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On 29 March 2019 - Global stocks advance on positive data and “constructive” US-China trade talks

Anne D Picker

Anne D Picker - Econoday

Brexit outcome remains unclear as UK parliament again rejects government plan .

US markets

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.

The Canadian dollar posted a solid gain Friday after data showed improved conditions in January and stronger energy prices in February. Monthly GDP data showed an increase of 0,3 percent on the month in January after declines in the two previous months, with year-on-year growth picking up from 1.1 percent to 1.6 percent. This improvement was broad-based, with the manufacturing and construction sectors doing particularly well. The industrial product price index rose 0.3 percent on the month in February, rebounding from a decline of 0.3 percent in January, with the year-on-year growth rate picking up from 1.0 percent to 1.2 percent. The headline increase was mainly driven by energy and petroleum product prices, up 3.1 percent on the month.

These data reflect observations at the close of trading Friday. Gold rose US$3.20 to US$1,298.50 while dated Brent spot crude rose US$0.48 to US$67.03. The US dollar made small gains against the pound and the yen, was flat against the euro, and fell against the Swiss franc, the Australian dollar, the yuan, and the Canadian dollar. The yield on the US Treasury 30-year bond was unchanged at 2.81 percent and the yield on the 10-year note rose 1 basis point to 2.41 percent.

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.

Germany’s unemployment rate fell from 5.0 percent in February to a new post-reunification low of 4.9 percent in March, though the fall in the number or unemployed people was somewhat smaller, perhaps indicating that the demand for labour has moderated. German retail sales were unexpectedly strong in February, up 0.9 percent on the month compared with the consensus forecast for a decline of 1.0 percent, with year-on-year growth accelerating from 3.1 percent to 4.7 percent. French data showed weaker growth in household spending on manufactured goods in February and a fall in headline inflation from 1.2 percent in February to 1.1 percent in March. Italian data showed consumer price inflation steady at 1.0 percent in March and producer price inflation down from 4.4 percent to 3.9 percent.

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.

Looking forward

Central Bank activities (all days local)

Apr-2

Australia

RBA Announcement

Apr-4

Eurozone

ECB Minutes (March)

 

India

Reserve Bank of India Announcement

The following indicators will be released this week...

Europe

   

Apr-1

Eurozone

PMI Manufacturing Index (March)

   

Unemployment Rate (February)

 

France

PMI Manufacturing Index (March)

 

Germany

PMI Manufacturing Index (March)

 

Switzerland

Adjusted Real Retail Sales (February)

 

UK

CIPS/PMI Manufacturing Index (March)

Apr-2

Eurozone

PPI (February)

 

Switzerland

CPI (March)

 

UK

PMI Construction (March)

Apr-3

Eurozone

PMI Composite (March)

 

France

PMI Composite (March)

 

Germany

PMI Composite (March)

Apr-4

Germany

Manufacturers' Orders (February)

Apr-5

France

Merchandise Trade (February)

 

Germany

Industrial Production (February)

 

UK

Halifax HPI (March)

Asia Pacific

   

Apr-1

China

PMI Manufacturing Index (March)

 

Japan

PMI Manufacturing Index (March)

Apr-2

India

PMI Manufacturing Index (March)

Apr-3

Australia

Merchandise Trade (February)

 

 

Retail Trade (February)

 

China

General Services PMI (March)

 

Hong Kong

PMI (March)

 

Japan

PMI Composite (March)

 

Singapore

PMI (March)

Apr-4

India

PMI Services Index (March)

Apr-5

Japan

Household Spending (February)

Americas

   

Apr-1

US

Construction Spending (February)

   

PMI Manufacturing Index (March)

   

Retail Sales (February)

Apr-2

US

Durable Goods Orders (February)

Apr-4

Canada

Ivey Purchasing Managers Index (March)

Apr-5

Canada

Labor Force Survey (March)

 

US

Employment Situation (March)

Global Stock Markets

 

Index

29 Mar 2019

Daily Change

% Change Daily

North America        
United States Dow 25928.68 211.22 0.8

 

NASDAQ

7729.32

60.15

0.8

 

S&P 500

2834.4

18.96

0.7

Canada

S&P/TSX Comp

16102.09

-53.40

-0.3

Europe

 

 

 

 

UK

FTSE 100

7279.19

44.86

0.6

France

CAC

5350.53

53.99

1.0

Germany

XETRA DAX

11526.04

97.88

0.9

Italy

MIB

21286.13

205.16

1.0

Spain

Ibex 35

9240.3

65.60

0.7

Sweden

OMX Stockholm 30

1553.42

-5.90

-0.4

Switzerland

SMI

9477.84

71.91

0.8

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6261.73

5.20

0.1

Japan

Nikkei 225

21205.81

172.05

0.8

 

Topix

1591.64

8.79

0.6

Hong Kong

Hang Seng

29051.36

276.15

1.0

S. Korea

Kospi

2140.67

12.57

0.6

Singapore

STI

3212.88

9.30

0.3

China

Shanghai Comp

3090.76

95.82

3.2

Taiwan

TAIEX

10641.04

104.78

1.0

India

Sensex 30

38672.91

127.19

0.3

*Markets closed
Source — Haver Analytics

 

 

Note: all releases are listed in local time.

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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.