. Core consumer prices, which exclude food and energy prices surged to 2.5 percent in the first quarter from 1.9 percent in the fourth quarter. April University of Michigan consumer sentiment slowed to a reading of 98.8 from 101.4 in March. These data reflect observations at 4:00 PM US ET. Gold was down US$5.50 to US$1,323.40. Copper futures were down 2.2 percent to US$3.07. WTI spot crude was down 9 US cents to US$68.10. Dated Brent spot crude was down 10 US cents to US$74.64. The US dollar was down against the euro, yen, Swiss franc and the Canadian and Australian dollars. It advanced against the pound. The Dollar Index was down 0.1 percent. The yield on the US Treasury 30 year bond was down 5 basis points to 3.12 percent while the 10 year note was down 2 basis points to 2.96 percent.
read moreUS Markets
US stocks declined Friday as investors worried about a jump in U.S. bond yields. Technology stocks led the decline thanks to anxiety about upcoming earnings reports and iPhone demand. The Dow Jones industrials were down 0.8 percent, the S&P declined 0.9 percent and the Nasdaq retreated 1.3 percent. However, for the week, the Dow was up 0.4 percent, the S&P gained 0.5 percent and the Nasdaq was 0.6 percent higher.
PepsiCo retreated. Procter & Gamble dropped for a second day when it said shrinking retailer inventories and higher costs squeezed its margins. Philip Morris International also had a second day of declines after getting crushed due to weak shipment volumes in its quarterly report. Apple was lower after an analyst estimated weak demand for its latest iPhones in the June quarter. Alphabet, Facebook, Intel and Microsoft report earnings next week. General Electric moved sharply higher after the conglomerate reported better than expected adjusted first quarter earnings. Honeywell also advanced after reporting first quarter results that beat estimates and raised its full-year guidance.
These data reflect observations at 4:00 PM US ET. Gold was down US$10.50 to US$1,338.30. Copper futures were up 0.05 percent to US$3.16. WTI spot crude was up 7 US cents to US$68.40. Dated Brent spot crude was up 28 US cents to US$74.06. The US dollar was up against all of its major counterparts including the euro, pound, Swiss franc, yen and the Canadian and Australian dollars. The Dollar Index was up 0.4 percent. The yields on the US Treasury 30 year bond and the 10 year note were up 5 basis points to 3.15 percent and 2.96 percent respectively.
Asia Pacific Markets
Asian markets were mostly lower Friday, led by losses in technology stocks amid falling demand for smartphones and a downward revision in the revenue target by chipmaker Taiwan Semiconductor Manufacturing. The Shanghai Composite was down 1.5 percent while the Hang Seng was 0.9 percent lower. For the week, the former was down 2.8 percent and the latter lost 1.3 percent. Both the S&P/ASX and All Ordinaries were 0.2 percent lower but up 0.7 percent higher for the week. G8 Education declined along with Evolution Mining, Independence Group, NB Holdings, JB Hi-Fi and TPG Telecom. Among big four banks, ANZ Bank and Westpac ended flat while Commonwealth Bank of Australia and Bank of Queensland were lower. Retail Food Group, Seven West Media, Galaxy Resources, Pilbara Minerals, Beach Energy, Challenger, Aristocrat Leisure, Qantas Airways, Ardent Leisure and Woodside Petroleum gained. The Nikkei slipped 0.1 percent while the Topix added 0.1 percent. Advantest, Tokyo Electron and TDK declined. Mitsubishi Electric, Fanuc, Sumitomo Chemical, Shin-Etsu Chemical, Takeda Pharmaceuticals, Sumco, Japan Tobacco and Chiyoda retreated. However, Mitsui OSK Lines, Shiseido, Pacific Metals, Oji Holdings, Nisshin Steel, T&D Holdings, Nichirei, Nikon and Dentsu gained. On the week, the Nikkei was up 1.8 percent and the Topix added 1.3 percent. The Kospi was down 0.4 percent but added 0.9 percent on the week. The Sensex was virtually unchanged Friday and added 0.7 percent on the week. read moreUS Markets
After initially climbing when markets opened, stocks retreated for the rest of Friday. The Dow Jones industrials and Nasdaq lost 0.5 percent while the S&P was down 0.3 percent. Despite Friday’s declines, the three indices advanced on the week. The Dow was up 1.8 percent, the S&P advanced 2.0 percent and the Nasdaq was 2.8 percent higher. Earnings news from JPMorgan Chase, Citigroup and Wells Fargo provided the initial strength. But investors were reluctant to make further upward moves prior to next week’s earnings deluge.
The preliminary reading of the April consumer sentiment index reading disappointed investors with a reading of
97.8 compared to the final March reading of 101.4. This might have added to the downward pressure on shares as well.
Boeing was lower after it said it was “aware and monitoring” the impact of proposed anti-American legislation in Russia that Moscow was considering as a response to US sanctions. Banking stocks declined — JPMorgan, Citigroup, and Wells Fargo all slid into negative territory despite reporting better than expected earnings. Considerable weakness was also visible among brokerage stocks.
JPMorgan Chase reported net income of $8.7 billion — up 35 percent from a year earlier. While the performance benefited from a quarter-billion dollars in savings from a lower tax rate, the bank said the results also reflected a brightening economic and business environment. Citigroup reported that net income rose 13 percent from a year earlier to $4.62 billion, while its return on equity, a closely watched measure of bank profitability, was at its highest level in five years. Wells Fargo’s first-quarter profit rose 5 percent to $5.9 billion, although it cautioned that it might need to restate the results because of a looming regulatory settlement that could be as high as $1 billion. PNC Financial Services Group reported a 16 percent rise in earnings thanks to rising interest rates and commercial-lending growth.
These data reflect observations at 4:00 PM US ET. Gold was up US$6.00 to US$1,347.90. Copper futures were up 0.24 percent to US$3.07. WTI spot crude was up 32 US cents to US$67.39. Dated Brent spot crude was up 56 US cents to US$72.58. The US dollar was up against the yen and the Canadian dollar. It retreated against the euro, pound and the Australian dollar. The currency was unchanged against the Swiss franc. The Dollar Index was up 0.04 percent. The yield on the US Treasury 30 year bond was down 1 basis point to 3.03 while the 10 year note was unchanged at 2.83 percent.
Asia Pacific Markets
Asian stock indices advanced Friday — a rebound in technology stocks on strong earnings and a drop in US Treasury yields helped improve investors' risk appetite. Also, the European Central Bank and the Bank of Japan maintained their monetary policies as widely expected. The Shanghai Composite added a modest 0.2 percent and was up 0.3 percent on the week. The Hang Seng was up 0.9 percent but lost 0.5 percent on the week. The Nikkei was up 0.7 percent and the Topix was 0.3 percent higher after the Bank of Japan maintained its monetary policy as widely expected, but dropped its target date for achieving its 2 percent inflation target. March industrial output rose a monthly 1.2 percent and the jobless rate remained at 2.5 percent while retail sales fell short of expectations. Advantest and Kyocera advanced after the companies forecast strong profits this fiscal year. However, industrial robot maker Fanuc retreated after a profit warning. The Nikkei and Topix advanced 1.4 percent and 1.5 percent respectively on the week. Both the S&P/ASX and All Ordinaries added 0.7 percent Friday. Healthcare stocks extended gains, helping offset losses in the banking sector. On the week, the S&P/ASX added 1.4 percent and the All Ordinaries, 1.3 percent. Private hospital operator Healthscope rallied after receiving a takeover proposal from a private equity consortium. Biotechnology firm CSL and medical device company Cochlear both were higher. Goldminer Newcrest jumped after its quarterly update. Commonwealth Bank slid on growing concerns about the quality of its mortgage book while the other three banks closed firmly in positive territory. The Kospi was up 0.7 percent Friday and 0.6 percent for the week. The Sensex added 0.7 percent Friday and 1.6 percent for the week. read moreUS Markets
US shares tumbled Friday. Weighing on stocks was the escalating rhetoric between the US and China regarding trade, a weaker-than-expected US employment report and commentary about the outlook for interest rates from Fed Chair Jerome Powell. Both the Dow Jones industrials and Nasdaq dropped 2.3 percent on the day and the S&P was 2.2 percent lower. On the week, the Dow declined 0.7 percent, the S&P lost 1.4 percent and the Nasdaq retreated 2.1 percent.
Stocks were under pressure from the outset. The Trump administration said late on Thursday it was considering imposing tariffs on an additional $100 billion worth of Chinese imports in response to China’s retaliatory tariffs, heightening concerns about a breakout of a global trade war. Adding to the downward pressure, the March employment report indicated that fewer jobs than expected were added (103,000 rather than the anticipated 175,000). The unemployment rate remained at 4.1 percent for the sixth month.
An afternoon sell-off in stocks and a Treasuries’ rally picked up steam on comments from Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jay Powell. In a television interview, Mr Mnuchin for the most part toed the Trump administration’s line on ensuring fair and free trade. He said he was optimistic the two countries “will be able to work this out” but also warned “there is the potential of a trade war”. Soon after this, the Fed chair Jay Powell delivered a speech in which he reiterated his upbeat view on the economy and endorsed a “patient” approach to tightening monetary policy.
These data reflect observations at 4:00 PM US ET. Copper futures were down 0.5 percent to US$3.06. WTI spot crude was down US$1.48 to US$62.06. Dated Brent spot crude was down US$1.22 to US$67.11. The US dollar was up against the Canadian and the Australian dollars. It retreated against the euro, pound, Swiss franc and the yen. The Dollar Index was down 0.35 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 6 basis points to 3.02 percent and 2.77 percent respectively.
Asia Pacific Markets
Asian stocks were mixed Friday as worries about a global trade war intensified and investors here waited for the US employment report for March which would be released later in the global market day. Markets in China and Taiwan were closed for a holiday. The Nikkei declined 0.4 percent and the Topix was 0.3 percent lower as the yen rose against the US currency after Trump’s latest tariff threat. Shipping companies and semiconductor shares declined. However, Sankyo, Seven & I Holdings and FamilyMart UNY Holdings gained. February household spending edged up 0.1 percent on the year. For the week, the Nikkei added 0.5 percent while the Topix was 0.2 percent higher. The All Ordinaries and S&P/ASX were virtually unchanged Friday. While most major banks ended marginally lower, ANZ edged up slightly after a brokerage upgrade. Woodside Petroleum and Santos rose after crude oil prices edged higher overnight. BHP Billiton and Fortescue Metals Group also advanced. The S&P/ASX was up 0.5 percent on the week while the All Ordinaries added 0.3 percent. The Kospi declined 0.3 percent as renewed trade tensions overshadowed Samsung's upbeat earnings guidance for the first quarter of this year. The index lost 0.7 percent on the week. The Sensex added 0.1 percent and was up 2.0 percent on the week. read moreUS Markets
US shares tumbled Monday, the beginning of the second quarter. Recent bad news about technology companies and festering worries about a trade war between the United States and China continued to prey on investors’ risk appetite. The Dow Jones industrials were down 1.9 percent, the S&P lost 2.2 percent and the Nasdaq dropped 2.7 percent.
Shares in major tech firms were among those hit hardest. Amazon slid after President Trump, who has repeatedly assailed the online retail giant over what he says is its abuse of the Postal Service and failure to pay adequate taxes, took another swipe at the company on Twitter. Facebook dropped yet again — it has experienced a rash of defections by users since becoming embroiled in a scandal over data privacy last month. Microsoft, Apple, Alphabet and Intel also retreated. Humana advanced on news that the health insurer was in talks with Walmart to expand their partnership or to be possibly acquired by Walmart. Walmart was lower.
Tesla dropped after the company’s disclosure late Friday that its Autopilot system had been engaged in a Tesla vehicle involved in a fatal crash in California last month. The revelation came amid wider concerns about the company’s financial woes. Manufacturing stocks were lower after China put tariffs of up to 25 percent on 128 American-made products in response to the Trump administration’s decision to place steep duties on imported steel and aluminum. Boeing, Caterpillar and 3M declined. With pork products among the goods subject to the Chinese tariffs, Tyson Foods tumbled.
March ISM manufacturing index eased to 59.3 from 60.8. The March manufacturing PMI however edged up to
55.6 from 55.3 indicating that the industry remains firm. However, February overall construction spending advanced only 0.1 percent on the month and 3.0 percent from a year ago.
These data reflect observations at 4:00 PM US ET. London gold market was closed for Easter Monday. Copper futures were up 0.55 percent to US$3.04. WTI spot crude was down US$1.78 to US$63.16. Dated Brent spot crude was down US$1.55 to US$67.79. The US dollar was up against the Canadian and Australian dollars. It retreated against yen, pound and Swiss franc. It was virtually unchanged against the euro. The Dollar Index was up 0.1 percent. The yield on the US Treasury 30 year bond was up 1 basis point to 2.98 percent while the 10 year note was unchanged at 2.74 percent.
Asia Pacific Markets
Asian stocks were mixed Monday in thin holiday trading with markets in Australia, Hong Kong and New Zealand closed for Easter Monday. The Shanghai Composite was down 0.2 percent after the flash manufacturing PMI for China rdeclined to 51.0 from 51.6 in February, growing at its slowest pace in four months. China imposed tariffs on 128 types of US imports beginning on Monday. The Nikkei retreated 0.3 percent and the Topix was 0.4 percent lower. The Bank of Japan’s quarterly Tankan indicated that business confidence deteriorated in the first quarter on the stronger yen and fears of trade war. Large manufacturers’ business confidence slipped to 24 from 25 in the fourth quarter of 2017 while small manufacturers’ confidence was unchanged at a reading of 15. Exporters were mixed with Sony and Canon posting modest gains while Panasonic retreated. Advantest and Tokyo Electron advanced. Utility Kansai Electric Power climbed but banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial were lower. Toshiba was down after the company said the planned sale of its memory chip unit would likely be completed in April. The Kospi slipped 0.1 percent after its manufacturing PMI indicated that the country's manufacturing activity deteriorated to a below breakeven reading of 49.1 from 50.3 the month before. The Sensex was up 0.9 percent as traders returned after a four-day holiday weekend. Investors are looking to the Reserve Bank of India's (RBI) policy decision on April 5. The RBI is expected to maintain status quo on rates despite increased risks to inflation posed by rising oil prices and a hike in minimum support price (MSP) announced in the Budget 2018. read moreUS Markets
US stocks suffered their biggest weekly drop in a little more than two years. The Dow Jones industrials closed in correction territory as investors worried that a global trade war would break out. Also weighing on shares were the prospect of higher US interest rates and continued uncertainty stemming from White House tumult. However, the markets managed to avoid one hurdle Friday when President Donald Trump signed the US$1.3 trillion spending bill that averted a government shutdown. The Dow dropped 1.8 percent, the S&P sank 2.1 percent and the Nasdaq tumbled 2.4 percent. For the week, the three indices were down 5.7 percent, 6.0 percent and 6.5 percent respectively.
Risks to the global economy were in focus after trade restrictions were announced by the United States and China along with increasingly protectionist moves by Washington elsewhere. The United States brought on steel and aluminum tariffs, albeit with exemptions for key allies (except Japan) and marginalized the World Trade Organization. Trump signed a presidential memorandum Thursday that could impose tariffs on up to $60 billion of imports from China, although the measures have a 30-day consultation period before they take effect. China responded to the US move targeting up to $3 billion of US imports in retaliation against US tariffs on Chinese steel and aluminum products.
Defense stocks including Lockheed Martin Corp and General Dynamics Corp rose after Trump signed a spending bill that increased military spending despite an earlier threat to veto it. Morgan Stanley and Bank of America dropped. Twitter, Apple, Microsoft and Alphabet retreated.
Economic data were mixed Friday. February durable goods orders jumped a monthly 3.1 percent after slumping by 3.5 percent in January. Excluding a jump in transportation equipment orders, durable goods orders were up
1.2 percent after edging down 0.2 percent in January. However, new home sales were down 0.6 percent to an annualized rate of 618,000 from an upwardly revised 622,000 in January.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$17.45 to US$1,346.60. Copper futures were down 0.9 percent to US$2.99. WTI spot crude was up US$1.58 to US$65.88. Dated Brent spot crude was up US$1.54 to US$70.45. The US dollar was down against the yen, euro, pound, Swiss franc and the Canadian dollar. It edged higher against the Australian dollar, The Dollar Index was down
0.4 percent. The yield on the US Treasury 30 year bond was up 1 basis point to 3.06 percent while the 10 year note was down 1 basis point to 2.81 percent.
Asia Pacific Markets
Asian stocks tumbled, the dollar weakened and safe-haven assets including gold and the Japanese yen strengthened after US President Donald Trump announced tariffs on US$50 to US$60 billion worth of Chinese imports and China said it would impose tariffs on up to US$3 billion worth of US goods in retaliation. The Shanghai Composite tumbled 3.4 percent — its worst day since the beginning of February — while the Hang Seng lost 2.5 percent. For the week, the former dropped 3.6 percent and the latter declined 3.8 percent. Japanese shares closed near six-month lows as worries of a global trade war shook financial markets and helped lift the yen to its highest level in more than a year against the US dollar. The Nikkei plunged 4.5 percent and the Topix tumbled 3.6 percent. Exporters Canon, Sony, Panasonic, Toyota and Honda slid after the dollar breached below ¥105 for the first time since November 2016. Steelmakers Nippon Steel & Sumitomo Metal Corp and JFE Holdings were lower along with Inpex and Japan Petroleum. In economic news, February consumer price index was up 1.5 percent on the year. Core CPI excluding fresh food was up 1.0 percent from a year ago. Australian shares dropped after Trump threatened Australia's largest trading partner, China, with trade tariffs on about US$60 billion of imported Chinese goods and China said it would "fight to the end" in trade war. The S&P/ASX dropped 2.0 percent while the All Ordinaries was 1.9 percent lower. On the week, the S&P/ASX was down 2.2 percent while the All Ordinaries was 2.1 percent lower. Santos, Oil Search and Origin Energy declined after crude oil prices fell more than 1 percent overnight. The big four banks slumped along with BHP Billiton, Fortescue Metals Group and Rio Tinto. The Kospi tumbled 3.2 percent amid selling by both foreign investors and domestic institutions. The Sensex was down 1.2 percent joining the global sell-off as increased fears of a global trade war dented investor sentiment and spurred demand for safe-haven assets. On the week, the Kospi was down 3.1 percent and the Sensex lost 1.7 percent. read moreUS Markets
Although strong industrial output numbers boosted shares Friday, the three indices retreated on the week. The Dow Jones industrials were up 0.3 percent, the S&P gained 0.2 percent and the Nasdaq edged up 4.68 points. Friday's gains came at the end of a rocky week dominated by concerns of a US trade war with China and political turmoil, which began with the ouster of Secretary of State Rex Tillerson. However, for the week, the Dow lost 1.5 percent, the S&P declined 1.2 percent and the Nasdaq was 1.0 percent lower.
Stocks traded in a narrow range as investors unwound positions in futures and options contracts that expired Friday — quadruple witching day. Investors were also looking ahead to Wednesday’s Federal Reserve announcement when it is expected to raise its fed funds interest rate by 25 basis points to a range of 1.50 percent to 1.75 percent.
Walmart gained after March preliminary consumer sentiment index rose more than expected. Adobe Systems advanced, hitting an all-time high during the session after the company beat profit and revenue estimates for the seventh straight quarter. Micron Technology was higher after analysts raised their price target on the stock. Western Digital Corp gained on a broker upgrade.
The University of Michigan’s preliminary consumer sentiment index reading for March was 102.0, up from the final February reading of 99.7. February industrial production was up 1.1 percent after dipping by a revised 0.3 percent in January. Housing starts in February tumbled 7.0 percent to an annualized rate of 1.236 million after jumping by 10.1 percent to a revised 1.329 million in January. Building permits tumbled 5.7 percent to a rate of
1.298 million after surging up by 5.9 percent to a revised 1.377 million in January.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$8.65 to US$1,310.10. Copper futures were down 0.6 percent to US$3.11. WTI spot crude was up US$1.15 to US$62.34. Dated Brent spot crude was up US$1.09 to US$66.21. The US dollar was up against the euro, Swiss franc and the Canadian and Australian dollars. It retreated against the yen and was virtually unchanged against the pound. The Dollar Index was up 0.1 percent. The yield on the US Treasury 30 year bond was up 3 basis points to 3.08 percent while the 10 year note was up 2 basis points to 2.84 percent.
Asian stocks ended mostly lower Friday as trade-war worries persisted and reports suggested that special counsel Robert Mueller has subpoenaed U.S. documents related to President Donald Trump's businesses, adding to the sense of continued political uncertainty in the US. Chinese and Hong Kong stocks fell on concerns over the increasingly protectionist policies of the Trump administration. The Shanghai Composite declined 0.6 percent while the Hang Seng edged down 0.1 percent. For the week, the Shanghai Composite lost 1.1 percent while the Hang Seng added 1.6 percent. The Nikkei and Topix lost 0.6 percent and 0.4 percent respectively, hurt by a firmer yen as investors fretted about US political uncertainty and January’s industrial production declined more than initially estimated 6.8 percent on the month in January. A widening political scandal over the cut-price sale of government land to a supporter of Prime Minister Shinzo Abe also overshadowed optimism over the Bank of Japan's regular debt- buying operation. Canon and Sony declined. Japan Petroleum retreated despite an increase in crude oil prices overnight. TDK and Kansai Electric Power also were lower. However, for the week the Nikkei and Topix were up 1.0 percent and 1.2 percent respectively. The S&P/ASX and All Ordinaries both added 0.5 percent Friday. Strong base metal prices helped lift miners BHP Billiton and Rio Tinto. South32 also gained. Banks Commonwealth, NAB and Westpac dropped to extend recent losses amid a government backed inquiry into the sector. Premier Investments was higher after the company said its net profit for the first half rose 9.4 percent on record sales at its stationary brand Smiggle and sleepwear chain Peter Alexander. On the week, the S&P/ASX and All Ordinaries were both down 0.2 percent. The Kospi added 0.1 percent as foreign investors became net buyers after two sessions of selloff. On the week, the index added 1.4 percent. The Sensex declined 0.4 percent on the day and was 1.5 percent lower on the week.
read moreUS Markets
Stocks rallied Friday, adding to the gains posted on Thursday. With the upward move on the day, the Nasdaq
closed higher for the sixth straight session, reaching a record closing high. The Dow Jones industrials and
Nasdaq were up 1.8 percent while the S&P advanced 1.7 percent. For the week, the Nasdaq jumped 4.2
percent, while the Dow and the S&P gained 3.3 percent and 3.5 percent respectively. Stocks celebrated the
larger than anticipated February employment increase. The markets also benefited from easing geopolitical
concerns amid news President Donald Trump has agreed to meet with North Korean leader Kim Jong-Un.
Financial stocks turned in some of the market's best performances on the day, benefiting from economic
optimism following the upbeat employment data. Strength was also visible among transportation stocks with
railroad operators Union Pacific and Norfolk Southern posting gains. Oil service stocks also advanced thanks to
rising crude oil for April delivery. Semiconductor, chemical and retail stocks also moved higher, reflecting broad
based buying interest.
February non-farm payrolls jumped a greater than anticipated 313,000 while the unemployment rate remained
at 4.1 percent. Expectations were for an increase of 205,000 jobs and an unemployment rate of 4.0 percent.
The participation rate jumped to 63.0 percent from 62.7 percent. But average hourly earnings eased to an
increase of 2.6 percent on the year from 2.9 percent in January. The earnings data relieved investors’ inflation
fears.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 40 US cents to
US$1,320.60. Copper futures were up 1.85 percent to US$3.14. WTI spot crude was up US$1.92 to US$62.04.
Dated Brent spot crude was up US$1.88 to US$65.49. The US dollar was up against the yen but retreated
against the pound and the Canadian and Australian dollars. It was virtually unchanged against the euro and
Swiss franc. The Dollar Index was virtually unchanged. The yield on the US Treasury 30 year bond was up 4
basis points to 3.16 percent while the 10 year note was up 3 basis points to 2.89 percent.
Asia Pacific Markets
Asian stocks advanced Friday as geopolitical tensions eased and investors were relieved that US tariffs were less severe than originally feared. Geopolitical tensions eased after North Korean leader Kim Jong Un offered to halt nuclear and missile tests and expressed his desire to meet with US President Donald Trump through South Korean national security adviser Chung Eui-yong. Separately, the White House placed import tariffs of 25 percent on steel and 10 percent for aluminum but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier "no-exceptions" stance. The Shanghai Composite advanced 0.6 percent after China's February inflation rose to the highest level in more than four years, driven by a rebound in food prices. At the same time, producer price inflation slowed to a 15- month low. Consumer prices were up 2.9 percent on the year after increasing 1.5 percent in January. This was the highest since November 2013. Producer price inflation weakened to 3.7 percent in February from 4.3 percent in January. The Hang Seng index was up 1.1 percent on the day. For the week, the Shanghai Composite was up 1.6 percent and the Hang Seng added 1.3 percent. read moreUS Markets
Even though the S&P and Nasdaq managed to finish higher for the day on Friday, the major indices posted their
worst week of losses since early February as President Donald Trump’s threat to impose import tariffs on steel
and aluminum rattled investors. Bargain hunting may have contributed to the rebound in the S&P and Nasdaq.
The gains on Friday came as investors who had been spooked by the prospect of a global trade war backed off
those concerns and noted a trade war was not certain at this point beyond verbal threats. The Dow Jones
industrials were down 0.3 percent Friday while the S&P and Nasdaq added 0.5 percent and 1.1 percent
respectively. However for the week, the Dow dropped 3.0 percent, the S&P retreated 2.0 percent and the
Nasdaq was 1.1 percent lower.
Trump on Thursday threatened a 25 percent tariff on steel imports and 10 percent on aluminum without
exemptions for any countries, igniting a selloff in a market already on edge over rising US interest rates and
bond yields.
Caterpillar, a buyer of raw materials and a big exporter of construction machinery products, was down after
falling in the previous day’s session. General Motors also retreated. McDonald’s dropped after a broker
downgrade citing a disappointing early sales impact from McDonald’s value menu. JC Penney retreated after the
department store chain missed same-store sales estimates. Biogen and AbbVie turned higher despite voluntarily
withdrawing their multiple sclerosis drug Zinbryta from the global markets.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$14.55 to
US$1322.30. Copper futures were up 0.1 percent to US$3.12. WTI spot crude was up 26 US cents to US$61.25.
Dated Brent spot crude was up 54 US cents to US$64.37. The US dollar was up against the Canadian and
Australian dollars. It retreated against the euro, pound, Swiss franc and yen. The Dollar Index was down 0.31
percent. The yields on both the US Treasury 30 year bond and 10 year note were up 5 basis points to 3.14
percent and 2.86 percent respectively.
Asia Pacific Markets
Asian stocks tumbled Friday after US President Donald Trump vowed to impose tariffs on steel and aluminum imports, sparking fears of a trade war. Renewed concerns over a faster pace of interest rate increases in the US also kept investors nervous. The Shanghai Composite index declined 0.6 percent and the Hang Seng dropped 1.5 percent. Investors here were monitoring the upcoming session of the National People's Congress in Beijing. The gathering of 3,000-plus delegates is expected to set the tone for the year's development plans. For the week, the Shanghai Composite declined 1.0 percent and the Hang Seng was 2.2 percent lower. read moreUS Markets
Stocks rallied Friday. They were lifted by a combination of technology shares and a retreat in bond yields. The
Dow Jones industrials increased 1.4 percent, the S&P added 1.6 percent and the Nasdaq jumped 1.8 percent.
After the daily gains, the three indices managed to advance on the week. The Dow edged up 0.4 percent, the
S&P gained 0.6 percent and the Nasdaq was 1.4 percent higher. Dropping treasury yields contributed to the
rally with the ten-year yield pulling back further off the four-year closing high set on Wednesday. Trading was
light as some traders stayed on the sidelines amid a lack of major US economic data. Traders were also waiting
for new Fed chairman Jerome Powell’s first testimony before the House and Senate on Tuesday and Thursday
respectively.
Asia Pacific Markets
Asian stocks advanced Friday after US government debt yields retreated from multiyear highs reached Wednesday and helped to ease worries about inflation and higher interest rates. The US dollar edged up against the yen on improved risk appetite and oil held onto overnight gains after an unexpected drawdown in US crude inventories. The Nikkei and Topix were up 0.7 percent and 0.8 percent respectively. Exporters Canon, Toyota Motor, Honda Motor and Panasonic advanced while the US dollar edged up against the yen and other currencies. Inpex and Japan Petroleum were higher as well. January nationwide consumer prices climbed an annual 1.4 percent. That exceeded forecasts for 1.3 percent and was up from 1.0 percent in December. However, the policy CPI target — consumer prices less fresh food — was up 0.9 percent on the year for a second month. For the week, the Nikkei was up 0.8 percent and the Topix was 1.3 percent higher. read moreUS Markets
US shares ended a volatile week with stocks surging in the final hour of trading Friday. The indices were no
longer in correction territory — defined as a drop of at least 10 per cent from a recent peak — but still dropped
the most on the week in just over two years. Friday was no exception to the volatility that occurred all week.
For the day, the Dow Jones industrials and Nasdaq were up 1.4 percent while the S&P added 1.5 percent.
However, on the week, both the Dow and S&P lost 5.2 percent and the Nasdaq retreated 5.1 percent.
The higher close Friday was partly due to bargain hunting after the steep losses incurred earlier in the week.
Traders may also have reacted positively to news that Congress managed to end a brief government shutdown
with a bill raising spending caps and funding the government until March 23rd. However, traders were spooked
by inflation fears after the release of the January employment report on Friday February 2, and the selloff of
that day spilled over into the next week’s trading as the fear gauge (VIX) doubled, clobbering exchange-traded
products that investors had used to bet on the continued stability of stock prices. Many investors believe recent
selling has reflected an overdue pullback in stocks after big 2017 and early 2018 gains.
Asia Pacific Markets
Asian stocks were sharply lower Friday on renewed worries about rising inflation and higher interest rates after the yield on the 10-year US Treasury note neared its highest levels in four years and the Bank of England hinted at somewhat earlier and more frequent interest rate increases. The decline in oil prices and concerns about high valuations also spooked investors. The declines in Asia mirrored the overnight selloff overnight in the US where the Dow and S&P entered correction territory amid rising government debt yields on worries that the Federal Reserve may fight inflation by aggressively raising interest rates. Chinese shares led regional losses as liquidity conditions tightened before the Chinese New Year break at the end of this week. The People’s Bank of China today said it released temporary liquidity of almost 2 trillion yuan to meet cash demand before the long Lunar New Year holidays. The Shanghai Composite sank 4.1 percent on the day while the Hang Seng lost 3.1 percent. For the week, the indices were down 9.6 percent and 9.5 percent respectively. January consumer prices climbed 1.5 percent on the year — the weakest in four months — after rising 1.8 percent in December. Producer prices were up an annual 4.3 percent after 4.9 percent in the previous month. read more2018-02-05 | USA
US stock indices retreated Friday and for the week — traders were worried about the prospect that the Federal
Reserve will accelerate its interest rate increase schedule. The Dow Jones industrials dropped 2.5 percent, the
S&P retreated 2.1 percent and the Nasdaq was 2.0 percent lower. On the week, the Dow plummeted 4.1
percent, while the Nasdaq and the S&P 500 plunged by 3.5 percent and 3.9 percent respectively.
Asian stocks were mixed Friday as rising bond yields and mixed earnings from top US companies led to caution
prior to the release of the January US employment report. Markets here were closed for the week prior the
release.
The Shanghai Composite was up 0.4 percent after reversing early losses as investors looked ahead to next
week’s releases of January merchandise trade and consumer and producer price indices. The Hang Seng slipped
0.1 percent. On the week, the former lost 2.7 percent and the latter was down 1.7 percent.
2018-01-29 | USA
After closing mixed for two consecutive sessions, US stocks moved to the upside on Friday with the rally sending all three major averages to new record closing highs. The Dow Jones industrials were up 0.8 percent, the S&P added 1.2 percent and the Nasdaq advanced 1.3 percent. On the week, the three indices were up 2.1 percent, 2.2 percent and 2.3 percent respectively. Asian shares were mixed Friday. Markets shrugged off data showing that China's industrial profit growth eased in December. Markets in Australia and India were closed for holidays. China's industrial profits continued to increase in December, though at a weaker pace than in the previous month, up 10.8 percent from a year ago after increasing 14.9 percent in November. The Shanghai Composite was up 0.3 percent while the Hang Seng added 1.5 percent. For the week, the Shanghai Composite was up 2.0 percent and the Hang Seng jumped 2.8 percent. Both the Nikkei and Topix retreated on Friday with the former down 0.2 percent and the latter 0.3 percent lower. The indices were dragged down by oil firms and financials. On the week, the Nikkei lost 0.7 percent and the Topix was 0.5 percent lower. Core consumer prices excluding only fresh food were up an annual 0.9 percent in December for a second month. Minutes from the Bank of Japan’s December 20-21 meeting revealed that the monetary policy board is seeking to make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target. Inpex and Japan Petroleum Exploration were lower along with Mitsubishi UFJ Financial Group and Dai-ichi Life Holdings.
read more2018-01-25 | Global
European markets continued to climb Friday, helping to extend their gains after the Dow reached a new record high Thursday and Asian markets turned in a strong performance overnight. The markets held most of their gains following the release of the weaker than expected US jobs report. The FTSE was up 0.4 percent, the SMI gained 0.5 percent and the CAC and DAX added 1.1 percent and 1.2 percent respectively. For the week, the FTSE was up 0.5 percent, the SMI advanced 1.9 percent, the CAC added 3.0 percent and the DAX was 3.1 percent higher.
read more2018-01-15 | USA
US stocks continued to climb Friday, closing at record highs as fourth quarter earnings season began. Banks produced solid results while economic data continued to boost investor morale. The Dow Jones industrials were up 0.9 percent and both the S&P and Nasdaq were 0.7 percent higher. For the week, the Dow added 2.0 percent, the S&P gained 1.6 percent and the Nasdaq was 1.7 percent higher. Investors were hopeful that 2018 financial forecasts from US companies would beat estimates as many analysts may not have tax savings fully reflected in their models because the tax bill was signed into law so late in December. Asian stocks were mostly higher Friday after oil prices rallied overnight and China dismissed media reports that officials have recommended slowing or halting purchases of US debt. Optimism about the earnings season also offered a boost. The Shanghai Composite edged up 0.1 percent while the Hang Seng added 0.9 percent. For the week, the former was up 1.1 percent and the latter, 1.9 percent. December merchandise trade data for Mainland China indicated that both exports and imports growth slowed in a sign of weaker global and domestic demand. December exports were up 10.9 percent on the year, down from the 12.3 percent gain in November. Imports were up 4.5 percent after 17.7 percent. Both the Nikkei and Topix retreated with the former down 0.2 percent and the latter down 0.6 percent. The indices also were lower for the week. The Nikkei was down 0.3 percent and the Topix was 0.2 percent lower. Fast Retailing posted a record quarterly profit, helping to limit the downside. Among exporters, Sony, Canon, Panasonic, Honda Motor and Kyocera retreated.
read more2018-01-08 | USA
Stock indices extended their daily gains for a fourth day and once again they reached new record closing highs. The Dow Jones industrials were up 0.9 percent, the S&P gained 0.7 percent and the Nasdaq was 0.8 percent higher. For the holiday shortened week, the three indices were up 2.3 percent, 2.6 percent and 3.4 percent respectively. The US tax legislation that was enacted last month includes hefty corporate tax cuts and has helped carry late-year gains into the new year. European markets continued to climb Friday, helping to extend their gains after the Dow reached a new record high Thursday and Asian markets turned in a strong performance overnight. The markets held most of their gains following the release of the weaker than expected US jobs report. The FTSE was up 0.4 percent, the SMI gained 0.5 percent and the CAC and DAX added 1.1 percent and 1.2 percent respectively. For the week, the FTSE was up 0.5 percent, the SMI advanced 1.9 percent, the CAC added 3.0 percent and the DAX was 3.1 percent higher.
read more2017-12-11 | USA
Stocks advanced on Friday thanks to a solid US November employment report that locked in expectations for a Federal Reserve interest rate increase Wednesday and raised optimism about economic prospects in 2018. The Dow Jones industrials were up 0.5 percent, the S&P added 0.6 percent and the Nasdaq was 0.4 percent higher. For the week, the Dow and S&P were up 0.4 percent but the Nasdaq slipped 0.1 percent. President Donald Trump signed legislation to fund the federal government for two more weeks, averting a government shutdown while Congress negotiated a longer-term budget deal, temporarily removing a potential headwind for stocks. European shares ended solidly in positive territory Friday. Traders were in an upbeat mood after the UK reached a divorce deal with the European Union, setting stage to move on to future trade talks post-Brexit. European Commission President Jean-Claude Juncker confirmed that enough progress had been made in talks to proceed to the second phase of negotiations. The deal ruled out a hard border for Northern Ireland and guaranteed the rights of three million EU citizens in the UK.
read more2017-12-04 | USA
US stocks retreated Friday. They fell sharply early in the trading session after former national security adviser Michael Flynn pleaded guilty to a charge of lying to the FBI. However, those losses were trimmed on expectations that the Senate had enough support to push through its version of tax reform. Stocks also were buoyed this week by hopes that Republicans would be able to deliver the first major tax overhaul since 1986 alongside data showing the US economy expanded at its quickest pace in three years in the third quarter.
read more2017-11-27 | USA
US stocks edged higher Friday in an abbreviated trading session. The S&P ended the day above 2,600 for the first time and joined the Nasdaq in closing at a record high. The S&P was up 0.2 percent, the Dow Jones industrials edged up 0.1 percent and the Nasdaq was 0.3 percent higher for the day. For the holiday shortened week, the Dow and S&P were both up 0.9 percent while the Nasdaq added 1.6 percent. The strength partly reflected recent upward momentum, which has propelled to stocks to new record highs.
read more2017-11-20 | USA
Activity was relatively subdued Friday with the three major indices declining. The Dow Jones industrials lost 0.4 percent, the S&P declined 0.3 percent while Nasdaq was 0.2 percent lower. For the week, the major averages were mixed. While the Nasdaq added 0.5 percent, the Dow and S&P 500 edged down 0.3 percent and 0.1 percent respectively. The weakness was partly attributed to continuing uncertainty about the outlook for Republican lawmakers' tax reform plans. While the House approved their tax reform bill on Thursday, significant differences with the Senate version could hinder final passage of the legislation.
read more2017-11-13 | USA
US stocks once again stayed close to the unchanged mark Friday. The Dow Jones industrials and S&P both declined 0.2 percent and 0.1 percent respectively while the Nasdaq inched up 0.89 point. On the week, the three indices were lower. The Dow was down 0.5 percent while both the S&P and Nasdaq retreated 0.2 percent. The weekly declines ended eight weekly advances by the Dow and the S&P and six weeks of gains for the Nasdaq.
read more2017-11-06 | USA
US shares advanced Friday — the Dow Jones industrials were up 0.1 percent, the S&P gained 0.3 percent and the Nasdaq added 0.7 percent. Both the Dow and S&P have now gained for 8 consecutive weeks while the Nasdaq has been up for 6. For the week, the Dow was up 0.4 percent, the S&P 0.3 percent and the Nasdaq was 0.9 percent higher.
read more2017-10-30 | USA
Shares advanced Friday with both the Nasdaq and the S&P climbing to new record closing highs. The Nasdaq outperformed its counterparts by a wide margin. The Nasdaq jumped 2.2 percent while the S&P added 0.8 percent and the Dow Jones industrials inched up 0.1 percent. For the week, Nasdaq jumped 1.1 percent, the Dow added 0.5 percent and the S&P edged 0.2 percent higher. The strength came in reaction to upbeat earnings news from several well-known companies.
read more2017-10-23 | USA
US stocks closed higher Friday, lifting the S&P to its fifth record close in a row. The Dow Jones industrials, which crossed the 23,000 mark for the first time Wednesday, also finished the day with its fifth-straight all-time high. The Nasdaq closed at a record high as well. On Friday, the Dow was up 0.7 percent (2.0 percent on the week), the S&P added 0.5 percent (0.9 percent) and Nasdaq was 0.4 percent higher (0.4 percent).
read more2017-10-16 | USA
US stocks edged higher Friday to close at record highs yet again. Investors were helped by upbeat sentiment and retail sales data as well as gains in technology shares. The Dow Jones industrials and S&P were up 0.1 percent and the Nasdaq added 0.2 percent. For the week, the Dow gained 0.4 percent and the Nasdaq and S&P were 0.2 percent higher. The S&P and the Dow closed higher for the fifth straight week and the Nasdaq for the third.
read more2017-09 | USA
US stocks barely moved Friday as worries about Washington's latest healthcare legislation proposal eased and investors shrugged off geopolitical concerns about North Korea in choppy trading. The Dow Jones industrials were down 9.64 points while the S&P and Nasdaq inched up 0.1 percent. For the week, the Dow was up 0.4 percent and the S&P edged up 0.1 percent. The Nasdaq retreated 0.3 percent.
read more2017-08 | USA
Stocks declined Friday as the rally triggered by the firing of Donald Trump;s chief strategist Stephen Bannon proved short-lived.
read more2017-08 | USA
US shares steadied Friday after dropping on Thursday.
read more2017-08 | USA
US stocks advanced Friday following the release of better than expected employment data.
read more2017-07 | USA
After initially declining, stocks turned mixed over the course of trading day on Friday.
read more2017-07 | USA
US shares closed slightly lower on the negative side of no change.
read more2017-07 | USA
Both the Dow Jones industrials and S&P closed once again at new record highs.
read more2017-07 | USA
Stocks rebounded from Thursday's declines and managed to gain in the holiday shortened week as well thanks to a stronger than anticipated June employment report.
read more2017-07 | USA
After advancing for most of Friday's trading session, the indices pulled back in afternoon trading.
read more2017-06 | USA
Stocks were lackluster Friday closing mixed for the third straight day.
read more2017-06 | USA
US stocks were mixed both on Friday and for the week thanks in part to disappointing economic data.
read more2017-06 | USA
US stocks, after reaching record intraday highs, retreated to give back some ground on Friday.
read more2017-06 | USA
US stocks set new closing and intraday highs and government bonds rallied strongly Friday after an unexpectedly weak May jobs report was seen to ease pressure on the Federal Reserve to increase the pace of interest rate increases beyond the three it has already signaled for this year.
read more2017-05 | USA
After rising over the past several days, shares showed a lack of direction in pre-holiday trading.
read more2017-05 | USA
Stocks advanced for a second day on Friday and that helped offset some of Wednesday's steep losses.
read more2017-05 | USA
Stocks declined Friday as mediocre inflation and retail sales data weighed on banks while worries deepened about the retail sector of the economy.
read more2017-05 | USA
US indices advanced Friday after a better than expected employment report.
read more2017-04 | USA
US stocks gyrated between gains and losses as traders looked ahead to Sunday's elections in France.
read more2017-04 | HK
Trading was quiet with markets in Europe closed for Easter Monday.
read more2017-04 | USA
Stock indices edged lower Friday in choppy trading investors were disappointed by the March employment report, the US airstrike in Syria and a Federal Reserve official's comments on trimming the Fed 's balance sheet.
read more2017-04 | USA
Stocks were mostly lower Friday as the first quarter ended.
read more2017-03 | USA
Stocks were down slightly Friday but pared losses in the late afternoon after Republicans pulled their health care bill because of a lack of votes just before markets closed.
read more2017-03 | USA
Investors paused for a second day after the Fed' s funds move.
read more2017-03 | USA
The US employment report validated expectations of robust jobs growth.
read more2017-03 | Hongkong
Shares retreated in the Asia Pacific region but were mostly higher in Europe and the US.
read more2017-02 | USA
Investors are waiting to see details on US tax cuts and other program changes.
read more2017-02 | Singapore
Most global stock indices paused for breath Friday but were still higher for the week.
read more2017-02 | USA
US stock indices reached new all-time highs for the second day in a row Friday.
read more2017-02 | USA
Stocks were mostly up on Friday but mostly lower for the week.
read more2017-01 | USA
Global shares were mostly lower for the week.
read more2017-01 | USA
Stocks were slightly higher Friday with the Nasdaq up 0.5 percent and the S&P 0.2 percent higher.
read more2017-01 | USA
US markets were closed Monday for the long New Year's weekend.
read more2016-12 | USA
Stocks mixed both on Friday and for the week.
read more2016-12 | Hongkong
On Friday, they were mixed in Asia but gained in Europe and the US.
read more2016-12 | Italian
Investors were waiting for the results of Sunday's Italian referendum.
read more2016-11 | USA
US stock indices hit new record highs in abbreviated trading session.
read more2016-11 | USA
Trading in the US was light before the US Thanksgiving holiday.
read more2016-11 | USA
Stocks were mixed Friday with the Dow Jones industrials edging up 0.2 percent and the Nasdaq adding 0.5 percent.
read more2016-11 | USA
Investors were risk averse before the US presidential election.
read more2016-10 | Shanghai
US stocks were lower Friday after fluctuating during the course of the trading session.
read more2016-10 | Shanghai
With little new economic news, investors focused on earnings
read more2016-10 | Shanghai
However, most global indices retreated for the week.
read more2016-10 | Shanghai
Shares were mostly lower for the week and month but positive for the third quarter.
read more2016-09 | Hongkong
Trading was subdued as investors waited for the FOMC and Bank of Japan monetary policy decisions.
read more2016-09 | Hongkong
Shares were lower for the week except in the US.
read more2016-09 | Hongkong
Investors worried that higher interest rates from the Fed will come soon.
read more2016-09 | USA
Europe and the US rallied when employment increased by less than expected.
read more2016-08 | USA
Stocks were mixed Friday and for the week in light summertime trading
read more2016-08 | USA
Investor focus is once again on Federal Reserve monetary policy.
read more2016-08 | USA
Stocks were mixed Friday in Europe and the US after US retail sales data disappointed.
read more2016-08 | USA
Stocks rallied Friday after the US employment report handily beat expectations.
read more016-08 | USA
Stocks were mixed on the last day of the month and for the week.
read more2016-07 | USA
While US stocks increased both on Friday and the week, the picture was mixed elsewhere.0.5%。
read more2016-07 | Hongkong
Stocks paused after the rally earlier in the week but were higher on the week.
read more2016-07 | Hongkong
Shares were mixed on the week but were boosted in the US and Europe thanks to the US employment gain.
read more2016-07 | Europe
On the week, stocks were mixed in Asia and Europe and were up in the US.
read more2016-06 | Europe
Financial markets tumbled after the UK voted to leave the European Union.
read more2016-06 | UK
US stocks were down Friday and for the week as investors continued to monitor the Brexit debate in the UK.
read more2016-06 | Hongkong
Declining oil prices and falling bond yields weighed on stocks. Stocks retreated wiping out most of the gains from earlier in the week.
read more2016-06 | USA
US and European stocks retreated on a very disappointing US employment report.
read more2016-05 | USA
Most stock advanced Friday and for the week prior to remarks by Fed chair Janet Yellen.
read more2016-05 | USA
However, for the week the indices were mixed.Stocks rebounded Friday and in the process erased most of the losses from earlier in the week when investors reacted negatively to the Federal Reserve's FOMC minutes.
read more2016-05 | Hongkong
Asian and US stocks retreated while Europe rallied. United States markets were lower Friday as more retailers reported plunging first quarter sales.
read more2016-05 | Hongkong
Stocks were mixed Friday after the US employment report disappointed traders. After initially moving to the downside, stocks rebounded over the course of the trading session Friday.
read more2016-05 | USA
US and European markets steadied Monday after last week's declines.Shares advanced Monday after tumbling last week. The Dow Jones industrials rebounded 0.7 percent, the S&P added 0.8 percent and the Nasdaq gained 0.9 percent.
read more2016-04 | Hongkong
A rebound in the prices of oil and natural gas helped drive gains for energy and financial companies, offsetting a slide in technology stocks. This left the Dow Jones industrials up 0.1 percent while the S&P was virtually unchanged.
read more2016-04 | USA
Investors weighed earnings results and waited for the outcome of Sunday's talks in Doha between most key oil producers.
read more2016-04 | USA
Investors were cautious ahead of earning season despite reassuring comments from Fed Chair Janet Yellen.
read more2016-03 | USA
Global stock indices were mixed Friday and for the week.US stocks advanced Friday and were up for a fifth consecutive week.
read more2016-03 | Hongkong
Stocks wobbled but managed a fourth consecutive day of gains after employment increased more than expected in February.
read more2016-02 | Hongkong
The Dow Jones industrial and S&P were down 0.3 percent and 0.2 percent respectively while the Nasdaq ended 0.2 percent higher.
read more2016-02 | Hongkong
Stocks were little changed Friday in lackluster trading. Tech shares helped to offset a renewed decline in oil prices.
read more2016-02 | Japan
Stocks soared on the last trading day of January with Microsoft, Visa and other tech stocks making the biggest gains in a broad market rally.
read more2016-01 | Hongkong
Stocks made their biggest gain in more than a month Friday as oil prices surged again, lifting energy stocks. Technology stocks also climbed. The Dow Jones industrials were up 1.3 percent on the day and 0.7 percent on the week.
read more2016-01 | Hongkong
Despite a blockbuster US jobs report Friday, the S&P had its worst week in more than four years as worries about China cast a shadow over markets. Both the Dow Jones industrials and the Nasdaq lost 1.0 percent on the day while the S&P retreated 1.1 percent.
read more2015-12 | Hongkong
Stocks plunged across all sectors in the heaviest trading of the year as enthusiasm over a long awaited increase in U.S. interest rates faded. Several other negative factors combined to give the market its second big loss in a row and sending the indices lower for the week.
read more2015-12 | USA
Stocks retreated Friday, more than offsetting the moderate increases of Thursday's session. The Dow Jones industrials were down 1.8 percent and 3.3 percent on the week.
read more2015-12 | Hongkong
US markets rose sharply on Friday after the government reported another month of strong job gains. The price of oil retreated on reports that OPEC would not cut production.
read more2015-11 | USA
Big gains by retailers and technology companies boosted stocks in Friday afternoon trading. The Dow Jones industrials were up 0.5% (3.4% on the week), the S&P gained 0.4% (3.3% on the week) and the Nasdaq added 0.6% (3.6% on the week).
read more2015-11 | USA
The stock market slumped to its second biggest weekly loss of the year, breaking six consecutive weeks of gains. Fears were that the holiday shopping season will not meet expectations. This sent retail stocks tumbling.
read more2015-11 | USA
Markets in the US were volatile Friday after the forecast-beating jobs figures were released. The dollar jumped after the figures were released as traders priced in a growing likelihood of a Federal Reserve interest rate increase in December.。
read more2015-11 | Shanghai
Stocks drifted lower Friday after economic data suggested that the economy is still sluggish. But the outlook for future growth improved and fears waned that a slowing Chinese economy would hamper the US economy.
read more2015-10 | Beijing
Stocks were up for a second day thanks to strong quarterly earnings from several technology companies.
read more2015-10 | Shanghai
Stocks traded with a lack of direction in early trading but rallied to end the session higher. The Dow Jones industrials and the S&P reached nearly two month closing highs while the Nasdaq rose to its best levels in a month.
read more2015-10 | USA
Following the rally the day before, stocks saw some further upside trading on Friday. While buying interest was somewhat subdued on the day, the Dow and the S&P reached their best closing levels in over a month.
read more2015-09 | USA
Fears over slowing global growth hammered stocks Friday and lifted prices of government bonds and other assets seen as safer bets.
read more2015-09 | USA
Stocks advanced in choppy trading for a second day. The gains on the day further offset Wednesday's losses.
read more2015-08 | USA
The Dow Jones industrials slipped 0.1% while the S&P and Nasdaq were up 0.1% and 0.3% respectively. The indices added 1.1%, 0.9% and 2.6% respectively.
read more2015-08 | USA
At the same time the Dow Jones industrials confirmed it had entered into correction territory as fears of a China-led global slowdown rattled investors globally.。
read more2015-08 | USA
On the week, the Dow was up 0.6%, the S&P gained 0.7% and Nasdaq edged up 0.1%. Trading was somewhat subdued Friday - it is the middle of the August vacation season.
read more2015-08 | USA
Stocks declined Friday after a solid employment report kept alive the possibly that the Federal Reserve will raise interest rates as soon as next month.
read more2015-08 | USA
Stocks slipped Friday but advanced for the month of July. Energy stocks retreated while weak wage data supported expectations that the Federal Reserve might hold off on an interest rate.
read more2015-07 | USA
New signs pointing to a slowing of China's economy also added to investor jitters, bringing down the price of oil and other commodities.
read more2015-07 | USA
Nasdaq advanced 0.9%, ending its best week in nearly nine months thanks to a rally in Google after it reported earnings that exceeded expectations.
read more2015-07 | Greece
Voters in Greece delivered a decisive 'no' vote on Sunday, with 61% of voters saying that they would not yield to further austerity measures demanded by the country's creditors.
read more2015-06 | Greece
Stocks closed mostly lower Friday prior to the weekend's events as negotiators continued to work toward a solution to Greece's debt problems.
read more2015-06 | USA
A setback in talks between Greece and its creditors helped send stocks lower Friday amid renewed concerns that the country could default on its debts.
read more2015-06 | USA
Stocks ended mostly lower in lackluster trading after a better than anticipated May US employment report.
read more2015-06 | USA
After coming under pressure in early trading, stocks continued to decline throughout the trading day. The indices fluctuated as the day progressed but remained firmly in negative territory.
read more2015-06 | USA
Stock indices spent Friday drifting between small gains and losses, but the moves were enough to nudge the S&P to its second closing high in two days.
read more2015-05 | Greece
US shares had their best day in two months Friday after encouraging news about the job market.
read more2015-05 | UK
US shares rebounded from Thursday's losses to post strong gains Friday. The Dow Jones industrials were up 1.0%, the S&P gained 1.1% and the Nasdaq added 1.3%.
read more2015-04 | USA
Stocks advanced Friday as investors cheered the quarterly results of three large technology companies - Google, Microsoft and Amazon.
read more