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On 14 June 2019 - US stocks off after Broadcom warns on Huawei impact

Anne D Picker

Anne D Picker - Econoday

Risk-off sentiment returns on trade worries, weak Chinese data.

US markets

US equities declined Friday as risk-off sentiment returned after chipmaker Broadcom warned of weakening demand linked to US sanctions against Huawei.

Sentiment was hurt by economic data pointing to a wider slowdown in the Chinese economy in response to the US-China trade dispute, and worries continued about the prospect of Mideast conflict after two tankers were set ablaze Thursday in the Persian Gulf.

The Dow industrials fell 0.1 percent; the S&P 500 fell 0.2 percent, and the NASDAQ was off 0.5 percent.

Broadcom was down 6 percent. Advanced Micro Devices, down about 4 percent, and Nvidia, down about 3 percent, were also notable decliners in the semiconductor sector. Apple fell 1 percent, a big negative for the main market indexes.

On the positive side, pet product retailer Chewy shares rallied 59 percent in its first day of trading after its IPO priced Thursday.

US retail sales data were relatively upbeat, with a 0.5 percent gain in May. Ex-auto sales, ex-auto ex-gas sales, and control group sales all rose 0.5 percent and all beat their respective consensus forecasts by 1 tenth. US industrial production proved mixed in May, up a stronger-than-expected 0.4 percent at the headline level but up only a modest and as-expected 0.2 percent for manufacturing. The overall capacity utilization rate was a bit stronger than expectations, up 2 tenths to 78.1 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up US$0.69 at US$62.04 while gold was up US$1.50 at $1,345.20. The US dollar was higher against most major currencies. The yield on the US Treasury 30-year bond was down 2 basis points at 2.59 percent while the yield on the 10-year note was unchanged at 2.09 percent.

European markets

European shares slipped Friday with chipmakers and other tech shares dropping on chipmaker Broadcom’s warning of falling demand due to US blacklisting of Huawei Technologies.

Poor Chinese industrial data contributed to the darker mood, as it suggested the US-China trade war is starting to hit the domestic Chinese economy. News that China would raise duties on US and European steel tubes and pipes added to negative sentiment.

The European STOXX 600 fell 0.4 percent, the German DAX was down 0.6 percent, the French CAC declined 0.1 percent, and the UK FTSE 100 was down 0.3 percent.

European chipmakers STMicroelectronics, Infineon, and Dialog Semiconductor were off 2 percent to 6 percent.

Consultancy DKSH Holdings dropped 10% after Credit Suisse downgraded it to “underperform”.

European economic news showed Italian industrial orders off sharply, and German and French inflation data on the soft side.  Disorderly Brexit worries continued to percolate as Boris Johnson appeared headed toward victory as Conservative Party leader.

Asia Pacific Markets

Asian markets posted mixed results Friday but most closed higher on the week as investors priced in a greater chance of Fed rate cuts in coming months. Japan’s Nikkei and Topix indices closed up 0.4 percent and 0.3 percent on the day and advanced 1.1 percent and 0.9 percent on the week, respectively. The Shanghai Composite index fell 1.0 percent on the day after the release of weak industrial production and investment data, but finished the week up 1.9 percent. Hong Kong’s Hang Seng index fell 0.6 percent on the day as protesters announced that more protests against the government’s extradition policy would take place over the weekend, with the index also underperforming other regional markets over the week, up 0.6 percent. Australia’s All Ordinaries index closed up 0.2 percent on the day and 1.7 percent on the week.

Chinese data published Friday indicates that trade tensions with the United States are having an impact of domestic activity, particularly in the manufacturing sector. Industrial production grew 5.0 percent on the year in May, down from 5.4 percent in April, mainly reflecting a drop in manufacturing output growth from 5.3 percent to 5.0 percent. Auto production fell 21.5 percent on the year in May after falling 15.8 percent in April. Fixed asset investment growth also slowed from 6.1 percent year-to-date in April to 5.6 percent in May, with investment slowing in both property and infrastructure. Retail sales, in contrast, grew at a faster pace in May, up 8.6 percent on the year after increasing 7.2 percent in April, with most categories of spending recording stronger growth.

Looking forward

Central Bank activities

Jun-17

Australia

RBA Meeting Minutes

Jun-18

US

FOMC Meeting Begins

Jun-19

Japan

BOJ Policy Announcement

 

US

FOMC Meeting Announcement/FOMC Forecasts

 

 

Fed Chair Press Conference

Jun-20

UK

BOE Annoumcement and Minutes

The following indicators will be released this week...

Europe

 

 

Jun-18

Eurozone

HICP (May)

 

 

Merchandise Trade (April)

 

Germany

PPI (May)

   

ZEW Survey (June)

Jun-19

Italy

Merchandise Trade (April)

 

UK

CBI Industrial Trends (June)

 

 

CPI (May)

Jun-20

Eurozone

Consumer Confidence Flash (June)

 

Switzerland

Merchandise Trade (May)

 

UK

Retail Sales (May)

Jun-21

Eurozone

PMI Composite Flash (June)

 

France

PMI Composite Flash (June)

 

Gerrmany

PMI Composite Flash (June)

Asia Pacific

   

Jun-16

Singapore

Merchandise Trade (May)

Jun-18

Australia

Residential Property Prices (Q1)

 

China

House Price Index (May)

Jun-19

Japan

Merchandise Trade (May)

Jun-20

Japan

All Industry Index (April)

 

NZ

GDP (Q1)

Jun-21

Hong Kong

CPI (May)

 

Japan

CPI (May)

Americas

 

 

Jun-17

US

Empire State Mfg Survey (June)

Jun-18

Canada

Manufacturing Sales (April)

 

US

Housing Starts (May)

Jun-19

Canada

CPI (May)

Jun-21

Canada

Retail Sales (April)

 

US

Existing Home Sales (May)

Global Stock Markets

 

Index

14 Jun 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26089.61

-17.16

-0.1

 

NASDAQ

7796.66

-40.47

-0.5

 

S&P 500

2886.98

-4.66

-0.2

Canada

S&P/TSX Comp

16301.91

62.65

0.4

Europe

 

 

 

 

UK

FTSE 100

7345.78

-22.79

-0.3

France

CAC

5367.62

-8.01

-0.1

Germany

XETRA DAX

12096.4

-72.65

-0.6

Italy

MIB

20612.45

-18.30

-0.1

Spain

Ibex 35

9194.2

-52.90

-0.6

Sweden

OMX Stockholm 30

1589.6

-8.52

-0.5

Switzerland

SMI

9847.61

-14.22

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6633.64

14.50

0.2

Japan

Nikkei 225

21116.89

84.89

0.4

 

Topix

1546.71

5.21

0.3

Hong Kong

Hang Seng

27118.35

-176.36

-0.6

S. Korea

Kospi

2095.41

-7.74

-0.4

Singapore

STI

3222.63

1.97

0.1

China

Shanghai Comp

2881.97

-28.77

-1.0

Taiwan

TAIEX

10524.67

-36.34

-0.3

India

Sensex 30

39452.07

-289.29

-0.7

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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