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On 30 August 2019 - US flat to lower, Europe up, Asia mixed

Anne D Picker

Anne D Picker - Econoday

Markets tense ahead of long US weekend, new US tariffs due

US markets

Most major US stock indexes were flat to lower Friday on mixed US economic data, including a drop in consumer sentiment, and caution ahead of a long weekend with new US tariffs set to take effect on Chinese goods. The Dow industrials rose 0.1 percent, the S&P 500 was flat, the NASDAQ fell 0.1 percent, and the Russell 2000 fell 0.1 percent.

Weak US consumer sentiment data caught the market’s attention, and tech stocks in particular were soft Friday on worries about new tariffs set to take effect Sunday. Energy stocks were soft as oil prices fell.

Among companies in the news, Ulta Beauty, a cosmetic firm, dropped 30 percent after lowering its 2019 guidance. Tesla, the automaker, rose 1.8 percent on favorable news related to China’s auto purchase tax. Campbell Soup was a leader as it rose 3.8 percent on news of strong organic sales growth.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil fell 59 cents to US$60.43, while gold fell US$2.60 to US$1532.70. The US dollar gained against most major currencies. The US Treasury 30-year bond yield was steady at 1.96 percent, while the 10-year note yield was unchanged at 1.50 percent.

In economic news, US consumer sentiment fell to multi-year lows, falling well below low expectations to 89.8 for final August and the lowest reading since October 2016. The expectations component fell more than 10 points in the month to 79.9 with the current conditions component down more than 5 points to 105.3. The report cites consumer apprehension over rising tariffs. In other US data, consumer spending was reported very strong and inflation very flat. Consumer spending jumped an outsized 0.6 percent in July to hit the top end of Econoday's consensus range. All components for spending were very strong led by a 1.1 percent rise for nondurable goods and including respective 0.6 and 0.5 percent monthly gains for durable goods and services.

European markets

Major European equities ended higher Friday on better mood music from the US-China trade dispute, and talk of ECB easing. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX gained 0.9 percent, and the French CAC rose 0.6 percent. The UK FTSE-100 rose 0.3 percent. The FTSE MIB Italian index fell 0.4 percent on worries that a proposed Italian government coalition was coming apart.

The euro moved sharply lower, below $1.10, in part on weak Eurozone inflation data, and after President Trump tweeted that the Eurozone was manipulating its currency to gain advantage in trade.

Outperforming sectors in the Stoxx 600 included basic resources, real estate, financial services, and industrial goods and services. Underperformers included media, telecom, banks. Among companies in the news, German real estate firms bounced back on a report that Berlin’s strict rent control measures would be scaled back. Deutsche Wohnen, a property firm, rose 9.7 percent.

In economic news, Eurozone inflation was provisionally unchanged this month.  A 1.0 percent annual rate matched both July's final outturn (flash 1.1 percent) and market expectations and so equalled the lowest print since November 2016. More importantly, the core rates were similarly steady. Hence, the narrowest measure which excludes energy, food, alcohol and tobacco was flat and lower than expected at just 0.9 percent. Meanwhile, French inflation was provisionally unchanged in August. A 0.5 percent monthly rise in the CPI left its annual rate steady at July's final 1.1 percent mark and so in the middle of the 0.9 percent - 1.3 percent range seen over 2019 to date.  The flash HICP broadly followed suit, also posting a 0.5 percent monthly increase for a 1.2 percent yearly rate, just a tick short of its July mark.

Asia Pacific markets

Major Asian markets recorded mixed results Friday, with moves on the week also varying across the region. US-China trade tensions remain the key focus of attention after comments from Chinese officials late Thursday, while Japanese data published Friday provided mixed signals about economic conditions. The Bank of Korea left it policy rate on hold on Friday, in line with expectations. Investors remain concerned about the potential for more civil unrest in Hong Kong over the weekend.

Australia’s All ordinaries index was among the strongest performers both on the day and on the week, with gains of 1.4 percent and 1.3 percent respectively. Japanese shares also advanced Friday, erasing losses made earlier in the week. The Nikkei index rose 1.2 percent on the day and finished flat on the week, while the Topix indices advanced 1.5 percent on the day and 0.6 percent on the week. The Shanghai Composite index posted modest falls of 0.2 percent on the day and 0.4 percent on the week, while Hong Kong’s Hang Seng index rose 0.1 percent on the day but was the worst regional performer on the week, dropping 1.7 percent.

Japan's industrial production index rose 1.3 percent on the month in July after falling a revised 3.3 percent in June, above the consensus forecast for an increase of 0.3 percent. This was broadly in line with PMI survey data which indicated that conditions in the manufacturing sector improved slightly but remained weak that month. Stronger growth in auto output helped boost headline growth. Labour market data were also positive, with Japan’s unemployment rate falling from 2.3 percent in June to 2.2 percent in July, below the consensus forecast of 2.4 percent, and matching the multi-decade low recorded last year. Retail sales, however, slowed in July, falling 2.0 percent on the year after an increase of 0.5 percent in June, weaker than the he consensus forecast for a fall of 0.8 percent. Food and fuel sales were the main drivers of the weaker headline number.

India's gross domestic product increased 5.0 percent on the year in the three months to March, slowing sharply from growth of 5.8 percent in the three months to March and falling well short of the consensus forecast of 5.7 percent. This is the fourth consecutive decline in year-on-year growth and the weakest growth seen since early 2013. After cuts in policy rate at the last three meetings of the Reserve Bank of India, today’s data will likely boost the chances for more policy easing at the next meeting, scheduled for early October.

Looking forward

The following indicators will be released this week...

Europe

 

 

Sep-02

Eurozone

PMI Manufacturing Index (August)

 

France

PMI Manufacturing Index (August)

 

Germany

PMI Manufacturing Index (August)

 

UK

CIPS/PMI Manufacturing Index (August)

Sep-03

Eurozone

PPI (July)

 

Switzerland

CPI (August)

 

UK

PMI Construction (August)

Sep-04

Eurozone

PMI Composite (August)

 

 

Retail Sales (July)

 

France

PMI Composite (August)

 

Germany

PMI Composite (August)

 

UK

CIPS/PMI Services Index (August)

Sep-05

Germany

Manufacturers Orders (July)

 

Switzerland

GDP (Q2)

Sep-06

Eurozone

GDP (Q2f)

 

France

Merchandise Trade (July)

 

Germany

Industrial Production (July)

 

Italy

Retail Sales (July)

 

UK

Halifax HPI

Asia Pacific

 

 

Sep-02

China

PMI Manufacturing Index (August)

 

India

PMI Manufacturing Index (August)

 

Japan

PMI Manufacturing Index (August)

Sep-03

Australia

Retail Sales (August)

Sep-04

Australia

GDP (Q2)

 

China

General Services PMI (August)

 

Japan

PMI Composite (August)

 

Singapore

PMI (August)

Sep-05

Australia

Merchandise Trade (June)

Sep-06

Japan

Household Spending (July)

Sep-08

China

Merchandise Trade (August)

 

 

 

Americas

 

 

Sep-03

US

Construction Spending (July)

 

 

ISM Mfg Index (August)

 

 

Motor Vehicle Sales (August)

 

 

PMI Manufacturing Index (August)

Sep-04

Canada

Merchandise Trade (July)

 

US

International Trade  (July)

Sep-05

US

ADP Employment (August)

 

 

Factory Orders (July)

 

 

ISM Non-Mfg Index (August)

 

 

Jobless Claims (Week of Aug. 31)

 

 

Productivity & Costs (Q2r)

Sep-06

Canada

Ivey Purchasing Managers Index (August)

 

 

Labor Force Survey (August)

 

US

Employment Situation (August)

Global stock markets

 

Index

30 Aug 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26403.28

41.03

0.2

 

NASDAQ

7962.88

-10.51

-0.1

 

S&P 500

2926.46

1.88

0.1

Canada

S&P/TSX Comp

16442.07

57.58

0.4

Europe

 

 

 

 

UK

FTSE 100

7207.18

22.86

0.3

France

CAC

5480.48

30.51

0.6

Germany

XETRA DAX

11939.28

100.40

0.8

Italy

MIB

21322.9

-75.27

-0.4

Spain

Ibex 35

8812.9

18.60

0.2

Sweden

OMX Stockholm 30

1576.98

18.24

1.2

Switzerland

SMI

9895.65

57.17

0.6

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6698.18

92.52

1.4

Japan

Nikkei 225

20704.37

243.44

1.2

 

Topix

1511.86

21.69

1.5

Hong Kong

Hang Seng

25724.73

21.23

0.1

S. Korea

Kospi

1967.79

34.38

1.8

Singapore

STI

3106.52

24.69

0.8

China

Shanghai Comp

2886.24

-4.68

-0.2

Taiwan

TAIEX

10618.05

155.62

1.5

India

Sensex 30

37332.79

263.86

0.7

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.