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On 10 May 2019 - Global stocks bounce back as US tariffs take effect

Anne D Picker

Anne D Picker - Econoday

Weekly losses still heavy; Uber falls in IPO.

US markets

Though a trade agreement is still distant, a cooling in US-China tensions helped the Dow post a 0.4 percent gain in Friday trading. Talks in Washington are continuing, described by President Trump as "congenial" with "no need to rush".
 
Beginning Friday, $200 billion of Chinese goods that were that were subject to 10 percent tariff are now subject to 25 percent tariffs. China has yet to announce any counter tariffs.

The session's economic data point to the rate-cut side of the Fed's wait-and-see approach. Consumer prices rose 0.3 percent with core prices, which exclude food and energy, up only 0.1 percent. Both missed expectations and contrast with Jerome Powell's confidence that core inflation would begin to climb back higher.

Reflecting the stock market's unsteady conditions in a week that saw the Dow fall 2.1 percent, Uber fell 7.6 percent on Friday in its initial public offering. 

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was up US$0.54 to $70.77 while gold was US$1.70 higher at $1,286.70. The US dollar weakened against the Swiss franc, the Australian dollar, the Canadian dollar, and the euro; it was little changed against the pound and the yuan and strengthened against the yen. The yield on the US Treasury 30-year bond rose 2 basis points to 2.89 percent while the yield on the 10-year note also rose 2 basis points to 2.47 percent.

European markets

European stocks ended mostly higher led by the DAX with a 0.7 percent gain while France’s CAC and Italy’s MIB rose 0.3 percent. The UK's FTSE, however, slipped 0.1 percent. But on week the FTSE had the lightest loss, at 2.4 percent, and the CAC the heaviest, at 4.0 percent.

It was a heavy session for economic data that included a solid 0.5 percent quarterly rise in UK first-quarter GDP which ran at a 1.8 percent yearly rate. In contrast, industrial production in both France and Italy posted sharp March declines. German trade data for March showed the strongest surplus since March last year.

British Airways owner IAG jumped after affirming full year guidance while Swiss cement maker LafargeHolcim rose after announcing the $2.2 billion sale of its Philippines operations. IT-systems provider Bechtle of Germany rose sharply on quarterly earnings.

Asia Pacific Markets

Chinese equities bounced back Friday, and most markets proved resilient as many traders expected ongoing US-China trade talks would lead to a favorable outcome despite an escalation in the trade war. The US raised its tariff to 25 percent from 10 percent on $200 billion in Chinese goods, effective at midday Friday in Beijing, and plans additional punitive measures. China has held off on threatened retaliation for now. There is widespread expectation that Chinese authorities would implement more economic stimulus if the trade talks fail. 

Trading was volatile Friday and Chinese shares were in negative territory after a positive start, before rebounding late in the day to close up 3.1 percent on the Shanghai composite. Hong Kong's Hang Seng rose 0.8 percent, Singapore's Straits Times index rose 0.1 percent, while Korea's KOSPI gained 0.2 percent and Australia's All Ordinaries 0.2 percent. Japan's Nikkei 225 fell 0.3 percent, led by losses in shipbuilding and marine transport stocks. Japanese markets recovered from the lows in the last hour as Chinese markets recovered. Bulls saw a moral victory that the Nikkei losses were not worse, given trade worries.
 
Australia remained a bright spot despite the worrisome trade situation. Markets expect rate cuts ahead from the Reserve Bank of Australia after it signaled an easier stance this week. Gains Friday were led by telecom and energy shares. TPG Telecom led the way on merger-related news, and Woodside Petroleum gained as oil prices continued to rally.

In economic news, household spending in Japan, in real terms, increased 2.1 percent on the year in March after advancing 1.7 percent in February, above the consensus forecast for a 1.6 percent increase. On the month, spending rebounded 0.1 percent on the month vs a drop of 2.0 percent previously. A measure of core household spending – which excludes housing, motor vehicles and other volatile items and tends to track more closely the consumption component of gross domestic product – also increased 2.1 percent on the year in March after increasing 1.9 percent in February.

Looking forward

The following indicators will be released this week...

Europe

 

14-May

EZ

Industrial Production (March)

 

Germany

CPI (April final)

 

 

ZEW Survey (Germany)

 

UK

Labour Market Report (April)

 

Switzerland

Producer and Import Price Index (April)

15-May

EZ

GDP Flash (Q1)

 

Germany GDP Flash (Q1)

 

France CPI (April final)
16-May Italy CPI (April)

17-May

EZ

HICP (April)

Asia Pacific

 

14-May

India

CPI (April)

15-May

China

Fixed Asset Investment (April)

 

 

Industrial Production (April)

 

 

Retail Sales (April)

16-May

Australia

Labour Force Survey (April)

17-May

Japan

PPI (April)

 

China

House Price Index (April)

 

Singapore

Merchandise Trade (April)

Americas

 

14-May

US

Small Business Optimism Index (April)

 

 

Import & Export Prices (April)

15-May

Canada

CPI (April)

 

US

Retail Sales (April)

16-May

US

Industrial Production (April)

 

 

Housing Starts (April)

 

Canada Manufacturing Sales (March)

17-May

US

Consumer Sentiment (May preliminary)

Global Stock Markets

 

Index

May 10 2019

Daily Change

% Change Daily

North America

United States

Dow

25942.37

114.01

0.4

 

NASDAQ

7916.94

6.35

0.1

 

S&P 500

2881.4

10.68

0.4

Canada

S&P/TSX Comp

16297.55

-24.20

-0.1

Europe

UK

FTSE 100

7203.29

-4.12

-0.1

France

CAC

5327.44

14.28

0.3

Germany

XETRA DAX

12059.83

85.91

0.7

Italy

MIB

20874.78

57.62

0.3

Spain

Ibex 35

9117.5

22.30

0.2

Sweden

OMX Stockholm 30

1597.13

0.44

0.0

Switzerland

SMI

9472.83

42.53

0.5

Asia/Pacific

Australia

All Ordinaries

6393.13

15.80

0.2

Japan

Nikkei 225

21344.92

-57.21

-0.3

 

Topix

1549.42

-1.29

-0.1

Hong Kong

Hang Seng

28550.24

239.17

0.8

S. Korea

Kospi

2108.04

6.03

0.3

Singapore

STI

3273.5

3.80

0.1

China

Shanghai Comp

2939.21

88.26

3.1

Taiwan

TAIEX

10712.99

-20.68

-0.2

India

Sensex 30

37462.99

-95.92

-0.3

*Markets closed
Data Source - Haver Analytics

Note: all releases are listed in local time.

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