On 11 April 2019 - Global stocks steady after European leaders agree to a “flexible extension” for Brexit

Anne D Picker

Anne D Picker - Econoday

Inflation data show price pressures remain subdued in China, Europe and the United States.

US markets

US stocks were little changed Thursday, with some offsetting moves among major sectors. The Dow fell 0.1 percent, the S&P closed flat on the day, and the Nasdaq fell 0.2 percent. The healthcare sector underperformed, with UnitedHealth Group recording the largest fall among Dow stocks. This followed the introduction of a “Medicare for all” plan to Congress by Democrat presidential candidate Senator Bernie Sanders and the conclusion of a Senate committee hearing on drug prices. Bank stocks, however, advanced ahead of earnings reports by six major US banks over the next few days.

Similar to consumer prices data earlier in the week, US producer prices data showed an increase in headline inflation but slightly weaker annual core inflation in March. The headline producer price index rose 0.6 percent on the month in March, up from 0.1 percent in February and above the consensus forecast of 0.4 percent, while annual inflation accelerated from 1.9 percent to 2.2 percent, also above the consensus forecast of 1.9 percent. Excluding food and energy, the index rose 0.3 percent on the month, up from 0.1 percent previously and just above the 0.2 percent consensus forecast, and annual inflation moderated from 2.5 percent to 2.4 percent, just below the 2.5 percent consensus forecast. Prices rose for gasoline, food, finished goods, and trade services, offset by a decline in prices for transportation services.

Jobless claims data continue to indicate accelerating demand for labour, with initial claims down 8,000 in the April 6 week from 204,000 to 196,000, defying he consensus expectation for an increase to 211,000. This is the lowest level of claims since 1969 when the labour force was half the size it is now. The 4-week average also fell by 7,000 providing another positive indication that the labour market is performing well.

These data reflect observations at 4:00 PM US ET. Gold fell US$18.80 to US$1,295.10 while dated Brent spot crude fell US$0.75 to US$70.98. The US dollar fell against the yen but made small gains against other major currencies. The yield on the US Treasury 30-year bond rose 3 basis point to 2.93 percent while the yield on the 10-year note advanced 3 basis points to 2.50 percent.

European markets

European markets were mixed Thursday after it was announced that the United Kingdom’s withdrawal from the European Union would be delayed further. The FTSE fell 0.1, the CAC outperformed with an increase of 0.7 percent, and the DAX rose 0.2 percent. The extended Brexit delay provided a strong boost to regional airlines and other travel-related stocks, while Commerzbank and Deutsche Bank both posted solid gains on renewed speculation that a merger between the two banks will proceed.

The European Union and the United Kingdom agreed to a “flexible extension” to Brexit at their summit in Brussels late Wednesday. The pound was little changed against the euro in response to this development. The UK’s withdrawal, previously scheduled to take place Friday, is now scheduled to occur by October 31. This extension gives the UK government more time to convince the parliament to support some version of a deal, but it remains unclear if and when Prime Minister Theresa May will be replaced and whether there may be increased support for a second referendum to take place over this time.

Germany’s consumer price index rose 0.4 percent on the month and 1.3 percent on the year in March, unchanged from preliminary estimates and confirming a modest fall in headline inflation from 1.5 percent in February. HICP estimates were also unchanged from initial estimates, up 0.5 percent on the month and 1.4 percent on the year in March, confirming a decline from 1.7 percent in February. French CPI and HICP data were also unchanged from previous estimates, with the CPI up 0.8 percent on the month and 1.1 percent on the year, confirming a fall from 1.3 percent in February, and the HICP up 0.9 percent on the month and 1.3 percent on the year, confirming a fall from 1.5 percent. In both countries, energy prices were stronger while food prices were weaker, and the core inflation rate fell, down from 1.4 percent to 1.1 percent for Germany and from 0.7 percent to 0.5 percent in France. Although the timing of Easter holidays may provide some boost to prices in April, underlying price pressures clearly remain subdued across both economies.

Asia Pacific Markets

Asian markets were again mixed Thursday. The Shanghai Composite index posted the largest move, falling 1.6 percent on the day, while Hong Kong’s Hang Seng index also fell 0.9 percent. Japanese shares were little changed, with the Nikkei up 0.1 percent and the Topix down 0.1 percent. Australia’s All Ordinaries index closed 0.4 percent lower, while indices advanced slightly in Singapore and India.

Chinese data showed a solid rebound in both consumer and producer price inflation in March, though low levels of inflation in February reflected the timing of lunar new year holidays. Headline CPI inflation accelerated from 1.5 percent in February to 2.3 percent in March, just below the consensus forecast of 2.5 percent, mainly driven by stronger food prices, up 4.1 percent on the year after increasing just 0.7 percent in February. Non-food prices, in contrast, again increased at a steady pace, up 1.8 percent on the year after increasing 1.7 percent previously. Headline PPI inflation also picked up from 0.1 percent to 0.4 percent, matching the consensus forecast, with prices accelerating across most major categories, including production materials, consumer goods, and fuel and power

Looking forward

Singapore GDP data and the Monetary Authority of Singapore’s semi-annual policy review will be published shortly, followed by Chinese trade data and Indian inflation and industrial production data. The European and US data calendars are relatively light Friday, with Eurozone industrial production data and US consumer sentiment data the highlights.

Global Stock Markets

 

Index

11 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26143.05

-14.11

-0.1

 

NASDAQ

7947.36

-16.88

-0.2

 

S&P 500

2888.32

0.11

0.0

Canada

S&P/TSX Comp

16399.47

3.18

0.0

Europe

 

 

 

 

UK

FTSE 100

7417.95

-3.96

-0.1

France

CAC

5485.72

35.84

0.7

Germany

XETRA DAX

11935.2

29.29

0.2

Italy

MIB

21684.84

13.08

0.1

Spain

Ibex 35

9445.4

38.90

0.4

Sweden

OMX Stockholm 30

1627.03

-1.52

-0.1

Switzerland

SMI

9549.26

-7.05

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6294.06

-22.40

-0.4

Japan

Nikkei 225

21711.38

23.81

0.1

 

Topix

1606.52

-1.14

-0.1

Hong Kong

Hang Seng

29839.45

-280.11

-0.9

S. Korea

Kospi

2224.44

0.05

0.0

Singapore

STI

3330.82

3.17

0.1

China

Shanghai Comp

3189.96

-51.97

-1.6

Taiwan

TAIEX

10808.77

-59.37

-0.5

India

Sensex 30

38607.01

21.66

0.1

Source —  Haver Analytics

 

 

 

Note: all releases are listed in local time.

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