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On 09 October 2019 - US, Europe better on trade hopes; Asia down

Anne D Picker

Anne D Picker - Econoday

Tech shares lead as risk-on resumes; US Treasuries off.

US markets

Technology shares led US equities higher Wednesday as risk sentiment recovered on positive news headlines ahead of the next round of US-China trade talks, though markets ended below the day’s highs. The Dow industrials rose 0.7 percent , the S&P 500 gained 0.9 percent, and the NASDAQ gained 1.0 percent.

Risk assets popped up after a Financial Times report said China was offering to raise its purchases of US farm goods, and Bloomberg reported China is still open to a partial trade deal. Other less optimistic reports said the Chinese delegation had cut short its planned visit to Washington, D.C., and that China had scaled back its expectations for a deal as the two sides remain far apart.

Among sectors, technology, energy, and financials outperformed, while defensive sectors and communications services underperformed. China-sensitive semiconductors were leaders, with Applied Materials up 3.1 percent, and Qualcomm up 2.1 percent. Tech market leaders Apple, up 1.2 percent, and Microsoft, up 1.9 percent, had big days, along with Facebook, up 1.2 percent, and Google, up 1.1 percent, on the improved risk mood.

Among companies in the news, Johnson & Johnson, the iconic pharma, dropped 2.0 percent after a jury said the company must pay $8 billion in damages because of side effects from its Risperdal drug. FireEye, the cybersecurity company, rallied 5.0 percent after affirming its upbeat guidance. Clothing maker Levi-Strauss dropped 7.4 percent despite an earnings and overall revenue beat, as its revenues in the US.

In US economic news, Federal Open Market Committee minutes showed a divided policy board and uncertain prospects for more rate cuts after the September meeting. Future cuts were "not on a preset course" and would depend on incoming information according to the minutes, which noted that a "few" of the 17 FOMC participants warned, in a hawkish note, that market expectations for future cuts were overdone and that "several" wanted the statement to note when cuts would end.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 20 cents to US$58.23, while gold rose by US$2.90 to US$1,513.30. The US dollar was on net little changed against most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 2.07 percent while the 10-year note yield rose 4 basis points to 1.58 percent.

European markets

European equities advanced Wednesday on reports suggesting better prospects for a limited US-China trade deal. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX popped up 1.0 percent, the French CAC rose 0.8 percent, and the UK FTSE-100 lagged with a gain of 0.3 percent.

Germany’s export-oriented market led the way higher on the US-China trade headlines, and France was lifted by trade-sensitive luxury names with heavy China exposure. Gains in UK shares were limited by uncertainty over Brexit, including a report that EU officials are insisting on more UK concessions to reach a deal before the current Oct. 31 deadline.

Among shares in the Stoxx 600, outperformers included technology, autos, and real estate. Underperformers included utilities, retail, and insurance. Daimler, the German automaker, rose 1.9 percent, and French luxury goods maker LVMH rose 1.7 percent. Airbus, Europe’s aircraft champion, fell 0.3 percent on a report of an internal warning over business conditions for its defense business unit.

Asia Pacific markets

Most major Asian markets closed lower Wednesday, with a bare regional data calendar keeping investor focus on US-China trade developments and hawkish comments earlier from Federal Reserve Chairman Jerome Powell. Chinese authorities criticised and demanded the reversal of the US decision Tuesday to impose trade restrictions on 28 Chinese security organizations deemed to be implicated in human rights violations, reinforcing concerns about prospects for progress in the next round of trade negotiations. Shares of some regional suppliers of Apple were also impacted after Chinese state media criticised the company for allowing the release of a mobile application that allows protesters to track the movements of police in Hong Kong.

Hong Kong’s Hang Seng index was among the weaker regional performers on Wednesday, closing down 0.8 percent, while Australia’s All Ordinaries index fell 0.7 percent. Japan’s Nikkei and Topic indices closed down 0.6 percent and 0.3 percent respectively, with major tech shares among those posting sharp declines. There Shanghai composite defied the regional trend and recovered from loses earlier in the session to close up 0.4 percent on the day. Markets in Korea were closed for a national holiday.

Looking forward

On Thursday in Asia-Pacific, Japanese machine orders and PPI reports are due. In Europe, ECB monetary policy meeting minutes, French industrial production, German merchandise trade, Italian industrial production, UK industrial production, and UK monthly GDP figures are scheduled. In US data, CPI, EIA natural gas, and jobless claims reports are scheduled.

Global stock markets

 

Index

9 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26346.01

181.97

0.7

 

NASDAQ

7903.74

79.96

1.0

 

S&P 500

2919.4

26.34

0.9

Canada

S&P/TSX Comp

16379.87

85.92

0.5

Europe

 

 

 

 

UK

FTSE 100

7166.5

23.35

0.3

France

CAC

5499.14

42.52

0.8

Germany

XETRA DAX

12094.26

124.06

1.0

Italy

MIB

21533.64

127.91

0.6

Spain

Ibex 35

8991.9

51.80

0.6

Sweden

OMX Stockholm 30

1620

14.31

0.9

Switzerland

SMI

9830.05

29.81

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6667.02

-46.67

-0.7

Japan

Nikkei 225

21456.38

-131.40

-0.6

 

Topix

1581.7

-4.80

-0.3

Hong Kong

Hang Seng

25682.81

-210.59

-0.8

S. Korea

Kospi

*

*

*

Singapore

STI

3089.9

-20.95

-0.7

China

Shanghai Comp

2924.86

11.29

0.4

Taiwan

TAIEX

10889.96

-127.35

-1.2

India

Sensex 30

38177.95

645.97

1.7

*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.