On 12 April 2019 - Global stocks advance on solid Chinese exports and new loans data

Anne D Picker

Anne D Picker - Econoday

US banks start off earnings season with mixed signals.

US markets

US stocks, getting a lift from Chinese trade data, were up on Friday but mixed on the week. The Nasdaq rose 0.6 percent on the week driven by Friday's 0.5 percent rally but the Dow Industrials, despite a sharp 1.0 percent Friday jump, ended the week no better than unchanged. Bank shares mostly rallied on Friday after JP Morgan rose sharply on record quarterly profit in contrast, however, to Wells Fargo which sank sharply on caution over future income tied to low interest rates.

But China's trade news, headlined by a higher-than-expected $32.6 billion trade surplus in March that included a 14.2 percent yearly jump in exports, made for sharp gains at the U.S. opening. Other news out of China also helped as new yuan loans nearly doubled in February and raised the outlook for general economic growth. Yet however much the trade data boosted Friday's stock market, the improvement in the data may well have reflected the timing impact of lunar new year holidays. Though the holidays took place in February in both 2019 and 2018, they were around 10 days earlier in the month this year and suggest that less of the usual pre-holiday surge in activity would have taken place in February this year relative to last year. When combining January and February, the trade surplus for the two months was a less impressive $21.6 billion with combined exports in the two months actually down 4.6 percent compared with the same period in 2018.

US economic data in the session was led by consumer sentiment which came in well below expectations and reflected a dip in expectations which often reflects a dip in economic confidence. Inflation expectations, which are also part of this report, were also not positive edging to a year-and-a-half low for the 1-year outlook and consistent with slowing expectations for the economy.

These data reflect observations at 4:00 PM US ET. Gold fell US$1.00 to US$1,294.10 while dated Brent spot crude rose US$0.56 to US$71.54. The US dollar rose 1.2 percent against the yen but weakened moderately against other major currencies. The yield on the US Treasury 30-year bond rose 5 basis point to 2.98 percent while the yield on the 10-year note advanced 6 basis points to 2.56 percent.

European markets

European shares were helped Friday by data out of China which are easing concerns over global economic slowing. China's trade surplus in US dollar terms rose $4.1 billion in February to $32.6 billion in March, well above the consensus forecast for a surplus of $11.3 billion. Exports rose 14.2 percent on the year in March, rebounding from a fall of 20.7 percent in February and also above the consensus. Yet imports were perhaps overlooked, falling 7.6 percent after February's 5.2 percent drop and may not be pointing to acceleration for Chinese domestic demand.

Friday's economic news out of Europe was positive as Eurozone industrial production proved better than expected. Output excluding construction fell only 0.2 percent on the month following a 1.9 percent jump in January. As a result, yearly growth climbed from minus 0.7 percent to minus 0.3 percent which, though hardly robust, is nevertheless the strongest result since last October. February's report puts average Eurozone industrial production in the first two months of the first quarter sizably above the pace of the fourth quarter and, barring revision, points to a positive contribution for first-quarter GDP growth in the Eurozone.

Boosted by strong earnings from U.S. giant JP Morgan Chase, shares of European banks were bid higher on Friday. Yet Spain's Banco Santander posted a loss after offering to buy a remaining stake in its Mexican unit. BNP and Credit Suisse both posted gains as did Deutsche Bank. Other movers on Friday included the UK's Plus500 which posted a steep loss after the online trading platform reported a substantial decline in revenue and trading volumes. Railcar manufacturer Stadler Rail posted gains in initial trading in the Swiss market.

On the week, European markets were no better than mixed with both Germany's Dax and the UK's FTSE, despite respective gains on Friday of 0.5 and 0.3 percent, still posting a slight weekly loss, both of 0.1 percent. France's CAC did better with a 0.3 percent Friday gain and 0.5 percent weekly gain.

Asia Pacific Markets

The Nikkei, at 21,870, posted a solid 0.7 percent gain on Friday to pull the average back into the positive column for the week at 0.3 percent. But the gain was narrow, getting a boost from Softbank Group after Uber Technologies in the US, in which it has a large interest, filed for an initial public offering. The Nikkei also got a lift from Uniqlo operator Fast Retailing on optimism over the company's business in China. The broader market showed less strength, reflected in a 0.1 percent Friday decline for the Topix which ended the week with a 1.3 percent loss.

Raising caution in the Japanese market is the pending earning season as well as a coming 10-day holiday beginning on April 27 to celebrate the accession of Crown Prince Naruhito.

The solid trade report out of China was a positive late in the session for the Shanghai and Hang Seng, both of which inched higher in reaction to the news. Yet the Shanghai ended unchanged on the day for a weekly decline of 1.8 percent while the Hang Seng ended up 0.2 percent on the day and down 0.1 percent on the week. But Australia's All Ordinaries had a good week, up 1.2 percent and continuing to reflect strength in energy companies amid ongoing strength in the price of oil. South Korea's Kospi also posted a gain on the week, up 1.1 percent, while India's Sensex slipped a weekly 0.2 percent.

Looking forward

Central Bank activities

16-Apr

Australia

Reserve Bank of Australia Minutes

     

The following indicators will be released this week...

Europe

   

16-Apr

UK

Labour Market Report (March)

 

Germany

ZEW Survey (April)

17-Apr

EZ

HICP (March)

 

Italy

CPI (March)

 

UK

CPI (March)

18-Apr

UK

Retail Sales (March)

19-Apr

Italy

Business and Consumer Confidence (April)

     

Asia Pacific

 

17-Apr

China

Fixed Asset Investment (March)

 

China

GDP (Q1)

 

China

Industrial Production (March)

 

China

Retail Sales (March)

 

Japan

Merchandise Trade (March)

 

New Zealand

Consumer Price Index (Q1)

18-Apr

Australia

Labour Force Survey (March)

19-Apr

Japan

CPI (March)

     

Americas

   

15-Apr

Canada

BOC Business Outlook Survey (Q1)

16-Apr

US

Industrial Production (March)

17-Apr

Canada

CPI (March)

 

Canada

Merchandise Trade (February)

 

US

International Trade (February)

18-Apr

Canada

Retail Sales (February)

 

US

Retail Sales (March)

19-Apr

US

Housing Starts (March)

Global Stock Markets

 

Index

12 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26412.3

269.25

1.0

 

NASDAQ

7984.16

36.80

0.5

 

S&P 500

2907.41

19.09

0.7

Canada

S&P/TSX Comp

16480.53

81.06

0.5

Europe

 

 

 

 

UK

FTSE 100

7437.06

19.11

0.3

France

CAC

5502.7

16.98

0.3

Germany

XETRA DAX

11999.93

64.73

0.5

Italy

MIB

21858.31

173.47

0.8

Spain

Ibex 35

9468.5

23.10

0.2

Sweden

OMX Stockholm 30

1641.21

14.18

0.9

Switzerland

SMI

9484.91

-64.35

-0.7

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6347

52.94

0.8

Japan

Nikkei 225

21870.56

159.18

0.7

 

Topix

1605.4

-1.12

-0.1

Hong Kong

Hang Seng

29909.76

70.31

0.2

S. Korea

Kospi

2233.45

9.01

0.4

Singapore

STI

3331.98

1.16

0.0

China

Shanghai Comp

3188.63

-1.33

0.0

Taiwan

TAIEX

10805.3

-3.47

0.0

India

Sensex 30

38767.11

160.10

0.4

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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