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On 14 May 2019 - US and European gain on upbeat US-China tariff talk; Asian stocks end off lows

Anne D Picker

Anne D Picker - Econoday

President Trump downplays trade dispute; China confirms talks to continue.

US markets

Confirmation from the Chinese foreign ministry that trade talks with the US would resume and comments from President Trump characterizing US-China differences as only "a little squabble" helped send US shares sharply on higher on Tuesday. The Dow rose 0.8 percent and the Nasdaq 1.1 percent. 

With Donald Trump and Xi Jinping to meet at next month's G-20, concerns over heightening tensions following last week's tariff hikes have eased. Still Tuesday's gains only reverse part of yesterday's losses and did not retrace any part of last week’s retreat. Since the end of the prior week before news broke of a breakdown in US-China talks, the Dow is down 3.7 percent.

In economic news, US inflation proved very weak in April despite confidence earlier this month from Jerome Powell that core prices would soon pick up and move back to target. Import & export price data followed earlier reports from the producer and consumer sectors to show subdued price conditions, led in today's data by a 0.6 percent decline for non-petroleum goods.

Boeing, feeling the effects of the 737 MAX grounding, gained despite delivering 24 percent fewer aircraft so far this year than last year. Both Walt Disney and Comcast both rose after announcing that Disney will take over control of streaming service Hulu with Comcast having a 5-year option to sell its 1/3 stake in Hulu for $27.5 billion. Apparel maker Ralph Lauren fell sharply on weak sales in North America.

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was up US$1.28 to $71.16 while gold was US$3.60 lower at $1,296.70. The US dollar rose against the pound, the yen, the Swiss franc and the euro; it was little changed against the yuan and the Australian dollar, and it fell against the Canadian dollar. The yield on the US Treasury 30-year bond rose 1 basis point to 2.85 percent while the yield on the 10-year note also rose 1 basis point to 2.41 percent.

European markets

Europe posted solid gains in line with US shares amid an improving tone in US-China trade relations. France's CAC rose 1.5 percent as did Italy's MIB. The UK's FTSE rose 1.1 percent with Germany's DAX up 1.0 percent.

European data in the session were mixed, headlined by a 0.3 percent decline in Eurozone industrial production for March that followed a 0.2 percent dip in February. With January's 1.4 percent surge the exception, this was the fifth decrease in the last six months and returned annual growth to negative territory, sliding from 0.0 percent to minus 0.6 percent. Yet the March report, masked by January, nevertheless puts Eurozone industrial production last quarter 0.8 percent above the fourth quarter and confirms a positive contribution from the sector to first quarter real GDP growth.

The number of people out of work in the UK fell 65,000 or 4.8 percent in the first quarter. This was steep enough to reduce the ILO unemployment rate by a tick to an unexpectedly low 3.8 percent – a level not seen since fourth quarter of 1974. The more up to date, but less reliable, claimant count data showed a 24,700 increase in joblessness in data for April that left this unemployment rate unchanged at 3.0 percent, historically very low. 

Bayer AG of German fell after a California couple were awarded $2 billion in a jury verdict that cited the alleged cancer risks of the company's Roundup weed killer. German drug developer Evotec and Italian industrial manufacturer Prysmian both rose on earnings.

Asia Pacific Markets

Asian equities ended weaker Tuesday but bounced back from early lows on renewed hopes for US-China trade talks. A Chinese foreign ministry spokesman said trade talks would resume, and President Trump repeated that he expects a trade pact and that he would meet with Chinese President Xi at the G20 summit.

China's Shanghai composite ended down 0.7 percent after rebounding from deeper early declines on the better trade rhetoric, and on reported state buying. Consumer staples, healthcare, and real estate shares led the declines.

The Hang Seng index ended down 1.5 percent as the Hong Kong market returned from vacation. Japan's Nikkei 225 was down 0.6 percent. Japanese automakers were hit hard, while machinery makers bounced back from recent lows.

The Singapore Straits Times index was down 0.3 percent, with financials leading the decline. The KOSPI closed up 0.1 percent. Australia's All Ordinaries index fell 0.8 percent, with financials and mining shares weakening.

In economic news, the Australia NAB Business Confidence index rose to 0 in April from minus 1, weaker than the plus 1 that was expected. The Japan April EcoWatchers Current Conditions index rose to 45.3 from 44.8, but underperformed the 45.9 expected. The outlook index rose to 48.4 from 48.6, but was below the 49.6 expected.

Looking forward

Key monthly data will lead Wednesday's session with China reporting fixed asset investment, industrial production as well as retail sales. The first estimate of first-quarter German GDP flash will be posted out of Europe also with the CPI in France and the second-estimate of first-quarter Eurozone GDP. Monthly retail sales in the US will lead North American data that will also include US industrial production and Canada's CPI.

Global Stock Markets

 

Index

May 14 2019

Daily Change

% Change Daily

North America

United States

Dow

25532.05

207.06

0.8

 

NASDAQ

7734.49

87.47

1.1

 

S&P 500

2834.41

22.54

0.8

Canada

S&P/TSX Comp

16284.53

91.12

0.6

Europe

UK

FTSE 100

7241.6

77.92

1.1

France

CAC

5341.35

78.78

1.5

Germany

XETRA DAX

11991.62

114.97

1.0

Italy

MIB

20892.66

298.94

1.5

Spain

Ibex 35

9127.6

80.80

0.9

Sweden

OMX Stockholm 30

1590.82

16.98

1.1

Switzerland

SMI

9404.08

40.90

0.4

Asia/Pacific

Australia

All Ordinaries

6327.2

-54.10

-0.8

Japan

Nikkei 225

21067.23

-124.05

-0.6

 

Topix

1534.98

-6.16

-0.4

Hong Kong

Hang Seng

28122.02

*

*

S. Korea

Kospi

2081.84

2.83

0.1

Singapore

STI

3223.71

-10.57

-0.3

China

Shanghai Comp

2883.61

-20.10

-0.7

Taiwan

TAIEX

10519.25

-39.04

-0.4

India

Sensex 30

37318.53

227.71

0.6

*Markets closed
Data Source - Haver Analytics

Note: all releases are listed in local time.

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