Daily global market update

On 20 July, 2017 - Monetary policy from both the ECB and BoJ was in focus

Earning reports from major companies were mixed.

United States

Stocks were little changed Thursday with the Dow Jones industrials down 0.1 percent, the S&P virtually unchanged (down 0.34 point) and the Nasdaq up 0.1 percent. The Dow and S&P were weighed down by a drop in retailers and some tepid earnings reports.

Home Depot retreated while Sears soared after it said it would sell its Kenmore home appliances on Amazon.com and integrate the brand's smart gadgets with the online giant's Alexa digital assistant. The news dragged down Best Buy and Lowe's. Amazon advanced and was the biggest boost for the Nasdaq, along with Facebook. Both the companies are due to report results next week. Qualcomm retreated after missing estimates.

T-Mobile gained after the wireless carrier's quarterly results topped estimates. Verizon and AT&T also advanced. Abbott Laboratories was higher after it raised its full-year profit forecast. Travelers declined after reporting a drop in quarterly profit. American Express dropped after second-quarter earnings fell 33 percent from last year.

Visa’s quarterly revenue jumped nearly 26 percent. Net operating revenue rose to $4.57 billion in the third quarter ended June 30 from $3.63 billion a year earlier. Net income rose to $2.06 billion or 86 cents per Class A share in the third quarter from $412 million or 17 cents per Class A share.

Microsoft reported a quarterly profit that more than doubled, helped by a tax benefit and strong growth in its cloud business. The company's net income rose to $6.51 billion or 83 cents per share in the fourth quarter ended June 30 from $3.12 billion or 39 cents per share a year earlier.

Weekly jobless claims dropped 15,000 to 233,000. July Philadelphia Fed survey reading was 19.5, down from 27.6 in June. The June leading indicator index jumped 0.6 percent.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$3.45 to US$1,238.70. Copper futures were up 0.2 percent to US$2.72. WTI spot crude was down 33 US cents to US$46.79. Dated Brent spot crude was down 41 US cents to US$49.29. The US dollar was up against the yen and pound. It declined against the euro and Swiss franc. It was virtually unchanged against the Canadian and the Australian dollars. The Dollar Index was down 0.5 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.83 percent while the yield on the 10 year note was down 1 basis point to 2.26 percent.


Although stocks here were positive in the early part of the trading day, most slid into negative territory and closed lower on the day. The FTSE was the exception adding 0.8 percent while the SMI (up 3.05 points) and DAX (down 4.80 points) were virtually unchanged on the day. Investors focused on the European Central Bank’s monetary policy decision and ECB’s President Mario Draghi’s press conference. There were a number of corporate earnings reports to parse as well.

The ECB left its key interest rates and massive stimulus unchanged for an 11th straight meeting and maintained forward guidance. Its main refi rate remained at zero percent, the deposit rate at minus 0.40 percent and the marginal lending facility rate was kept at 0.25 percent. The ECB also retained its asset purchases of €60 billion a month until December 2017 or beyond, if necessary. "The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time and well past the horizon of the net asset purchases."

Though the economic expansion is providing confidence that euro area inflation will hit the target in future, it has yet to show any convincing trend of a pickup, prompting the Governing Council to delay a review of the massive stimulus until the fall. In his comments, Mr Draghi said “headline inflation is dampened by the weakness in energy prices.” Further he said that “measures of underlying inflation remain overall at subdued levels."

In Paris, Publicis Groupe rallied after the advertising company posted better than expected second quarter results driven by an uptick in its North American business. Ingenico jumped after it agreed to buy Swedish rival Bambora from Nordic Capital for €1.5 billion. Sports Direct soared as founder Mike Ashley named a new chief financial officer. Unilever advanced after the company said it expects full-year underlying operating margin to grow by at least 100 basis points, as against 80 basis points projected earlier. EasyJet dropped after the carrier made some cautious comments on the outlook for summer pricing. ABB tumbled in Zurich after its second quarter net profit came in below expectations. SAP reversed early gains and declined after reporting revenues for the second quarter rose 10.4 percent to €5.78 billion, slightly above expectations.

UK retail sales rebounded a monthly 0.6 percent in June, reversing a 1.1 percent drop in May.

Asia Pacific

Asian stocks were mixed Thursday after oil prices hit a six-week high and the Bank of Japan kept its monetary policy unchanged. The yen weakened and oil prices held steady after climbing nearly 2 percent overnight on data showing another big weekly decline in US crude oil and gasoline stockpiles, while gold edged lower ahead of ECB rate decision.

The Shanghai Composite was up 0.4 percent as the index rose for a third straight session on expectations of solid earnings from cyclical sectors such as mining and steel. The Hang Seng added 0.3 percent.

The Nikkei was up 0.6 percent and the Topix added 0.7 percent as the yen weakened following the Bank of Japan's decision to leave its monetary policy on hold. Investor sentiment was also buoyed by upbeat merchandise trade data pointing to a sustained economic recovery. June’s merchandise trade balance returned to surplus, though the net balance came in below expectations. Exports were up 9.7 percent from the same month a year ago while imports increased 15.5 percent. While exporters and energy stocks rose, banks ended on a mixed note. Toshiba closed higher on the day.

The BoJ raised its economic assessment saying it was "expanding moderately," while it upgraded the growth projection for the fiscal year ending March 2018 to 1.8 percent from 1.6 percent. The BoJ now expects inflation to reach around 2 percent in the year ending March 2020, a year later than its previous projection. This is the sixth time it has had to postpone the target under Governor Haruhiko Kuroda’s leadership.

Both the S&P/ASX and All Ordinaries advanced 0.5 percent — banks continued to rally. The labour force report for June indicated that the jobless rate remained at 5.6 percent while employment was up 14,100. However, the increase in employment was driven by a strong increase in full-time jobs, outweighing a large decline in part-time jobs. Full-time employment increased by 62,000 persons while part-time employment dropped 48,000. The big four banks climbed to extend Wednesday's gains after the bank regulator outlined its new "capital adequacy" targets, which weren't as tough as initially feared.

The Kospi was up 0.5 percent. However, the Sensex was 0.2 percent lower.

Looking forward

Canada posts May retail sales and June consumer price index.

Global Stock Market Recap

Global Stock Market Recap

Bond markets

Bond markets

Currencies and commodities

Currencies and Commodities

The Longer-Term Perspective

The table below demonstrates that while we may experience some short-term weakness in markets, the longer-term performance remains encouraging.

equity market

*Note — all releases are listed in local time.

Anne D Picker
Chief Economist

Important Information

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