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On 7 November 2019 - US, Europe Asia rise on upbeat trade news

Anne D Picker

Anne D Picker - Econoday

Risk-on mood resumes on hopes for US-China tariff rollbacks.

US markets

US equities rose and US Treasuries dropped Thursday on hopeful US-China and US-Europe trade news. The Dow industrials rose 0.7 percent while the S&P 500 and NASDAQ both rose 0.3 percent.

Reuters reported that China and the US are working on a trade pact that would call for both sides to roll back tariffs in phases, though the article said this approach has drawn opposition from President Trump’s political advisers. Bloomberg reported a tariff rollback is part of a phase 1 deal, and that White House adviser Kellyanne Conway said Trump is anxious to sign a deal. A separate Reuters report said outgoing EC President Jean-Claude Juncker does not expect the US will impose tariffs on European auto imports next week.

Energy, financials, and tech outperformed in the risk-on move, while defensives such as telecom and utilities, plus consumer discretionary lagged. Among companies in focus, Qualcomm, the memory chipmaker, rose 6.3 percent on an earnings beat and after raising its 1Q guidance citing its strong position on 5G in 2020. Ralph Lauren, the clothing company, rallied 14.7 percent after an earnings beat and strong global same-store sales. On the downside, Expedia, the online travel company, was hammered by 27 percent after huge earnings and revenue misses and cutting its guidance.

In US economic news, initial jobless claims fell 8,000 in the November 2 week to a lower-than-expected 211,000 with the 4-week average edging marginally higher to a still very favorable 215,250. The results underscore the strength of the US labor market, strength that has supported this year's solid growth in consumer spending.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 23 cents to US$62.09, while gold fell by US$23.40 to US$1,469.70. The US dollar was up against major currencies. The US Treasury 30-year bond yield rose 8 basis points to 2.39 percent while the 10-year note yield rose 9 basis points to 1.91 percent.

European markets

Most major European equities indexes rose Thursday on renewed signs of progress toward a US-China trade pact, and on upbeat quarterly earnings. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX gained 0.8 percent, the French CAC rose 0.4 percent and the UK FTSE-100 rose 0.1 percent.

The Chinese Commerce Ministry said the two sides were working on a plan to roll back tariffs in phases. Autos led gains Thursday after Reuters reported that outgoing EC President Jean-Claude Juncker does not expect the US will impose tariffs on European auto imports next week. The decision is expected by Nov. 14. Banks outperformed on the better risk mood and on upbeat earnings, including Unicredit, the Italian bank, which rose 5.7 percent.

In other corporate news, Lufthansa, the German airline, rose 6.8 percent after revealing a cost-cutting plan. Siemens, the German manufacturing conglomerate, gained 4.7 percent on a profits beat, though it warned of weaker growth ahead. Vestas, the Danish wind turbine maker, soared 10.5 percent on an earnings beat. On the downside, Deutsche Telekom, the German telecom, fell 2.3 percent on an earnings disappointment.

In economic news, German goods production was weak in September. A 0.6 percent monthly fall was marginally smaller than expected but still more than reversed August's upwardly revised 0.4 percent gain and put output at its lowest level since December 2016. Annual growth dropped from minus 3.9 percent to minus 4.4 percent.

Asia Pacific markets

Most major Asian markets closed higher Thursday. Australia’s All Ordinaries index outperformed with an increase of 0.9 percent after the release of stronger-than-expected trade data, with the yield on the Australian 10-year bond dropping six basis points. The Shanghai Composite underperformed, closing flat Thursday after Wednesday reports indicated that US-China trade talks will take longer to reach a deal, while Hong Kong’s Hang Seng index gained 0.6 percent. Japan’s Nikkei and Topix indices advanced 0.1 percent and 0.2 percent respectively, with earnings reports prompting a solid gain for automaker Toyota but a heavy fall for Softbank Group.

Australia's trade surplus widened from A$6.617 billion in August to A$7.18 billion in September, well above the consensus forecast for a surplus of A$5.0 billion. Both exports and imports rebounded on the month, but exports did so to a greater extent, suggesting that net trade's contribution to headline GDP growth in the three months to September will be stronger than previously estimated. Exports rose 3.5 percent on the month in September after dropping 2.0 percent in August, largely reflecting stronger growth in non-rural goods and rural goods, while imports rose 2.5 percent after falling 0.5 percent previously.

Looking forward

On Friday in Asia/Pacific, the Reserve Bank of Australia will release its statement on monetary policy. In data, Australian home loans, Japanese household spending, and Chinese merchandise trade figures are scheduled. In Europe, Swiss unemployment, German merchandise trade, French industrial production, and French merchandise trade reports are due. In North America on Friday, Canadian housing starts and labor force reports, plus US consumer sentiment data will be released. On Saturday, China will post both consumer and producer prices.

Global stock markets

 

Index

7 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27674.8

182.24

0.7

 

NASDAQ

8434.52

23.89

0.3

 

S&P 500

3085.18

8.40

0.3

Canada

S&P/TSX Comp

16805.75

60.11

0.4

Europe

 

 

 

 

UK

FTSE 100

7406.41

9.76

0.1

France

CAC

5890.99

24.25

0.4

Germany

XETRA DAX

13289.46

109.57

0.8

Italy

MIB

23503.03

129.81

0.6

Spain

Ibex 35

9447.3

48.90

0.5

Sweden

OMX Stockholm 30

1763.81

1.02

0.1

Switzerland

SMI

10326.78

8.68

0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6836.91

63.66

0.9

Japan

Nikkei 225

23330.32

26.50

0.1

 

Topix

1698.13

3.68

0.2

Hong Kong

Hang Seng

27847.23

158.59

0.6

S. Korea

Kospi

2144.29

0.14

0.0

Singapore

STI

3285.72

23.03

0.7

China

Shanghai Comp

2978.71

0.11

0.0

Taiwan

TAIEX

11606.56

-46.51

-0.4

India

Sensex 30

40653.74

183.96

0.5

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.