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On 17 April 2019 - Global stocks get only modest lift from solid Chinese data

Anne D Picker

Anne D Picker - Econoday

US exports jump but Beige Book soft; Qualcomm surges on Apple deal.

US markets

Better-than-expected economic data out of China as well as a much smaller-than-expected trade deficit for the U.S. failed to ignite a spark in the stock market. The Dow and Nasdaq posted fractional losses with the S&P 500 slipping a tangible 0.2 percent.

Modest rallies in Asia and Europe following a 6.4 percent first-quarter showing for Chinese GDP held down U.S. reaction to a $49.4 billion February trade deficit that looks to give first-quarter GDP in the U.S. a major boost. And the positives are more than just technical as exports jumped 1.1 percent in the month on top of January's 1.0 percent gain. Exports were led by a $2.2 billion jump in civilian aircraft though other categories, outside of services where exports were also positive, showed less strength including for agriculture which was once again weak.

Bilateral country deficits showed a sharp decline with China, down $24.8 billion in unadjusted monthly data that, however, are hard to gauge given strong calendar effects during the lunar new year. But year-to-date, the deficit with China is at $59.2 billion and down sizably from $65.2 billion in the comparison with the 2018 period in what may, at least in the short run, further ease tensions in U.S.-Chinese trade talks.

More subdued news came from the Federal Reserve's Beige Book of economic conditions where improvement was not significant enough to raise the overall assessment of the economy's pace beyond slight to moderate. Consumer spending was described as mixed to sluggish for both general retailers and auto dealers in what is not a positive indication for Thursday's March retail sales report where significant acceleration is the general expectation. The assessment of manufacturing was more favorable though reports of trade-related uncertainty were once again cited.

In company news, Qualcomm jumped 12 percent following an unexpected settlement with Apple which also rose on the day. Under the deal, which ends a 2-year dispute between the companies over patents and royalties, Apple will license communication chips directly from Qualcomm. Other movers included fast-food chain Chipotle which fell on an analyst downgrade and Netflix which fell on downbeat guidance.

These data reflect observations at 4:00 PM US ET. Gold slipped US$0.90 to US$1,276.30 while Brent spot crude was little changed at US$71.62. The US dollar was also little changed. The yield on the US Treasury 30-year bond rose 1 basis point to 2.99 percent while the yield on the 10-year note remained unchanged at 2.59 percent.

European markets

European stocks posted mostly moderate to solid gains led by a 0.6 percent increase for France's CAC and 0.4 percent increases for both Germany's DAX and Italy's FTSE MIB. The UK's FTSE was unchanged.

Trade data for the Eurozone looked strong at the headline level, at a February surplus of €19.5 billion but they masked contraction on both sides of the balance sheet. Exports fell a monthly 1.4 percent for their lowest mark since September last year while imports declined a sharp 2.7 percent for their worst showing since May last year. Still, the mix does increase the likelihood of another, probably small, positive contribution from total net exports to first-quarter Eurozone GDP.

The Eurozone also posted final inflation data for March which, once again, were subdued. A seasonal 1.0 percent monthly rise in prices left the annual HICP rate at its flash 1.4 percent reading and still a tick short of February's final 1.5 percent. This equalled the lowest outturn since last April. Core rates were also subdued including the narrowest measure which excludes energy, food, alcohol and tobacco and which fell 0.2 percentage points from February to just a 0.8 percent annual rate, similarly matching its weakest mark since April 2018.

In company news, Ericsson posted a strong gain on earnings while BHP Group fell after cutting guidance for iron-ore output.

Asia Pacific Markets

GDP out of China as well as industrial production and retail sales came in better than expected but didn't drive much action in Asian stock markets. Stocks did post gains but mostly modest ones with the Shanghai Composite, the Nikkei and the Topix all up 0.3 percent. Singapore's Strait Times added 0.5 percent while the Australia's All Ordinaries slipped 0.3 percent.

China's economy expanded at a 6.4 percent year-on-year pace in the three months to March, unchanged from the previous quarter and marginally higher than the consensus forecast. As in the previous quarter, China's economy grew at the slowest year-on-year pace since 2009, albeit not far below the 6.7 percent to 7.0 percent range that had been recorded since the start of 2015 and near the top of the 6.0 to 6.5 percent growth target range for 2019 set at the annual parliamentary meeting.

Wednesday's other data out of China included surprisingly sharp acceleration in industrial output, up 8.5 percent on the year in March from 5.3 percent in the January to February period for a 4-1/2 year high. Growth in retail sales was also stronger than expected, 8.7 percent higher year-on-year and above the 8.2 percent growth recorded in January to February.

Merchandise trade data from Japan was also posted Wednesday, showing a surplus of Y528.5 billion in March. Yet here the news was less upbeat as the higher-than-expected result was not due to exports which fell 2.4 percent on the year in March for the fourth consecutive drop. Singapore also posted March trade data and exports here also swung lower, down 11.7 percent on the year reflecting a sharp drop in electronic products but also declines for pharmaceuticals, machinery and petrochemicals.

Looking forward

Thursday's data from Asia will include the PMI manufacturing flash out of Japan and the Labour Force Survey out of Australia. In Europe, the PMI composite will be posted for Europe as well as Germany and France with retail sales to be posted in the UK. Data from the U.S. will be led by retail sales and will also include the Philadelphia Fed manufacturing report.

Global Stock Markets

 

Index

17 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26449.54

-3.12

0.0

 

NASDAQ

7996.08

-4.15

-0.1

 

S&P 500

2900.45

-6.61

-0.2

Canada

S&P/TSX Comp

16544.24

42.04

0.3

Europe

 

 

 

 

UK

FTSE 100

7471.32

1.40

0.0

France

CAC

5563.09

34.42

0.6

Germany

XETRA DAX

12153.07

51.75

0.4

Italy

MIB

22000.88

81.95

0.4

Spain

Ibex 35

9549.8

52.50

0.6

Sweden

OMX Stockholm 30

1660.14

12.62

0.8

Switzerland

SMI

9596.6

16.75

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6350.25

-22.01

-0.3

Japan

Nikkei 225

22277.97

56.31

0.3

 

Topix

1630.68

4.22

0.3

Hong Kong

Hang Seng

30124.68

-5.19

0.0

S. Korea

Kospi

2245.89

-2.74

-0.1

Singapore

STI

3348.64

16.60

0.5

China

Shanghai Comp

3263.12

9.52

0.3

Taiwan

TAIEX

10997.26

69.41

0.6

India

Sensex 30

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*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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