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On 28 June 2019 - Bank shares lift US and Europe, Asia off

Anne D Picker

Anne D Picker - Econoday

Markets hope for trade truce, resumption of talks after Trump-Xi meeting.

US markets

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.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude was down US$2.17 at US$64.19 while gold was up US$3.25 at $1410.70. The US dollar was slightly lower against most major currencies. The yield on the US Treasury 30-year bond was unchanged at 2.53 percent while the yield on the 10-year note was down 1 basis point at 2.00 percent.

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.

UK homebuilders rose on reports Boris Johnson, the leading candidate to succeed Theresa May as prime minister, would cut taxes on house sales to boost the economy if there is a no-deal Brexit. Homebuilder Berkeley Group rose 4.2 percent. Tech shares rose, especially semiconductors, with Dialog Semiconductor leading, up 6 percent on a ratings upgrade.

In economic news, Eurozone flash HICP data showed annual inflation stable at 1.2 percent in June, well below the ECB target despite years of extraordinary stimulus. Underlying inflation rose to 1.1 percent from 0.8 prior, but remained way below where the ECB wants it.

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.

Looking forward

Central Bank activities

 

Jul-02

Australia

RBA Announcement

The following indicators will be released this week...

Europe

 

 

Jul-01

Eurozone

M3 Money Supply (May)

 

 

PMI Manufacturing Index (June)

   

Unemployment Rate (May)

 

France

PMI Manufacturing Index (June)

 

Germany

PMI Manufacturing Index (June)

 

 

Unemployment Rate (May)

 

Switzerland

Adjusted Real Retail Sales (May)

 

 

SVME Purchasing Managers' Index (June)

 

UK

CIPS/PMI Manufacturing Index (June)

Jul-02

Eurozone

PPI (May)

 

Germany

Retail Sales (May)

 

UK

PMI Construction (June)

Jul-03

Eurozone

PMI Composite (June)

 

France

PMI Composite (June)

 

Germany

PMI Composite (June)

 

UK

CIPS/PMI Services Index (June)

Jul-04

Eurozone

Retail Sales (May)

 

Switzerland

CPI (June)

Jul-05

France

Merchandise Trade (May)

 

Germany

Manufacturers' Orders (May)

 

UK

Halifax HPI (June)

Asia Pacific

 

 

Jul-01

India

PMI Manufacturing Index (June)

Jul-02

Japan

Tankan (Q2)

Jul-03

Australia

Merchandise Trade (May)

 

China

General Services PMI (June)

 

Japan

PMI Composite (June)

 

Singapore

PMI (June)

Jul-04

Australia

Retail Sales (May)

Jul-05

Japan

Household Spending (May)

Americas

 

 

Jul-01

US

Construction Spending (May)

   

ISM Manufacturing Index (June)

Jul-03

Canada

Merchandise Trade (May)

 

US

ADP Employment (June)

   

Factory Orders (May)

   

International Trade (May)

   

ISM Non-Mfg Index (June)

Jul-05

Canada

Ivey Purchasing Managers (June)

   

Labor Force Survey (June)

 

US

Employment Situation (June)

Global Stock Markets

 

Index

28 Jun 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26599.96

73.38

0.3

 

NASDAQ

8006.24

38.48

0.5

 

S&P 500

2941.76

16.84

0.6

Canada

S&P/TSX Comp

16382.2

74.47

0.5

Europe

 

 

 

 

UK

FTSE 100

7425.63

23.30

0.3

France

CAC

5538.97

45.36

0.8

Germany

XETRA DAX

12398.8

127.77

1.0

Italy

MIB

21234.79

123.92

0.6

Spain

Ibex 35

9198.8

51.00

0.6

Sweden

OMX Stockholm 30

1622.43

5.49

0.3

Switzerland

SMI

9898.24

38.48

0.4

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6699.17

-43.84

-0.7

Japan

Nikkei 225

21275.92

-62.25

-0.3

 

Topix

1551.14

-2.13

-0.1

Hong Kong

Hang Seng

28542.62

-78.80

-0.3

S. Korea

Kospi

2130.62

-3.70

-0.2

Singapore

STI

3321.61

-6.99

-0.2

China

Shanghai Comp

2978.88

-17.91

-0.6

Taiwan

TAIEX

10730.83

-43.07

-0.4

India

Sensex 30

39394.64

-191.77

-0.5

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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