Skip Header

On 09 September 2019 - Global shares: US flat, Europe mixed; Asia better on PBOC action

Anne D Picker

Anne D Picker - Econoday

Markets see better geopolitical backdrop, await ECB policy announcement.

US markets

US equities ended flat to mixed Monday with weakness in technology shares dragging down major indexes, but energy shares were the biggest gainers on rising oil prices. The Dow industrials rose 0.1 percent; the S&P 500 was off a marginal 0.01 percent, and the NASDAQ was down 0.2 percent.

Market positives included China’s latest offer in the trade talks to buy US agricultural goods, an easing in geopolitical risk from Brexit and Hong Kong, plus more talk of German fiscal stimulus. Trading was restrained by uncertainty ahead of the ECB governing council meeting on Thursday, as markets appear to be scaling back expectations for aggressive stimulus.

Rising oil prices supported the energy sector after Saudi Arabia's new oil minister indicated output cuts will continue. Weakness in Microsoft, off 1.1 percent, was a negative for the NASDAQ and other indexes.  Amgen fell 2.6 percent after disappointing news on its lung cancer drug. AT&T rose 1.4 percent on news that Elliott Management, the activist investor, had taken a huge stake and is pressing the telecom to sell non-core assets and take other steps to boost its share price. Acadia Pharmaceuticals rocketed by 63 percent on favorable news in its dementia drug test.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil rose US$0.91 to US$62.69, while gold fell by US$6.70 to US$1,508.50. The US dollar fell against most major currencies. The US Treasury 30-year bond yield jumped 9 basis points at 2.11 percent while the 10-year note yield was up 8 basis point at 1.63 percent.

European markets

European markets ended mixed to lower Monday as UK stocks underperformed on sterling’s rise after news suggesting Britain would not leave the EU without a deal. The Europe-wide STOXX 600 fell 0.3 percent, the German DAX rose 0.3 percent, and the French CAC fell 0.3 percent. The UK FTSE-100 declined by 0.6 percent.

German markets were bolstered by a report that Germany is considering relaxing limits on deficit spending, and news of a better than expected performance in German exports during July. Automakers did better on the positive Brexit news, along with positive headlines on the US-China trade dispute. On the negative side, markets appeared to scale back expectations for aggressive ECB stimulus after public ECB comments, and the latest data.

Banks outperformed on the lowered expectations for the ECB which meets later this week. Underperformers included health care, food & beverages, and utilities. Among companies in the news, Abcam, a UK biotech company, fell 5.9 percent on an earnings miss. Air France/KLM dropped 9.8 percent on a report it would buy part of bankrupt France’s Aigle Azur Airways.

In economic news, Germany’s seasonally adjusted merchandise trade balance was €20.2 billion in the black in July, up from a revised €17.9 billion surplus in June and its best performance since May 2018. Unadjusted, the surplus was €21.4 billion, a sizeable €5.0 billion gain versus a year ago. The adjusted headline improvement reflected a 0.7 percent monthly increase in exports and a 1.5 percent drop in imports. The rebound in the former easily more then reversed June's 0.1 percent dip and, at €111.2 billion, exports recorded their highest level since March.

Asia Pacific markets

Most major Asian markets closed higher Monday after Chinese authorities cut bank reserve ratios Friday, with weaker-than-expected US payrolls data also reinforcing investor expectations that US policy rates will be to cut later in the month. The Shanghai Composite index advanced 0.8 percent while Japan’s Nikkei and Topix indices posted gains of 0.6 percent and 0.9 percent respectively after the release of GDP data that were in line with expectations. Australia’s All Ordinaries index closed up 0.1 percent while Hong Kong’s Hang Seng index was flat after somewhat more subdued civil unrest on the weekend.

The People’s Bank of China cut banks' reserve ratios by 50 basis points late Friday, freeing up an estimated CNY900 billion of additional liquidity for banks to lend. This is the third cut in reserve ratios so far this year and represents another move by officials to support domestic activity in response to weaker external demand. This weakness was again evident in trade data published over the weekend which showed China's trade surplus narrowed from US$45.06 billion in July to US$34.83 billion in August. Exports fell 1.0 percent on the year in August after advancing 3.3 percent in July, while imports fell 5.6 percent on the year, as they did previously. The fall in headline exports growth was largely driven by weaker demand from the United States as US-China trade tensions escalated further and new tariff rates took effect. Exports to the US fell 16.0 percent on the year in August after dropping 6.5 percent in July. Demand from the European Union also slowed, party offset by a rebound in exports to Japan.

Revised GDP growth published Monday showed Japan’s economy grew 0.3 percent on the quarter in the three months to June. This is just below the preliminary estimate of an increase of 0.4 percent published last month, matches the consensus forecast, and confirms a slowdown from the revised 0.5 percent increase in the three months to March. The small downward revision to headline GDP growth mainly reflects a weaker estimate for growth in private non-residential investment, with consumer spending and net exports little changed from preliminary estimates. Compared with the three months to March, household consumption spending and public demand strengthened in the three months June but net exports were significantly weaker, in line with monthly data and data elsewhere across the region showing more subdued external demand in recent months.

Australian home loans data indicate conditions improved in July, with the number of dwelling commitments for owner occupied housing in Australia up 5.0 percent after dropping a revised 0.8 percent in June. This is broadly in line with comments made by officials at the Reserve Bank of Australia at their policy meeting last week. Officials noted that growth in housing credit remains low but pointed to "signs of a turnaround" in established housing markets, especially in the two largest cities, Sydney and Melbourne.

Looking forward

In economic data for Asia/Pacific, Chinese CPI and PPI data are scheduled. In Europe, the following are due: French industrial production, Italian industrial production, and the UK labor market report. In North America, the US JOLTs report is scheduled.

Global stock markets

 

Index

9 Sep 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26835.51

38.05

0.1

 

NASDAQ

8087.44

-15.63

-0.2

 

S&P 500

2978.43

-0.28

0.0

Canada

S&P/TSX Comp

16495.09

-40.24

-0.2

Europe

 

 

 

 

UK

FTSE 100

7235.81

-46.53

-0.6

France

CAC

5588.95

-15.04

-0.3

Germany

XETRA DAX

12226.1

34.37

0.3

Italy

MIB

21989.73

42.40

0.2

Spain

Ibex 35

9010.6

20.50

0.2

Sweden

OMX Stockholm 30

1610.7

8.75

0.6

Switzerland

SMI

10059.37

-14.45

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6760.13

7.40

0.1

Japan

Nikkei 225

21318.42

118.85

0.6

 

Topix

1551.11

14.01

0.9

Hong Kong

Hang Seng

26681.4

-9.36

0.0

S. Korea

Kospi

2019.55

10.42

0.5

Singapore

STI

3146.33

1.85

0.1

China

Shanghai Comp

3024.74

25.14

0.8

Taiwan

TAIEX

10801.14

20.50

0.2

India

Sensex 30

37145.45

163.68

0.4

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.