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On 15 January 2020 - Global shares: US flat to firm after US-China trade deal; Europe soft; Asia mixed

Anne D Picker

Anne D Picker - Econoday

US company earnings in focus as trade pact matches expectations.

US markets

US equities ended slightly higher Wednesday but retreated from initial highs as reaction was generally muted to the US-China trade deal. The Dow industrials rose 0.3 percent, the S&P 500 gained 0.2 percent, and the NASDAQ was up 0.1 percent.

Markets appeared relieved as terms of the US-China pact, including Chinese purchases of US farm goods, matched expectations for a modest deal and removed the immediate threat of a trade war. Attention focused instead on a mixed batch of corporate earnings, with retailers off on soft holiday results.

Among sectors in the S&P 500, defensive sectors led the gains, with utilities, health care, and materials leading, while energy, financials, and consumer discretionary lagged. Soft oil prices depressed energy stocks, with exploration and production leader Haliburton off 1.6 percent.

Among companies in the news, Target, the retailer, fell 6.6 percent after reporting disappointing sales during the holiday period. Toymakers Mattel and Hasbro fell 4.6 percent, and 2.1 percent, respectively, on poor holiday results. Bank of America declined 1.1 percent after warning of weak net interest income ahead. On the positive side, United Health Group rose 2.8 percent after an earnings beat, and reaffirmed 2020 guidance.

In US economic news, energy lifted producer prices into the plus column in December -- but by only 0.1 percent. Excluding energy as well as food, producer prices also rose 0.1 percent, as they did when excluding energy, food and also trade services. Year-on-year readings in December's report were modest if not subdued, underscored by a 1.3 percent rise overall. Separately, the Empire State manufacturing index rose 1.3 points in January to a moderate 4.8, coming in at the high end of Econoday's consensus range.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 14 cents to US$64.30, while gold rose US$9.80 to US$1,556.60. The US dollar was mostly weaker against major currencies. The US Treasury 30-year bond yield fell 3 basis points to 2.24 percent while the 10-year note yield fell 3 basis points to 1.78 percent.

European markets

European equities ended mostly flat to lower Wednesday on soft economic data as markets awaited details of the US-China trade pact. The Europe-wide STOXX 600 firmed 0.01 percent, the German DAX eased 0.2 percent, the French CAC was off 0.1 percent, and the UK FTSE-100 rose 0.3 percent.

Among sectors, defensive shares outperformed, including utilities, health care, and consumer staples, while autos, banks, insurance, and basic resources lagged. UK markets rose as sterling fell on weak economic data, and comments from Bank of England officials suggesting a rate cut is possible soon. German stocks got the worst of it, with automaker Daimler off 2.5 percent and Deutschebank off 2.4 percent.

In economic news, Eurozone goods production expanded in November, but not by much and following a sharp downward revision to October; the underlying trend remains worryingly soft. Output (ex-construction) rose a slightly smaller than expected 0.2 percent on the month, only denting the previous period's 0.9 percent decline. This put annual growth at minus 1.5 percent, up from minus 2.6 percent but mainly due to a particularly weak period in November 2018. Separately, UK inflation was significantly weaker than expected at year-end. The December CPI was only flat at November's level, reducing its annual rate from 1.5 percent to just 1.3 percent, its lowest reading since November 2016 and some 0.7 percentage points short of its medium-term target.

Asia Pacific markets

Major Asian markets posted mixed but generally modest moves Wednesday, with the regional data calendar bare and investors focused on the details of the US-China trade deal due to be signed in Washington later in the day and potential indications of next steps for trade negotiations. Japan’s Nikkei and Topix indices as well as the Shanghai Composite index all fell 0.5 percent on the day, while Hong Kong’s Hang Seng index closed down 0.4 percent. Australia’s All Ordinaries index outperformed with a gain of 0.5 percent.

Looking forward

On Thursday in Asia/Pacific, Japanese machine orders and PPI, and Chinese home price index reports will be released. In Europe, the following are scheduled: German CPI and Eurozone ECB minutes. In North America, US releases are scheduled for the following: jobless claims, Philadelphia Fed, retail sales, import and export prices, business inventories, housing market index, and Treasury TICS.

Global stock markets

 

Index

15 Jan 2020

Daily Change

% Change Daily

North America

United States

Dow

29030.22

90.55

0.3

 

NASDAQ

9258.7

7.37

0.1

 

S&P 500

3289.29

6.14

0.2

Canada

S&P/TSX Comp

17415.17

62.27

0.4

Europe

UK

FTSE 100

7642.8

20.45

0.3

France

CAC

6032.61

-8.28

-0.1

Germany

XETRA DAX

13432.3

-24.19

-0.2

Italy

MIB

23763.86

-164.35

-0.7

Spain

Ibex 35

9511.7

-16.60

-0.2

Sweden

OMX Stockholm 30

1787.29

-5.61

-0.3

Switzerland

SMI

10670.74

14.92

0.1

Asia/Pacific

Australia

All Ordinaries

7113.5

35.50

0.5

Japan

Nikkei 225

23916.58

-108.59

-0.5

 

Topix

1731.06

-9.47

-0.5

Hong Kong

Hang Seng

28773.59

-111.55

-0.4

S. Korea

Kospi

2230.98

-7.90

-0.4

Singapore

STI

3256.98

-13.56

-0.4

China

Shanghai Comp

3090.04

-16.78

-0.5

Taiwan

TAIEX

12091.88

-87.93

-0.7

India

Sensex 30

41872.73

-79.90

-0.2

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.