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On 4 November 2019 - US, Europe better on trade hopes; Asia firm

Anne D Picker

Anne D Picker - Econoday

US Commerce Secretary Ross spurs risk-on move with upbeat trade comments.

US markets

US equities rose Monday and US Treasuries sank as positive comments on US-China trade spurred risk appetite, while energy stocks tracked crude oil prices higher. The Dow industrials and the S&P 500 rose 0.4 percent, and the NASDAQ was up 0.6 percent.

On the trade front: Reuters reported more progress toward a US-China trade pact during a high-level US-China call late last week; US Commerce Secretary Wilbur Ross said threatened tariffs on European cars may be delayed, and Ross said the administration would soon issue permits to allow US firms to sell key components to China’s Huawei, the Chinese telecom subject to a US blacklist.

Sectors leading the gains included energy, industrials, materials, and financials, while defensive stocks underperformed. Petroleum exploration & production shares led gains, with Haliburton up 4.7 percent and Apache up 3.0 percent. Semiconductor shares, which typically react to US-China trade news, continued their recent run, with Intel, the bellwether, up 1.9 percent.

Among companies in the news, McDonald’s fell 2.8 percent after firing its CEO Steve Easterbrook, to be replaced by Chris Kempczinski, most recently president of McDonald's USA. Under Armour, a sports apparel retailer, dropped 19 percent on news of an SEC investigation into its accounting practices. Medical device maker Stryker fell 3.6 percent on news it would buy Wright Medical Group, which rose 32 percent.

In US economic news, September factory orders fell 0.6 percent, with durable goods orders falling 1.2 percent and nondurable goods up 0.1 percent. Total unfilled orders have been flat this year and were unchanged in September while inventories rose 0.3 percent in contrast to shipments, which fell 0.2 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 49 cents to US$62.13, while gold fell by US$4.10 to US$1510.80. The US dollar was up against major currencies. The US Treasury 30-year bond yield rose 8 basis points to 2.28 percent while the 10-year note yield rose 6 basis points to 1.77 percent.

European markets

Most major European equities indexes advanced Monday on renewed hopes for progress on US-China and US-Europe trade. The Europe-wide STOXX 600 jumped 1.0 percent, the German DAX was up 1.4 percent, the French CAC gained 1.1 percent and the UK FTSE-100 gained 0.9 percent.

Miners, autos, and other trade-exposed sectors led the rally after US Commerce Secretary Wilbur Ross’s comments that licenses for US firms to sell components to China’s Huawei would be forthcoming soon, and that the Trump administration may delay threatened tariffs on European automakers. Markets also expect incoming ECB President Christine Lagarde, who was speaking later Monday, to press for fiscal stimulus from Eurozone countries.

Fiat Chrysler, up 2.5 percent, and Peugeot, up 3.7 percent, rose on expectations the two will agree to merger terms by year end. Other winners included Deutscheland Telefonica, up 1.8 percent, and Siemens Healthineers, up 8.9, and Ryan Air, up 8.1 percent, after earnings beats. Food & beverage stocks underperformed, along with travel & leisure, and utilities.

In economic news, UK construction had another poor month in October, according to the new sector PMI. However, at 44.2, the headline index was at least nearly a full point above its September mark and marginally firmer than expected. That said, it was also only 1.1 points above June's decade-low. In another report, October's Eurozone flash PMI was revised up from 45.7 to 45.9 in the final report, also a 0.2 point gain versus its final September outturn but still indicative of another significant contraction in business activity.

Asia Pacific markets

Japanese markets were closed for a holiday Monday, while markets elsewhere in the region opened the week higher, taking the lead from gains on Wall Street Friday and some positive US-China trade news over the weekend. US Commerce Secretary Wilbur Ross said trade talks had made “good progress” and advised that licenses for US companies to supply components to Chinese telecommunications firm Huawei would be approved “very shortly”. Hong Kong’s Hang Seng index was the strongest performer in the region, up 1.6 percent, while the Shanghai Composite index advanced 0.6 percent and Australia’s All Ordinaries index closed up 0.3 percent.

Retail sales in Australia rose 0.2 percent on the month in September after advancing 0.4 percent in August, below the consensus forecast for growth of 0.4 percent, with this drop in headline growth reflecting more subdued growth in five of the seven major categories of spending. Sales of clothing, footwear and accessories fell 0.5 percent after advancing 1.9 percent previously, while sales for household goods were flat after increasing 0.4 percent previously. Sales growth for the largest category, food, also slowed from 0.3 percent to 0.1 percent.

Looking forward

On Tuesday in Asia/Pacific, the Reserve Bank of Australia is scheduled to make its policy announcement. In data, China General Services PMI, India PMI, and Singapore PMI reports are scheduled. In Europe, the UK CIPS/PMI Services index and Eurozone PPI reports are due. In North America, Canadian merchandise trade, and from the US, international trade, ISM nonmanufacturing PMI, and JOLTS figures will be released.

Global stock markets

 

Index

4 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27462.11

114.75

0.4

 

NASDAQ

8433.2

46.80

0.6

 

S&P 500

3078.27

11.36

0.4

Canada

S&P/TSX Comp

16669.81

75.74

0.5

Europe

 

 

 

 

UK

FTSE 100

7369.69

67.27

0.9

France

CAC

5824.3

62.41

1.1

Germany

XETRA DAX

13136.28

175.23

1.3

Italy

MIB

23311.43

377.11

1.6

Spain

Ibex 35

9416.4

88.40

0.9

Sweden

OMX Stockholm 30

1771.03

33.52

1.9

Switzerland

SMI

10337.07

84.83

0.8

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6799.84

20.69

0.3

Japan

Nikkei 225

*

*

*

 

Topix

*

*

*

Hong Kong

Hang Seng

27547.3

446.54

1.6

S. Korea

Kospi

2130.24

30.04

1.4

Singapore

STI

3236.4

6.97

0.2

China

Shanghai Comp

2975.49

17.29

0.6

Taiwan

TAIEX

11556.85

157.32

1.4

India

Sensex 30

40301.96

136.93

0.3

*Markets closed

 

 

 

 

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.