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On 15 May 2019 - Global stocks rise despite weak economic data out of China and the US

Anne D Picker

Anne D Picker - Econoday

US delays European auto tariffs; Middle East heats up.

US markets

Reports that the White House intends to delay pending tariffs on European automobiles to year-end offset a run of weak economic news and helped support a solid rally in US stocks. The Dow rose 0.5 percent while the Nasdaq gained 1.1 percent.

US-China trade tensions appeared to be easing with higher tariffs in place but talks apparently to resume in June. However, after the US markets closed Wednesday, President Trump issued an executive order declaring a national emergency over threats against American technology. The order is expected to precede a ban on US firms doing business with Chinese telecommunications company Huawei, though it does not refer to the company directly.

Amid reports of possible attacks by Iran, the US has ordered its embassy staff in Baghdad to leave as soon as possible while German and Dutch military advisors have suspended training Iraqi soldiers.

In economic results that echo overnight disappointment in China, US retail sales fell 0.2 percent in April with no significant strength in the details, results that make for an unexpectedly weak start to second-quarter consumer spending. Industrial production was also weak, posting very sharp 0.5 percent declines at both the headline level and for manufacturing which is being held back by contraction in autos and lack of growth for business equipment. 

Home improvement chain Home Depot rose on a broker upgrader while apparel retailer Children's Place fell sharply on earnings. Canada's Restaurant Brands rose after announcing plans to expand its Burger King, Tim Hortons and Popeyes chains. 

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was up US$0.53 to $72.01 while gold was US$0.40 higher at $1,297.10. The US dollar rose against the pound and the Australian dollar, was little changed against the euro, the yen, the yuan and Swiss franc, and fell against the Canadian dollar. The yield on the US Treasury 30-year bond fell 2 basis points to 2.82 percent while the yield on the 10-year note fell 4 basis points to 2.38 percent.

European markets

European shares rallied on the back of a strong overnight showing in Asia and a strong opening to trading in the US. Germany's DAX led the gains with a 0.9 percent rise followed by the FTSE at 0.8 percent and France's CAC at 0.6 percent. The MIB slipped 0.1 percent after Italy's deputy minister focused attention on public spending, warning that the government was prepared once again to break Eurozone rules.

The first look at first-quarter German GDP was mostly favorable, rising 0.4 percent quarterly for the first increase since the second quarter of 2018 but only enough to nudge the annual rate a tick firmer to 0.7 percent. Private consumption had a respectable quarter as did equipment investment and construction. Public sector current spending was soft but there were gains in both exports and imports. The second look at Eurozone first-quarter GDP overall was unrevised at modest quarterly growth of 0.4 percent.

Austria's Raiffeisen Bank International slipped as did Dutch bank ABN Amro which both posted earnings. French bank Credit Agricole also fell after earnings.

Asia Pacific Markets

Asian shares were mostly higher Wednesday as weak economic data spurred hopes for more Chinese government stimulus, and on renewed hopes for progress in US-China trade talks.

Chinese data reports were uniformly disappointing, and suggested government efforts to boost the economy were faltering, even before the recent escalation in the US-China dispute. On the trade front, investors may have been soothed by President Trump when he called the US-China trade war "a little squabble" and predicted an accord on US terms. 

China's Shanghai composite rose 1.9 percent, paced by consumer, healthcare and real estate shares.  The Hang Seng index rose 0.5 percent, led by technology and financial shares. 
After seven consecutive losses, the Nikkei 225 gained 0.6 percent despite mostly downbeat domestic earnings news, as traders responded to the better showing in Chinese markets. Nissan dropped by 6.5 percent on a negative earnings surprise. Singapore's Straits Times index was down 0.2 percent. Korea's KOSPI rose 0.5 percent. Australia's All Ordinaries rose 0.7 percent.

The weak economic news included Chinese retail sales which grew 7.2 percent on the year in April, slowing from 8.7 percent in March and falling well short of the consensus forecast of 8.6 percent growth. This is the weakest year-on-year growth since May 2003. Chinese industrial production rose 5.4 percent on the year in April, down from 8.5 percent in March and below the consensus forecast of 6.3 percent. Finally, Chinese fixed asset investment rose 6.1 percent year to date in April, down from 6.3 percent in March and below the 6.4 percent expected figure.

Looking forward

Producer prices out of Japan, the house price index out of China, and the labour force survey from Australia lead Asia's data on Thursday. ILO unemployment will be posted in France and both consumer prices and merchandise trade from Italy. Eurozone merchandise trade will be released as well. Housing starts and permits open the North American session that will also include manufacturing sales from Canada.

Global Stock Markets

 

Index

May 15 2019

Daily Change

% Change Daily

North America

United States

Dow

25648.02

115.97

0.5

 

NASDAQ

7822.15

87.66

1.1

 

S&P 500

2850.96

16.55

0.6

Canada

S&P/TSX Comp

16318.14

33.61

0.2

Europe

UK

FTSE 100

7296.95

55.35

0.8

France

CAC

5374.26

32.91

0.6

Germany

XETRA DAX

12099.57

107.95

0.9

Italy

MIB

20863.14

-29.52

-0.1

Spain

Ibex 35

9177.1

49.50

0.5

Sweden

OMX Stockholm 30

1593.32

2.50

0.2

Switzerland

SMI

9480.76

76.68

0.8

Asia/Pacific

Australia

All Ordinaries

6370.9

43.70

0.7

Japan

Nikkei 225

21188.56

121.33

0.6

 

Topix

1544.15

9.17

0.6

Hong Kong

Hang Seng

28268.71

146.69

0.5

S. Korea

Kospi

2092.78

10.94

0.5

Singapore

STI

3218.77

-4.94

-0.2

China

Shanghai Comp

2938.68

55.07

1.9

Taiwan

TAIEX

10560.71

41.46

0.4

India

Sensex 30

37114.88

-203.65

-0.5

*Markets closed
Data Source - Haver Analytics

Note: all releasesa are listed in local time.

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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.