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On 09 July 2019 - US narrowly mixed before Fed's Powell; Europe off, Asia flat to lower

Anne D Picker

Anne D Picker - Econoday

German shares hit by trade worries as chemicals giant BASF warns of slowdown.

US markets

US stocks ended narrowly mixed on Tuesday in cautious trading ahead of Fed Chair Jay Powell’s two-day congressional testimony starting Wednesday. The Dow industrials declined 0.1 percent; the S&P rose 0.1 percent, and the NASDAQ rose 0.5 percent.

Earnings season got under way with PepsiCo off 1.1 percent on profit-taking after reporting in-line quarterly results -- the shares are up 20 percent year to date. Acacia Communications, an optical technology company, soared by 35 percent after news it would be acquired by Cisco, which rose 0.3 percent.

Materials and industrial firms underperformed, partly on fallout from German chemical firm BASF’s earnings warning. Alcoa fell 0.5 percent and 3M company was off 2.3 percent on analyst downgrades.

Among other shares in focus, financial services firm Square rose 6.2 percent on an analyst upgrade. Online retailer Etsy was up 4.4 percent on positive guidance. Entertainment company Netflix rose 1 percent on strong viewing results for its “Stranger Things 3” show. Hotel company Marriott fell 1.3 percent after an analyst downgrade.

In US economic data, the US NFIB small business optimism index missed expectations in June, falling 1.7 points to 103.3 and reflecting wide weakness among components especially earnings, sales expectations, capital investment plans, and employment. Separately, US job openings remain very high but fell to a lower-than-expected 7.323 million in May with April revised sharply lower to 7.372 million. Hires, however, got a sharp upward revision to April, now at 5.991 million, though May came in much lower at 5.725 million.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up 16 cents to US$64.27 while gold fell US$1.00 to $1,399.00. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield was up 1 basis point at 2.54 percent while the yield on the 10-year note was up 2 basis points at 2.07 percent.

European markets

European equities fell Tuesday with German stocks underperforming on a profits warning from BASF, the world’s largest chemical maker. The European STOXX 600 declined 0.5 percent, the German DAX dropped 0.9 percent, the French CAC was off 0.3 percent, and the UK FTSE 100 was down 0.2 percent.

BASF shares fell 3 percent after warning its business would be hit by the US-China trade dispute and slowing global growth. German automakers fell on US-EU trade worries, with Daimler down 1.3 percent and Volkswagen off 1 percent. Deutsche Bank fell 3.9 percent as the market continued to react badly to the bank’s restructuring plan.

Defensive shares fared better, with real estate and utilities leading the way. Ocado, a UK online supermarket, jumped 5.6 percent on a favorable earnings report. UK energy provider Centrica was up 1.2 percent as it continued its recent rally.

In economic news, Italian retail sales were very weak in May. Following an unrevised flat monthly performance in April, nominal purchases decreased fully 0.7 percent, meaning that sales have not risen since January. Unadjusted annual growth was slashed from 4.2 percent to minus 1.8 percent.

Asia Pacific Markets

Most Asian markets were little changed Tuesday, with the regional data calendar bare and moves in US shares overnight providing only limited guidance. Moves in Japanese markets were mixed but modest, with the Nikkei index closing up 0.1 percent and the Topix index falling 0.2 percent. The Shanghai Composite index fell 0.2 percent on the day while Australia’s All Ordinaries index closed down 0.1 percent.

Hong Kong’s Hang Seng index posted the largest move in the region Tuesday, falling 0.8 percent on the day. This decline mainly took place late in the trading session after Hong Kong’s Chief Executive, Carrie Lam, announced that the government’s proposed legislation allowing extradition of residents to mainland China is now “dead”. Large-scale protests against this legislation in recent weeks had prompted the government to postpone its introduction and then consider changes, but Tuesday’s comments are the clearest yet that the government will not go ahead with these plans.

Looking forward

Fed Chair Jay Powell is scheduled to testify before Congress on Wednesday morning in Washington, D.C. Later, the Fed will release minutes from its latest FOMC meeting. The Bank of Canada monetary policy announcement is due, followed by a press conference with BOC Governor Stephen Poloz. In Asian data Wednesday, Chinese CPI and PPI reports are due, plus Japanese PPI. In European data, French, Italian, and UK industrial production figures are due, plus UK monthly GDP. In North America, it’s Canadian housing starts and the US EIA Petroleum Status report.

Global Stock Markets

 

Index

9 Jul 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26783.49

-22.65

-0.1

 

NASDAQ

8141.73

43.35

0.5

 

S&P 500

2979.63

3.68

0.1

Canada

S&P/TSX Comp

16545.21

82.26

0.5

Europe

 

 

 

 

UK

FTSE 100

7536.47

-12.80

-0.2

France

CAC

5572.1

-17.09

-0.3

Germany

XETRA DAX

12436.55

-106.96

-0.9

Italy

MIB

21886.17

-89.83

-0.4

Spain

Ibex 35

9273.9

-10.80

-0.1

Sweden

OMX Stockholm 30

1630.88

-11.19

-0.7

Switzerland

SMI

9961.34

-32.76

-0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6750.12

-7.29

-0.1

Japan

Nikkei 225

21565.15

30.80

0.1

 

Topix

1574.89

-3.51

-0.2

Hong Kong

Hang Seng

28116.28

-215.41

-0.8

S. Korea

Kospi

2052.03

-12.14

-0.6

Singapore

STI

3329.46

-4.77

-0.1

China

Shanghai Comp

2928.23

-5.13

-0.2

Taiwan

TAIEX

10702.78

-48.44

-0.5

India

Sensex 30

38730.82

10.25

0.0

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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