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On 28 February 2019 - Global stocks broadly steady after data provide mixed signals

Anne D Picker

Anne D Picker - Econoday

US markets

US stocks fell moderately Thursday after mixed economic data, with the Dow, the S&P and the Nasdaq all closing down 0.3 percent. Technology manufacturer HP posted a very large fall after reporting a year-on-year decline in revenue for the quarter ending January 31 and providing weaker-than-expected guidance for sales and earnings.

GDP data published Thursday confirmed that the US economy slowed at the end of 2018 but not as much as had been expected. Real GDP grew 2.6 percent on the quarter, down from growth of 3.4 percent but near the top of the consensus range. Residential investment was the weakest component, falling for the fourth consecutive quarter, while consumer spending slowed from outsized rates recorded in the two previous quarters but remained solid. Nonresidential fixed investment, however, picked up again, with net trade and government spending making a small negative and a slight positive contribution to growth respectively. The US economy grew 2.9 percent in 2018, up from 2.2 percent in 2017.

Jobless claims for the February 23 week rose 8,000 to 225,000, matching the consensus, with the four-week moving average falling but still above January levels, suggesting the February employment report will show labour conditions have moderated but remain robust. Regional surveys provided a mixed message ahead of Friday’s ISM report, with the Chicago PMI main index increasing sharply in February but the Kansas City Fed’s manufacturing index falling to a level indicating only marginal growth in activity.

US Trade Representative Robert Lighthizer reported further on the recent US-China trade negotiations to Congress Wednesday, with his office formally advising that the planned increase in tariffs on Chinese imports from 10 percent to 25 percent had been suspended “until further notice”. He noted, however, that any deal would allow the US to increase tariffs as a means to enforce the terms of the deal. The World Trade Organisation ruled Thursday that Chinese farm subsidies exceeded agreed limits.

These data reflect observations at 4:00 PM US ET. Gold fell US$6.70 to US$1,314.50 while dated Brent spot crude was last quoted down US$0.36 to US$66.03. The US dollar advanced against the Australian dollar, the yen, the pound, the yuan, and the Canadian dollar, was unchanged against the euro, and fell moderately against the Swiss franc. The yield on the US Treasury 30 year bond advanced 2 basis points to 3.09 percent while the 10 year note rose 4 basis points to 2.72 percent.

European markets

European markets were mixed Thursday, with the FTSE down 0.5 percent but the CAC and DAX advancing 0.3 percent and 0.2 percent respectively. French media conglomerate Vivendi increased sharply Thursday after Reuters reported that potential purchasers are interested in buying a large stake in its music division, Universal Music.

Revised French GDP data made no changes to initial estimates, with the economy expanding 0.3 percent on the quarter in the three months to December and year-on-year growth slowing from 1.3 percent previously to 0.9 percent. Revisions among components were also minor and confirm that external demand was largely responsible for keeping growth in positive territory. Swiss GDP data showed a small rebound in activity in the three months to December, with net trade making a solid positive contribution and consumer spending also picking up.

Inflation data for major Eurozone economies showed a pick-up in headline numbers but indicate underlying price pressures remain subdued across the region. German headline CPI inflation rose from 1.4 percent in January to 1.6 percent in February, mainly reflecting the impact of stronger increases in food and energy prices. Food and energy prices also drove a small increase in French CPI inflation from 1.2 percent in January to 1.3 percent in February, with PPI inflation also picking up from 1.2 percent to 1.4 percent. This pattern was repeated in Italy, with core inflation unchanged in February but headline CPI inflation rising from 0.9 percent to 1.1 percent. Eurozone inflation data will be published Friday.

Asia Pacific Markets

Most Asian markets closed lower Thursday with weaker regional data and geopolitical tensions weighing on investor sentiment. Japan’s Nikkei and Topix indices both fell 0.8 percent and the Shanghai Composite index and Hong Kong’s Hang Seng index both closed down 0.4 percent. Australia’s All Ordinaries index outperformed, increasing 0.3 percent, with solid gains in the banking and healthcare sectors.

South Korea’s Kospi index was the weakest performer in the region, falling 1.8 percent, and its currency also weakened against the US dollar after the summit in Hanoi between President Trump and North Korean leader Kim Jong Un concluded with no agreement on tighter nuclear weapon restrictions and sanctions relief. India’s Sensex index closed slightly lower but its currency rallied strongly after India-Pakistan tensions eased Thursday with Pakistani Prime Minister Imran Khan’s announcement that a captive Indian military pilot would be released Friday.

The Asian data calendar was busy Thursday. Japanese data showed weakness in both industrial production and retail sales in January. Industrial production dropped 3.7 percent on the month and was flat on the year, broadly in line with PMI survey data, while retail sales fell 2.3 percent on the month and grew just 0.6 percent on the year, reflecting weaker growth in all but two of the nine major categories of spending. The official Chinese PMI manufacturing survey showed activity contracted for the third consecutive month and at a sharper rate in February, with the equivalent non-manufacturing survey also showing weaker conditions. Australian private capital expenditure increased 2.0 percent on the quarter in the three months to December, rebounding from a decline of 0.5 percent in the three months to September, with spending on equipment, plant and machinery slowing but spending on building and structures increasing after four consecutive quarterly declines

Indian GDP data showed year-on-year growth moderated for a second consecutive quarter from 7.0 percent in the three months to September to 6.6 percent in the three months to December, with more subdued activity in key sectors of the economy, including agriculture, manufacturing, utilities and the public sector. This  slowdown will likely reinforce the assessment of officials at the Reserve Bank of India that supporting growth should be their main near-term priority after cutting policy rates at their last meeting earlier this month. 

Looking forward

PMI surveys for the manufacturing sector in Japan, China and India will be published shortly, with PMI surveys for major regional economies also a major focus of the European data calendar, in addition to Eurozone and German labour market data. The US PMI and ISM surveys are also scheduled for release Friday, as are personal income and spending data  and the Canadian GDP report.

Global Stock Markets

 

Index

Feb 28 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

25916.00

-69.16

-0.3

 

NASDAQ

7532.53

-21.98

-0.3

 

S&P 500

2784.49

-7.89

-0.3

Canada

S&P/TSX Comp

15999.01

-75.29

-0.5

Europe

 

 

 

 

UK

FTSE 100

7074.73

-32.47

-0.5

France

CAC

5240.53

15.18

0.3

Germany

XETRA DAX

11515.64

28.31

0.2

Italy

MIB

20659.46

160.67

0.8

Spain

Ibex 35

9277.70

66.00

0.7

Sweden

OMX Stockholm 30

1572.68

-3.87

-0.2

Switzerland

SMI

9388.94

-23.25

-0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6252.66

19.07

0.3

Japan

Nikkei 225

21385.16

-171.35

-0.8

 

Topix

1607.66

-12.76

-0.8

Hong Kong

Hang Seng

28633.18

-124.26

-0.4

S. Korea

Kospi

2195.44

-39.35

-1.8

Singapore

STI

3212.69

-37.33

-1.1

China

Shanghai Comp

2940.95

-12.87

-0.4

Taiwan

TAIEX

*

*

*

India

Sensex 30

25916.00

-69.16

-0.3

Source — Haver Analytics

Note: all releases are listed in local time.

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.