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On 4 March 2019 - Global stocks mixed as investors await details of US-China trade deal

Anne D Picker

Anne D Picker - Econoday

US and UK construction data fall short of expectations.

US markets

US stocks closed lower Monday, with earlier optimism in Asian markets that a US-China trade deal may be close not extending into the New York session. The Dow fell 1.1 percent on the day, the S&P closed down 0.8 percent, and the Nasdaq dropped 0.6 percent. AT&T fell Monday after announcing plans to restructure its media and entertainment businesses after a court ruled last week that its acquisition of Time Warner could proceed, while clothing retailer Gap reversed some of the gains it made Friday after announcing it would split one of its more profitable brands into a separate company.

Reports over the weekend indicate that the US and China are close to reaching a trade deal, with the Wall Street Journal citing sources suggesting that a formal agreement could be signed by President Trump and President Xi around the end of the month. Details, however, remain unconfirmed. Cheniere Energy posted a solid increase Monday on reports that a trade deal could include an undertaking by China to purchase $US18 billion worth of natural gas. 

Construction spending fell 0.6 percent on the month in December after increasing 0.8 percent in November, falling well short of the consensus forecast of 0.3 percent. Declines in private residential construction and public construction were only partly offset by an increase in private nonresidential construction. Year-on-year growth in construction spending slowed from 3.4 percent to 1.6 percent 

These data reflect observations at 4:00 PM US ET. Gold fell US$11.40 to US$1,287.80 while dated Brent spot crude advanced US$0.54 to US$65.61. The US dollar was little changed Monday against other major currencies. The yield on the US Treasury 30 year bond fell 3 basis points to 3.09 percent while the 10 year note dropped 3 basis points to 2.75 percent.

European markets

European markets were mixed but generally subdued Monday, with only limited economic data to provide trading guidance. The FTSE and the CAC both closed up 0.4 percent, but the DAX underperformed with a fall of 0.1 percent.

The UK PMI construction survey showed a contraction in the sector February, with its headline index falling from 50.6 to 49.5, well below the consensus forecast of 50.4. Residential building continued to expand but at a rate insufficient to offset declines in commercial and civil engineering construction. Respondents cited ongoing Brexit uncertainty as the main factor weighing on activity.

Eurozone inflation data showed producer prices (ex-construction) rose 0.4 percent on the month in January, rebounding from a fall of 0.8 percent in December, with year-on-year growth unchanged at 3.0 percent. Core producer prices rose 0.3 percent on the month, with year-on-year growth moderating from 1.3 percent to 1.2 percent, its slowest growth since December 2016.

Asia Pacific Markets

Most Asian markets closed higher Monday after reports over the weekend indicating that a US-China trade deal is close. Japan’s Nikkei and Topix indices rose 1.0 percent and 0.7 percent respectively, while the Shanghai Composite index advanced 1.1 percent. The annual meeting of China’s National People’s Congress begins Tuesday and is expected to pass new legislation easing restrictions on foreign investment. The government’s growth and inflation targets for 2019 are also expected to be announced Tuesday. Hong Kong’s Hang Seng index and Australia’s All Ordinaries index both advanced 0.5 percent.

Bank of Japan governor Haruhiko Kuroda told legislators Monday that officials remain committed to achieving their 2.0 percent inflation target but acknowledged that hitting this target in the next two years seems unlikely. He argued that the bank’s current aggressive policy stance is not having negative side-effects at present but also stressed that communicating to markets the bank’s exit strategy from this stance will be a major focus once the target is reached. 

Looking forward

Australian trade data will be published shortly, followed by the Reserve Bank of Australia’s policy decision, with no change in policy rates expected. Service sector PMI surveys for February are due for release across all regions, along with Italian GDP, Swiss inflation and Eurozone retail sales and US new home sales data.

Global Stock Markets

 

Index

Mar 4 2019

Daily Change

% Change Daily

North America

United States

Dow

25819.65

-206.67

-0.8

 

NASDAQ

7577.57

-17.78

-0.2

 

S&P 500

2792.81

-10.88

-0.4

Canada

S&P/TSX Comp

16038.13

-30.12

-0.2

Europe

UK

FTSE 100

7134.39

27.66

0.4

France

CAC

5286.57

21.38

0.4

Germany

XETRA DAX

11592.66

-9.02

-0.1

Italy

MIB

20718.30

23.77

0.1

Spain

Ibex 35

9259.80

-7.90

-0.1

Sweden

OMX Stockholm 30

1587.79

7.57

0.5

Switzerland

SMI

9394.05

-17.97

-0.2

Asia/Pacific

Australia

All Ordinaries

6302.51

28.67

0.5

Japan

Nikkei 225

21822.04

219.35

1.0

 

Topix

1627.59

11.87

0.7

Hong Kong

Hang Seng

28959.59

147.42

0.5

S. Korea

Kospi

2190.66

-4.78

-0.2

Singapore

STI

3251.08

30.68

1.0

China

Shanghai Comp

3027.57

33.56

1.1

Taiwan

TAIEX

10349.88

39.29

-0.4

India

Sensex 30

*

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*Markets closed
Source: Haver Analytics

Note: all releases are listed in local time.

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