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On 12 August 2019 - Global shares: US, Europe off on US-China worries, Asia mixed

Anne D Picker

Anne D Picker - Econoday

Hong Kong in focus as protests mount, airport shut

US markets

Major US stock indexes dropped Monday with US Treasuries surging on a flight from risk spurred by widening Hong Kong protests and the closure of its airport, and worries about recession linked to the US-China trade war. The Dow industrials fell 1.5 percent, the S&P 500 fell 1.2 percent, and the NASDAQ fell 1.2 percent.

Markets took note of a Goldman Sachs research report suggesting no US-China trade deal was likely before the 2020 US election, and that recession prospects were increasing as a result. Disappointing growth in Chinese money and credit data added to concerns that a Chinese downturn is underway. A renewed selloff in Argentine assets after a big election victory by the opposition Peronist candidate added to weakness in emerging markets and the overall risk-off tone.

Financial shares led the stock losses on concern about low interest rates, with JP Morgan off 1.8 percent. Energy shares saw notable weakness despite an uptick in oil prices, and many mining stocks were hit by falling minerals prices. Big oil company ConocoPhillips was off 1.7 percent. Retail names, restaurants, and autos were among the worst performers.

Defensive shares, including consumer staples, health care, and precious metals miners fared better. Among companies in focus, Amgen rose 4.9 percent on a court ruling that its patent on its blockbuster Enbrel drug would continue for 10 more years. Food service company Sysco rose 3.2 percent on an earnings beat.

In economic news, the US Treasury budget deficit came in larger than expected in July, at $119.7 billion up sharply from the $76.9 billion recorded in July last year and deepening the total deficit for the first ten months of the fiscal year to $866.8 billion, 26.7 percent deeper than in the same period of fiscal 2018.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude rose 15 cents to US$58.49, while gold rose US$15.50 to US$1,524.00. The US dollar fell against most major currencies. The yield on the US Treasury 30-year bond yield was down 13 basis points at 2.14 percent while the yield on the 10-year note dropped 10 basis points at 1.64 percent.

European markets

European equities eased Monday in a risk-off move with bond markets rallying on rising tensions in Hong Kong, and political worries in Italy and the UK, plus the ongoing US-China trade war, and talk of global recession. The Europe-wide STOXX 600 fell 0.3 percent and the German DAX was off 0.1 percent, the French CAC fell 0.3 percent and the UK FTSE 100 fell 0.4 percent.

In Hong Kong, the closure of the airport amid widening protests spurred concerns about Chinese military intervention. In Italy, there was relief that Fitch left the sovereign debt rating unchanged, but prospects receded for early elections to resolve the country’s political stalemate. In the UK, uncertainty continued over the Conservative Party’s hold on power, and prospects for a disorderly Brexit.

In the Euro Stoxx 600, banks led the declines on the low interest rate outlook, with retail, basic resources, and autos & parts off as well. Shares with Hong Kong exposure were hit, with HSBC off 11 percent. Outperformers included chemicals, utilities, and health care. In corporate news, German steel products maker Salzgitter dropped 7.9 percent and German financial firm Deutsche Pfandbriefe fell 0.9 percent on earnings misses.

Asia Pacific markets

Markets were closed for public holidays Monday in Japan, Singapore and India, with moves elsewhere in the region mixed and the regional data calendar very light. The Shanghai Composite index posted a strong gain, closing up 1.5 percent, while authorities set the yuan reference rate above the key 7 level against the dollar for the third consecutive trading day. Hong Kong’s Hang Seng index fell 0.4 percent on the day after another weekend of civil unrest and more disruption Monday, including protests that closed down the international airport. Australia’s All Ordinaries index was little changed on the day, closing up 0.1 percent.

Total new yuan loans made by Chinese banks in July were CNY1,060 billion, down from CNY1,660 billion in June and below the consensus forecast of CNY1,300 billion. Total outstanding loans rose by 12.6 percent on the year at the end of July, moderating from 13.0 percent in June.

Looking forward

On Tuesday in Asia/Pacific, the Japanese PPI report is due. In Europe, German CPI and ZEW, plus the UK labor market report is scheduled. In North America, US CPI data will be released.

Global stock markets

 

Index

12 Aug 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

25896.44

-391.00

-1.5

 

NASDAQ

7863.41

-95.73

-1.2

 

S&P 500

2882.69

-35.96

-1.2

Canada

S&P/TSX Comp

16237.77

-103.57

-0.6

Europe

 

 

 

 

UK

FTSE 100

7226.72

-27.13

-0.4

France

CAC

5310.31

-17.61

-0.3

Germany

XETRA DAX

11679.68

-14.12

-0.1

Italy

MIB

20263.83

-60.40

-0.3

Spain

Ibex 35

8676.4

-81.40

-0.9

Sweden

OMX Stockholm 30

1533.06

1.54

0.1

Switzerland

SMI

9760.02

10.10

0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6670.14

6.71

0.1

Japan

Nikkei 225

*

*

*

 

Topix

*

*

*

Hong Kong

Hang Seng

25824.72

-114.58

-0.4

S. Korea

Kospi

1942.29

4.54

0.2

Singapore

STI

*

*

*

China

Shanghai Comp

2814.99

40.24

1.5

Taiwan

TAIEX

10472.36

-22.13

-0.2

India

Sensex 30

*

*

*

*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.