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On 02 September 2019 - Europe up with UK leading as sterling falls; Asia mixed, US closed

Anne D Picker

Anne D Picker - Econoday

Shanghai market gains on stimulus news despite US tariffs.

US markets

Markets in the US and Canada were closed for Labor Day holidays.

These data reflect observations at 2:00 PM US ET:  Dated Brent spot crude oil fell US$1.82 to US$58.61, while gold rose US$8.90 to US$1,538.30. The US dollar gained against most major currencies. The US Treasury 30-year bond yield was unchanged at 1.96 percent while the 10-year note yield was unchanged at 1.50 percent.

European markets

Major European equities rose Monday, with the FTSE-100 leading the way as sterling weakness lifted export-oriented UK companies. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX edged up 0.1 percent, and the French CAC gained 0.2 percent. The UK FTSE-100 rallied by 1.0 percent as sterling fell half a percentage point against major currencies. The FTSE MIB Italian index rose 0.6 percent on confidence the new coalition government will take office soon.

UK exporters that bill heavily in dollars, including consumer staples maker Unilever (up 1.4 percent) and drinks giant Diageo (up 2.5 percent) led the FTSE 100 index higher, as sterling dropped amid political turmoil in London over Brexit and the rising likelihood of new UK elections. Big pharma firm AstraZeneca rose 3 percent on favorable drug trial news.

German stocks were subdued by worries over global trade, soft data, and gains by the far-right Alternative for Germany in regional elections. Outperforming sectors in the Stoxx 600 included financial services, food and beverages, and health care. Underperformers included basic resources, technology, and real estate.

In economic news, UK manufacturing had a poor August. In fact, at a lower than expected 47.0, down from July's 48.0, the sector PMI recorded its weakest reading since July 2012. Meanwhile, Germany’s flash manufacturing PMI was revised down a tick to 43.5 in the final report for August. This made for a 0.3 point gain versus the July's final 43.2, itself a 7-year low, but still points to a manufacturing sector mired in recession. The Eurozone manufacturing also had another poor month in August. The flash sector PMI was unrevised at 47.0 in the final report and while 0.5 points stronger than its final reading in July, still fully 3 points short of the 50-expansion threshold.
 

Asia Pacific markets

Major Asian markets recorded mixed results Monday, with China’s Shanghai index rising sharply, South Korea up moderately, but Japan, Hong Kong, and Australia lower. Shanghai rose on reports of new, stronger stimulus efforts coming from Beijing, including fiscal measures to offset the impact of US tariffs. Hong Kong markets were hit by new clashes between protesters and police, while Japanese markets were hurt by worries about US tariffs on China, and soft economic data.

The Shanghai composite was up 1.3 percent, South Korea’s KOSPI rose 0.1 percent, while Japan’s Nikkei 225 and the Hong Kong Hang Seng both fell 0.4 percent. Australia’s All Ordinaries index was off 0.3 percent.

The Trump administration imposed a new round of 15 percent tariffs on another $110 billion in imports from China on Sunday, and another $160 billion in goods are scheduled to be subject to the tariff on Dec. 15. China imposed retaliatory tariffs on $75 billion in US goods on Sunday, and more to come on Dec. 15, including tariffs on US autos. The weekend saw more violent clashes between Hong Kong police and protesters. Rhetoric on the Chinese side points to declining patience with the protests, which are seen as a threat to Beijing’s control of Hong Kong and the stability of the Chinese government.

Among stocks in focus, Yanzhou Coal Mining of China rallied 19 percent on an earnings beat, while Western Areas Ltd., an Australian nickel miner, jumped 14 percent on news Indonesia would limit its mineral exports. Olympus, the Japanese optics maker, rose 2 percent on news of a share buyback.

In economic news, Japan’s Markit Manufacturing PMI headline index fell to 49.3 in August, below the flash estimate and consensus estimate of 49.5, confirming a small drop from the revised estimate of 49.4 in July, and indicating contraction in the sector for the sixth time in the last seven months.  Meanwhile, the Markit Manufacturing PMI headline index for China advanced from 49.9 in July to 50.4 in August, suggesting conditions in the sector improved modestly but remain close to stagnant, broadly in line with the trend seen over the last twelve months.

Looking forward

On Tuesday in Asia/Pacific, the Australian Reserve Bank of Australia policy announcement is due, plus the Australian retail sales report is scheduled. In Europe, the following data releases are due: Eurozone PPI, Swiss CPI, and UK PMI construction. In North America, US construction spending, US ISM manufacturing, and US PMI manufacturing reports are scheduled.

Global stock markets

 

Index

2 Sep 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

*

*

*

 

NASDAQ

*

*

*

 

S&P 500

*

*

*

Canada

S&P/TSX Comp

*

*

*

Europe

 

 

 

 

UK

FTSE 100

7281.94

74.76

1.0

France

CAC

5493.04

12.56

0.2

Germany

XETRA DAX

11953.78

14.50

0.1

Italy

MIB

21451.98

129.08

0.6

Spain

Ibex 35

8815.50

2.60

0.0

Sweden

OMX Stockholm 30

1570.19

11.45

0.7

Switzerland

SMI

9924.54

28.89

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6677.52

-20.66

-0.3

Japan

Nikkei 225

20620.19

-84.18

-0.4

 

Topix

1505.21

-6.65

-0.4

Hong Kong

Hang Seng

25626.55

-98.18

-0.4

S. Korea

Kospi

1969.19

1.40

0.1

Singapore

STI

3082.96

-23.56

-0.8

China

Shanghai Comp

2924.11

37.87

1.3

Taiwan

TAIEX

10634.85

155.62

0.2

India

Sensex 30

*

*

*

Note: all releases are listed in local time.

Important Information

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