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On 16 September 2019 - US, Europe off as oil price spikes; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Economic slowdown worries return on soft Chinese economic data.

US markets

US equities slipped Monday as oil prices surged after an attack on Saudi oil facilities, and global slowdown worries returned after weak Chinese industrial production data. The Dow industrials fell 0.5 percent and both the S&P 500 and NASDAQ declined 0.3 percent.

Materials stocks were the worst performers, along with consumer discretionary stocks — cruise ship operators, autos, retail, and airlines — on the oil price rise. Surging oil prices, up about 15 percent on the day, lifted energy shares. Oil driller Devon Energy rose 12 percent, while oil major Hess was up 11 percent.

Among companies in focus, General Motors fell 0.9 percent after the United Auto Workers voted to strike. Burlington Stores weakened 1.1 percent after announcing its CFO would step down. New Relic, a software company, was off 0.4 percent after cutting its guidance and announcing management changes.

In US economic data, the Empire State's sample continues to report flat conditions, at 2.0 for September's headline index and the third straight low single-digit score. New orders are little better, at 3.5 points with unfilled orders in the negative column for a fourth straight month. A prominent negative in the report is a significant decline in general optimism, as the six-month outlook fell a very sharp 12 points to only 13.7, a very low score.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US$7.44 to US$67.72, while gold rose by US$10.40 to US$1,505.30. The US dollar rose against most major currencies. The US Treasury 30-year bond yield fell 6 basis points to 2.31 percent while the 10-year note yield fell 5 basis points to 1.85 percent.

European markets

European equities fell Monday as the latest Mideast flare-up lifted oil prices and geopolitical risk worries returned. The Europe-wide STOXX 600 fell 0.6 percent, the German DAX dropped 0.7 percent, and the French CAC fell 0.9 percent. The UK FTSE-100 was off 0.6 percent.

Energy shares were the primary beneficiaries, with oil majors rallying by 3-4 percent, and Brent crude oil up more than 10 percent, after a drone attack on Saudi oil facilities, and subsequent bellicose warnings from President Trump. On the downside, airlines were among the biggest losers on concerns about rising fuel prices.

Among shares in the Stoxx 600, outperformers, in addition to oil & gas, included telecom, utilities, and health care, while underperformers included personal & household goods, banks, chemicals, and retail. In corporate news, Scandinavian Tobacco Group ended down 1 percent after saying it will acquire Royal Agio Cigar. DSM, the Dutch nutrition company, declined 3.3 percent after a report it may buy Dupont’s nutrition business.

Asia Pacific markets

Japanese markets were closed for a holiday Monday, with moves in other major Asian markets mixed. The spike in global oil prices, weaker-than-expected Chinese economic data, and another weekend of civil unrest in Hong Kong were the main focus for investors. Hong Kong’s Hang Seng index fell 0.8 percent on the day, with shares of the exchange operator, Hong Kong Exchanges and Clearing, posting a large fall after its bid to take over the London Stock Exchange Group was rejected Friday. The Shanghai Composite index closed flat on the day as trading resumed after Friday’s holiday while Australia’s All ordinaries index closed up just 0.1 percent.

Chinese economic data published Monday fell short of consensus expectations and showed conditions remained subdued in August. Industrial production advanced 4.4 percent on the year in August, down from 4.8 percent in July, well below the consensus forecast of 5.3 percent and the weakest growth since 2012. Output growth slowed across the industrial sector, including manufacturing, mining and utilities. Retail sales growth also slowed slightly , up 7.5 percent on the year in August after advancing 7.6 percent in July, below the consensus forecast of 8.1 percent. Auto sales were again weak after they spiked earlier in the year ahead of the introduction of new emission standards, but sales growth in other categories improved. Chinese fixed asset investment grew 5.5 percent year-to-date in August, down from 5.7 percent in July and just below the consensus forecast of 5.6 percent.

India's wholesale price index increased by 1.08 percent on the year in August, unchanged from the rate recorded in July and matching its lowest level since mid-2017. Prices of manufactured products grew at a faster pace, offset by weaker growth in prices for food and fuel. CPI data released last week showed a small increase in headline consumer inflation from 3.15 percent in July to 3.21 percent in August, still well below the midpoint of the Reserve Bank of India's target range of 2.0 to 6.0 percent.

Looking forward

On Tuesday in Asia/Pacific, the Reserve Bank of Australia will release its policy meeting minutes, and the Australian residential property report is scheduled, along with the Chinese house price index and Singapore merchandise trade. In Europe, the German ZEW Survey is due. In North America, Canadian manufacturing sales while in the US data due are the housing market index, industrial production and Treasury International Capital reports.

Global stock markets

 

Index

16 Sep 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27076.82

-142.70

-0.5

 

NASDAQ

8153.54

-23.17

-0.3

 

S&P 500

2997.96

-9.43

-0.3

Canada

S&P/TSX Comp

16751.31

68.89

0.4

Europe

 

 

 

 

UK

FTSE 100

7321.41

-46.05

-0.6

France

CAC

5602.23

-53.23

-0.9

Germany

XETRA DAX

12380.31

-88.22

-0.7

Italy

MIB

21969.24

-212.17

-1.0

Spain

Ibex 35

9052

-85.90

-0.9

Sweden

OMX Stockholm 30

1655.01

-10.34

-0.6

Switzerland

SMI

9969.19

-78.15

-0.8

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6782.01

4.86

0.1

Japan

Nikkei 225

*

*

*

 

Topix

*

*

*

Hong Kong

Hang Seng

27124.55

-228.14

-0.8

S. Korea

Kospi

2062.22

13.02

0.6

Singapore

STI

3203.93

-7.56

-0.2

China

Shanghai Comp

3030.75

-0.49

0.0

Taiwan

TAIEX

10898.13

70.58

0.7

India

Sensex 30

37123.31

-261.68

-0.7

*Markets closed

 

 

 

 

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.