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On 16 April 2019 - US Shares Rise Despite Weak Economic Data; Shares Jump in Europe and China

Anne D Picker

Anne D Picker - Econoday

Boeing Gets Passing Grade, Reports of Dovish Bias at the ECB.

US markets

After flat showings on Monday, U.S. stocks posted modest gains on Tuesday including both the Dow and the Nasdaq, each up 0.3 percent. Boeing shares were lifted by passing grades from the U.S. Federal Aviation Administration for software updates on the 737 Max. Investment firm BlackRock, which manages over $6 trillion in assets, jumped on earnings while Bank of America eased on concerns, which are wide in the banking sector given the low rate environment, over the outlook for net interest income.

U.S. economic data were headlined by yet another weak report out of the factory sector, this time an unchanged reading for the manufacturing component of the March industrial production report. This component posted sizable declines in both February and January and has been sending clear signals that weakening in cross-border trade is hurting the U.S. factory sector.

The U.S. housing sector, like manufacturing, has also been struggling though the recent decline in mortgage rates, which has been very sharp, looks to be a major positive for the Spring housing season. Yet builder optimism, as measured by the housing market index, is only inching higher, up 1 point to an as-expected 63 for April's reading. This index literally plunged at year end but has been recovering since.

These data reflect observations at 4:00 PM US ET. Gold fell US$12.50 to US$1,278.80 while Brent spot crude rose US$0.60 to US$71.90. The US dollar firmed slightly against most major currencies. The yield on the US Treasury 30-year bond rose 2 basis points to 2.99 percent while the yield on the 10-year rose 4 basis points to 2.59 percent.

European markets

European shares closed mostly higher including Germany's DAX and Switzerland's Market Index which both gained 0.7 percent. UK's FTSE and France's CAC both gained 0.4 percent.

Softening monetary policy has been a key theme for the European Central Bank this year, heightened on Tuesday by reports that many of the bank's policy makers believe economic projections, due to slowing cross-border trade and slowing growth in China, are too optimistic.

But the day's economic news was not soft. The UK the labour market report was generally quite robust in February/March and wages growth, a major input into policy at the Bank of England, remained firm at 3.5 percent. Joblessness as measured by the report's ILO data came in at 3.9 percent for a 45-year low. In contrast to the ECB, policy at the BoE is still biased toward tightening, a risk underscored by the wage data. Out of Germany came April's ZEW survey which was mixed with a fresh deterioration in current conditions contrasting with a sixth straight improvement for expectations.

Asia Pacific Markets

Asian markets mostly posted gains on Tuesday led by the Shanghai Composite which rose 2.4 percent to lift its year-to-date gain to a very sizable 30.5 percent. The Hang Seng rose 1.1 percent on the day with its 2019 rise now at 16.6 percent. Japanese indexes, which rallied sharply on Monday, were steady on Tuesday with the Nikkei up 0.2 percent and the Topix down 0.1 percent.

The latest upbeat assessment of U.S.-China trade talks came from Larry Kudlow, economic advisor to President Trump who said negotiations over the enforcement of technology policies were going "very well".

A heavy slate of Chinese economic data will be posted Wednesday including industrial production and retail sales which are both expected to show improvement. Not expected to improve, however, is first-quarter GDP where the consensus, despite a relatively wide range of estimates, is looking for a 1 tenth slip to 6.3 percent.

Tuesday's data included Chinese residential property prices which increased by 10.6 percent on the year in March, for the strongest showing in nearly two years and up from 10.4 percent recorded in February. Japan's Index of Tertiary Industry Activity fell 0.6 percent in February in a broad-based decline that included wholesale trade and information. And dovish news continues to come from Australia where minutes from the last central bank meeting stressed the slowing pace of global economic activity, particularly in manufacturing. The Australian dollar edged lower in reaction.

Looking forward

Industrial production, retail sales and fixed asset investment will be posted in China along with first-quarter GDP. Europe sees consumer price reports out of Italy, the UK as well as the Eurozone. Consumer prices will also be posted in Canada as well as manufacturing trade with the trade deficit for February the big news out of the U.S.

Global Stock Markets

 

Index

16 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26452.66

67.89

0.3

 

NASDAQ

8000.23

24.22

0.3

 

S&P 500

2907.06

1.48

0.1

Canada

S&P/TSX Comp

16502.2

-13.26

-0.1

Europe

 

 

 

 

UK

FTSE 100

7469.92

33.05

0.4

France

CAC

5528.67

19.94

0.4

Germany

XETRA DAX

12101.32

81.04

0.7

Italy

MIB

21918.93

26.51

0.1

Spain

Ibex 35

9497.3

0.20

0.0

Sweden

OMX Stockholm 30

1647.52

4.89

0.3

Switzerland

SMI

9579.85

66.14

0.7

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6372.26

24.40

0.4

Japan

Nikkei 225

22221.66

52.55

0.2

 

Topix

1626.46

-1.47

-0.1

Hong Kong

Hang Seng

30129.87

319.15

1.1

S. Korea

Kospi

2248.63

5.75

0.3

Singapore

STI

3332.04

6.18

0.2

China

Shanghai Comp

3253.6

75.81

2.4

Taiwan

TAIEX

10927.85

52.25

0.5

India

Sensex 30

39275.64

369.80

1.0

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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