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On 07 October 2019 - Global shares: US weaker on US-China trade fear; Europe up; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Markets seesaw on dueling US-China trade headlines

US markets

US stock indexes slipped late Monday on a report that China would not accept US demands for changes in law to address the trade dispute. Earlier, the market had traded higher on a report that China was ready to do an interim deal based on current agreement. The Dow industrials fell 0.4 percent, the S&P 500 declined 0.5 percent, and the NASDAQ slipped 0.3 percent.

The day saw volatile trading on a succession of trade stories. Markets reacted badly to a late Fox Business report that the Chinese Commerce Ministry said China will never accept changes in law to protect intellectual property. The markets had rallied earlier when Fox said China was ready to accept a trade deal based on what the two sides could agree on now. In the morning, equities weakened on a negative-seeming Bloomberg story, only to recover on comments from Larry Kudlow, President Trump’s economic adviser, who said a deal was in sight.

Consumer staples, energy, and consumer discretionary underperformed while communications services and materials outperformed. Among companies in focus, General Motors slipped 0.3 percent after the striking United Auto Workers said labor talks had “taken a turn for the worse.” Meanwhile, General Electric recovered early losses to end up 0.1 percent after announcing cutbacks in its pension plans.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil rose 7 cents to US$58.50, while gold fell US$13.40 to US$1497.20. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield rose 3 basis points to 2.05 percent while the yield on the 10-year note rose by 4 basis points to 1.56 percent.

European markets

European stocks firmed Monday with defensive sectors plus energy stocks leading, as positive sentiment carried over from the US jobs report last week, and on hopes for a favorable outcome to US-China trade talks after optimistic comments from Larry Kudlow, President Trump’s economic adviser. The Europe-wide Stoxx 600 and the German DAX both rose 0.7 percent, while the French CAC and the FTSE-100 both rose 0.6 percent.

Bayer, the German chemicals and pharma giant, rose 2.3 percent to lead the Stoxx 600 on news that a pending US lawsuit over its Roundup pesticide had been delayed. HSBC, the big bank, ended up 0.4 percent after announcing a big round of layoffs. Energy stocks gained on rising oil prices. Outperformers in the Stoxx 600 included chemicals, health care, food and beverage, oil and gas, utilities, and telecom. Underperformers included autos and parts, financials, and media.

Despite the gains, an underlying risk-off mood reflected ongoing Hong Kong protests, plus a Bloomberg report that Chinese officials are unwilling to consider a broad trade agreement of the kind the Trump administration wants, including adjusting Chinese industrial policy. In European data, unexpectedly bad German factory orders data hurt German shares in particular. Last-minute EU-UK negotiations on Brexit are keeping markets on edge. In the US, weekend news of a second whistle blower in the Trump impeachment inquiry contributed to the negative mood.

In economic news, the outlook for German manufacturing output deteriorated again in August. Following a 2.1 percent monthly slump in July, orders fell a slightly steeper than expected 0.6 percent, their third decline in the last four months. Annual growth dropped from minus 4.7 percent to minus 6.6 percent.

Asia Pacific markets

Markets in China and Hong Kong were again closed for holidays Monday while moves elsewhere in the region were mixed but generally subdued. With the regional data calendar bare on Monday, positive news from Friday’s US payrolls report provided some support to investor sentiment in the region, offset by another weekend of serious civil unrest in Hong Kong. Investors remain uncertain how much progress will be made at the next round of US-China trade talks, expected to take place later in the week in Washington.

Australia’s All Ordinaries index was the regional outperformer Monday, closing up 0.8 percent, though volumes were low due to public holidays in much of the country. Markets also advanced in India, Korea and Singapore. Price action was limited in Japan, with the Nikkei index down 0.2 percent and the Topix index flat on the day. 

Looking forward

On Tuesday in Asia/Pacific, the Chinese General Services PMI and Japanese household spending reports are due. In Europe, French merchandise trade, German industrial production, Italian retail sales, and Swiss unemployment reports are scheduled. In North America, the US PPI-FD figures are due. The big event, however, will be Fed Chair Jay Powell’s speech at the National Association of Business Economics.

Global stock markets

 

Index

4 Oct 2019

7 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

 

United States

Dow

26573.72

26478.02

-95.70

-0.4

 

NASDAQ

7982.47

7956.29

-26.18

-0.3

 

S&P 500

2952.01

2938.79

-13.22

-0.5

Canada

S&P/TSX Comp

16449.35

16421.82

-27.53

-0.2

Europe

 

 

 

 

 

UK

FTSE 100

7155.38

7197.88

42.50

0.6

France

CAC

5488.32

5521.61

33.29

0.6

Germany

XETRA DAX

12012.81

12097.43

84.62

0.7

Italy

MIB

21470.44

21652.15

181.71

0.9

Spain

Ibex 35

8961.8

9044.1

82.30

0.9

Sweden

OMX Stockholm 30

1593.98

1618

24.02

1.5

Switzerland

SMI

9827.72

9914.06

86.34

0.9

Asia/Pacific

 

 

 

 

 

Australia

All Ordinaries

6636.9

6686.74

49.84

0.8

Japan

Nikkei 225

21410.2

21375.25

-34.95

-0.2

 

Topix

1572.9

1572.75

-0.15

0.0

Hong Kong

Hang Seng

25821.03

*

*

*

S. Korea

Kospi

2020.69

2021.73

1.04

0.1

Singapore

STI

3078.36

3099.48

21.12

0.7

China

Shanghai Comp

*

*

*

*

Taiwan

TAIEX

10894.48

10925.98

31.50

0.3

India

Sensex 30

37673.31

37531.98

-141.33

-0.4

*Markets closed

Note: all releases are listed in local time.

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