Daily global market update

On 22 September, 2017 - Geopolitical concerns once again weighed on investors

Shares were mixed on Friday and for the week.

United States

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.

Healthcare stocks rallied on Friday, with many briefly erasing losses after Senator John McCain came out in opposition to the latest Republican attempt to repeal and replace Obamacare. UnitedHealth closed lower. T-Mobile gained after Reuters reported that it was close to agreeing tentative terms on a deal to merge with Sprint, whose shares jumped. The report also pushed up Verizon Communications and AT&T, both of which could benefit from having one less competitor.

Pure Storage, Quantum and Seagate Technology advanced. CarMax jumped after quarterly earnings and revenue beat expectations. DaVita dropped after a Southern Investigative Reporting Foundation report questioned the company’s revenue sources. Equifax jumped after plunging more than 30 percent in the wake of a data breach that compromised sensitive information of 143 million Americans. Apple closed lower over the week, making it the worst week ahead of an iPhone launch since the original iPhone was released back in 2007. The lackluster performance comes after less-than-stellar reviews on its new slate of product offerings.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.70 to US$1,294.80. Copper futures were up 0.34 percent to US$2.94. WTI spot crude was up 11 US cents to US$50.66. Dated Brent spot crude was up 43 US cents to US$56.86. The US dollar was down against the yen, euro, Swiss franc and the Australian dollar. The currency was up against the pound and unchanged against the Canadian dollar. The Dollar Index was virtually unchanged. The yield on the US Treasury 30 year bond was down 2 basis points to 2.78 percent and 10 year note was down 3 basis points 2.25 percent.

European markets

Most European markets advanced Friday thanks to the solid flash PMI readings for Germany, France and the Eurozone. However, optimism over the positive data was offset by geopolitical concerns as tensions between North Korea and the United States flared up again. The FTSE was up 0.6 percent, the CAC was up 0.3 percent and the SMI added 2.59 points. The DAX edged 0.1 percent lower. For the week, both the FTSE and CAC added 1.3 percent, the DAX advanced 0.6 percent and the SMI gained 1.2 percent.

In a speech in Florence, Italy Friday, UK Prime Minister Theresa May hinted at the departure from the European Union by March 2019. May said that it is impossible to have all the advantages of the single market with none of the disadvantages. Hence, a "creative" economic partnership was needed. The FTSE rallied in afternoon trading Friday as Prime Minister May’s speech in Florence disappointed currency traders, sending the pound sliding. Traders sold sterling as they deemed May’s speech short on detail, and hopes of a plan on how Britain might keep preferential access to the single market were dashed.

L’Oréal rallied on speculation about the future of the company after billionaire Liliane Bettencourt died at the age of 94. Capita was lower after the staff represented by trade union Unite voted in favor of an industrial action. Smiths Group dropped after the conglomerate reported a fall in underlying full-year revenue. Telia was down in Stockholm after it agreed to pay a combined total penalty of more than $965 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.

Fresnillo and Randgold Resources advanced. Rio Tinto gained even as the company said it is starting an additional $2.5 billion share buyback program. Rio Tinto is returning proceeds from the sale of Coal & Allied to shareholders. Unilever retreated after the company said it plans on buying Remgro’s stake in Unilever South Africa Holdings in a deal valued at 11.9 billion rand. EasyJet was down after Air Berlin confirmed it is in talks with the UK carrier and Germany’s Deutsche Lufthansa to sell its airline operations.

September Eurozone flash composite PMI reading rose 56.7 in September from 55.7 in August. Germany's private sector grew at the fastest pace in almost six-and-a-half years. The composite output index climbed to 57.8 from 55.8 in August. This was the highest reading since April 2011. France’s flash composite reading climbed to a 76-month high of 57.2.

Asia Pacific

Asian stocks declined Friday as rising geopolitical tensions between the United States and North Korea as well as a rating downgrade to China's credit rating sent investors to safe haven assets such as gold, the Japanese yen and the Swiss franc.

The Shanghai Composite was down 0.2 percent while the Hang Seng lost 0.8 percent. S&P Global Ratings downgraded China's credit rating on Thursday, citing higher economic and financial risks after a prolonged period of strong credit growth. The ratings agency also lowered its sovereign rating on Hong Kong, citing spill over risks. The Shanghai Composite was down 1.09 points for the week while the Hang Seng was up 0.3 percent.

The Nikkei was down 0.3 percent while the Topix was 0.2 percent lower as renewed concerns about North Korea helped lift demand for safe-haven assets, including the Japanese yen. On the week however, the Nikkei was up 1.9 percent and the Topix, 1.6 percent. Steelmakers bore the brunt of the selling, with JFE Holdings and Kobe Steel retreating.

The S&P/ASX added 0.5 percent and the All Ordinaries was 0.4 percent higher. The big four banks gained. Rio Tinto advanced after launching a share buyback. Regional broadcaster Prime Media Group after talks with Seven West Media over a potential merger failed. For the week, the S&P/ASX was up 0.2 percent while the All Ordinaries added 0.3 percent.

The Kospi was down for a fourth day this time by 0.7 percent with steelmakers succumbing to heavy selling pressure in the wake of reports that the US plans to impose tariffs on South Korean steel. On the week, the index edged up 0.1 percent. The Sensex tumbled 1.4 percent as the rupee breached the 65 per dollar level to hit its lowest since April 5. The Sensex was 1.1 percent lower on the week.

Looking forward

Central Bank activities

Sep 28

New Zealand

Reserve Bank of New Zealand Monetary Policy Announcement

The following indicators will be released this week...

Europe

Sep 25

Germany

Ifo Survey (September)

Sep 27

Eurozone

M3 Money Supply (August)

Sep 28

Eurozone

EC Business and Consumer Confidence (September)

Sep 29

Eurozone

Harmonized Index of Consumer Prices (September flash)

Germany

Retail Sales (August)

France

Consumer Spending on Manufactured goods (August)

UK

Gross Domestic Product (Q2:2017 final)

Asia Pacific

Sep 25

Japan

Manufacturing PMI (September flash)

Sep 29

Japan

Household Spending (August)

Unemployment (August)

Retail Sales (August)

Industrial Production (August)

Consumer Price Index (August)

China

Manufacturing PMI (September)

Americas

Sep 26

United States

Case-Shiller House Price Index (July)

New Home Sales (August)

Consumer Confidence (September)

Sep 27

United States

Durable Goods Orders (August)

Pending Home Sales (August)

United States

Initial Unemployment Claims (week ending prior Saturday)

Gross Domestic Product (Q2.2017 final)

International Trade in Goods (August)

Sep 29

Canada

Monthly Gross Domestic Product (July)

Industrial Product Price Index (August)

United States

Personal Income & Spending (August)

Chicago PMI (September)

Consumer Sentiment (September final)

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
Econoday

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.

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