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On 17 June 2019 - Global stocks steady to firm as traders await Fed policy news

Anne D Picker

Anne D Picker - Econoday

Array Biopharma, Sotheby’s Up on Takeover News.

US markets

US equities ended stable to higher Monday with big tech shares gaining and M&A news in focus. Markets were cautious as traders anticipated the Federal Reserve’s policy meeting on Wednesday.

The Dow industrials rose 0.1 percent; the S&P 500 rose 0.1 percent, and the NASDAQ was up 0.6 percent.

Alphabet (up 0.7 percent), Amazon (up 0.9 percent), Apple (up 0.6 percent), Facebook (up 4.2 percent), and Netflix (up 3.2 percent) advanced, with Facebook reacting to positive analyst commentary. Boeing, the beleaguered aerospace company, rose 2.2 percent after raising its forecast.

Array Biopharma rallied by 56 percent on news of a takeover by Pfizer, and Sotheby’s rose 59 percent on news it would be taken private. Disney was down 0.4 percent after an analyst downgrade.

Many traders viewed negative news favorably Monday as it tended to confirm expectations for Fed rate cuts. The negatives included US Commerce Secretary Wilbur Ross’s comment that President Trump would be “perfectly happy” to put more tariffs on Chinese imports. Other negatives Monday included comments from Huawei’s founder conceding the firm was being hurt badly by US sanctions, and news of a big drop in the Empire State manufacturing index.

Whether tariff effects are to blame is uncertain but the Empire State report has suddenly shifted deep into the negative column. At minus 8.6, June's index is far below Econoday's consensus range and is the worst showing since October 2016. The monthly change, at minus 26.4, is the steepest fall on record in data going back to 2001. In the day's other data, home builders may be moderately less optimistic but June's index level of 64 for the housing market index, though down 3 points, is outside of May's 67 the second best score since October last year.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was down US$0.99 at US$61.05 while gold was up US$6.57 at $1,339.62. The US dollar was little changed against most major currencies. The yield on the US Treasury 30-year bond was down 1 basis point at 2.58 percent while the yield on the 10-year note was flat at 2.09 percent.

European markets

Bank shares helped most European equities markets to edge up on Monday though Lufthansa weighed on the averages after the airline’s shares dropped on a profit warning.

A report that Deutsche Bank would cut costs and create a “bad bank” to dispose of distressed assets lifted its shares by 1 percent. HSBC and Standard Chartered, banks with big operations in Asia and Europe, also rose about 1 percent, on news the Hong Kong government had backed off on its bill to allow extradition to China.

Market negatives included Italy’s ongoing fiscal problems, and a report from the British Chamber of Commerce that UK businesses are scaling back investment in light of Brexit. On the plus side are expectations for dovish comments from the Federal Reserve’s policy meeting announcement on Wednesday.

The European STOXX 600 fell 0.1 percent, the German DAX fell 0.1 percent, the French CAC rose 0.4 percent, and the UK FTSE 100 rose 0.2 percent.

Lufthansa plunged by 11 percent, after citing competition from low-cost carriers, and other airlines declined as well, including Ryanair, down 4 percent, and Air France KLM, down 4 percent. Kier Group, a UK construction firm, plunged by 17 percent, on news it would exit businesses and suspend its dividend. 1&1 Drillisch, the German telecom, dropped 10 percent after results of the German auction of 5G spectrum.

Asia Pacific Markets

Most major Asian markets closed Monday little changed, with economic news in the region limited and investors waiting for guidance from the Federal Reserve meeting later in the week. The Shanghai Composite index advanced 0.2 percent on the day, while Japan’s Nikkei and Topix indices closed flat and down 0.5 percent, respectively. Hong Kong’s Hang Seng index closed up 0.4 percent on the day after the government announced on the weekend that it will suspend plans to allow residents to be extradited to mainland China in response to large-scale protests last week. Australia’s All Ordinaries index closed down 0.4 percent.

Singapore trade data for May showed weaker growth in both exports and imports, broadly in line with Chinese data published last week also showing subdued trade flows in the region. Japanese trade data are scheduled for release later this week. Singapore's non-oil domestic exports fell 15.9 percent on the year in May after falling 10.0 percent in April, while total imports fell 0.5 percent on the year after advancing 7.6 percent previously. Weakness in exports was broad-based across categories and trading partners, with exports to China falling 23.3 percent on the year in May after a decline of 5.9 percent in April and year-on-year growth in exports to the United States slowing from 2.2 percent to 0.2 percent.

Looking forward

From China, the house price index is due for release on Tuesday. From Australia, it’s the RBA meeting minutes and residential property prices. From Germany, the ZEW report is due, along with Eurozone HICP and merchandise trade. In the US, housing starts data, and from Canada, manufacturing sales. The two-day FOMC meeting gets under way Tuesday, with the outcome due on Wednesday afternoon in Washington, D.C.

Global Stock Markets

 

Index

17 Jun 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26112.53

22.92

0.1

 

NASDAQ

7845.02

48.36

0.6

 

S&P 500

2889.67

2.69

0.1

Canada

S&P/TSX Comp

16353.45

51.54

0.3

Europe

 

 

 

 

UK

FTSE 100

7357.31

11.53

0.2

France

CAC

5390.95

23.33

0.4

Germany

XETRA DAX

12085.82

-10.58

-0.1

Italy

MIB

20626.42

13.97

0.1

Spain

Ibex 35

9131.7

-62.50

-0.7

Sweden

OMX Stockholm 30

1586.53

-3.07

-0.2

Switzerland

SMI

9851.57

3.96

0.0

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6609.45

-24.19

-0.4

Japan

Nikkei 225

21124

7.11

0.0

 

Topix

1539.74

-6.97

-0.5

Hong Kong

Hang Seng

27227.16

108.81

0.4

S. Korea

Kospi

2090.73

-4.68

-0.2

Singapore

STI

3207.99

-14.64

-0.5

China

Shanghai Comp

2887.62

5.65

0.2

Taiwan

TAIEX

10530.54

5.87

0.1

India

Sensex 30

38960.79

-491.28

-1.2

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

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.