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On 17 July 2019 - US, Europe, Asia weaker on trade worries and earnings news

Anne D Picker

Anne D Picker - Econoday

US transportation shares hurt by railroad CSX warning on trade war impact.

US markets

US stocks fell Wednesday on a batch of earnings reports and worries about the US-China trade war. The Dow industrials fell 0.4 percent; the S&P fell 0.7 percent and the NASDAQ was off 0.5 percent. Weak US housing data added to the selloff.

Transportation shares weakened as railroad CSX dropped 10.3 percent after announcing an earnings miss, and warned of the ongoing negative impact of the US-China trade dispute. Trade worries had returned to the forefront on President Trump’s renewed threat to impose new tariffs on Chinese goods Tuesday. Oil shares fell as Brent crude oil prices declined about 1 percent, with Exxon Mobil off 0.6 percent and Chevron down 0.5 percent.

Among other companies in focus, Bank America rose 0.7 percent after its earnings exceeded market expectations. United Airlines rose 0.9 percent after beating expectations and raising its guidance. Amazon declined 0.9 percent on reports the European Commission is looking into possible anti-competitive conduct.

In economic news, US housing data showed an unexpected 6.1 percent drop in permits to a 1.220 million annual rate for June, the lowest in more than two years. Starts performed better than permits, posting a nearly as-expected 1.253 million rate. Separately, the Fed Beige Book said US growth is modest, as it has been since March, with concerns over tariffs and trade-related uncertainty "widespread." And with inflation described as "stable to down," the report would support policy makers who are leaning toward a rate cut at the month-end FOMC.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was down 70 cents to US$63.65 while gold rose US$20.24 to $1,426.57. The US dollar fell against most major currencies. The yield on the US Treasury 30-year bond yield was down 5 basis points at 2.56 percent while the yield on the 10-year note was down 6 basis points at 2.05 percent.

European markets

European equities slipped Wednesday on earnings disappointment, and on concerns about a disorderly Brexit and the US-China trade war. The European STOXX 600 declined by 0.4 percent, the German DAX fell 0.7 percent, the French CAC fell 0.8 percent, and the UK FTSE 100 was off 0.6 percent.

Oil, banks, and autos underperformed, with real estate and food and beverages outperforming. British Petroleum fell 1.6 percent and French oil giant Total declined by 1.5 percent as oil prices dropped. Automakers Daimler and Volkswagen (both down 1.3 percent) were hit by weak European auto sales figures.

Among other companies in the news, Swedish telecom Ericsson fell 10.4 percent after warning of rising costs. Miner BHP was up 0.2 percent after reporting a recovery in iron output. German chipmaker Dialog Semiconductor was off 0.2 percent despite raising its Q2 earnings outlook. Dutch chip equipment maker ASML gained 5.3 percent after a Q2 earnings beat.

In economic news, UK CPI was stable and in line with market expectations in June. Unchanged prices on the month put the annual CPI rate at 2.0 percent, matching its May result. Meanwhile, Eurozone inflation was revised a little firmer in June. At 1.3 percent, the final annual rate was a tick higher than both its flash estimate and the final print in May. That said, it was still the second weakest reading in 2019 to date.

Asia Pacific Markets

Most major Asian markets closed moderately lower Wednesday after weak Singapore exports data and comments from President Trump renewed concerns about the global trade outlook. Japan’s Nikkei and Topix indices dropped 0.3 percent and 0.1 percent respectively, the Shanghai Composite index fell 0.2 percent, and Hong Kong’s Hang Seng index lost 0.1 percent. Australia’s All Ordinaries index was the main exception, closing up 0.4 percent.

Singapore trade data for June 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 17.3 percent on the year in June after falling a revised 16.3 percent in May, with exports of both electronics and non-electronics posting weaker growth. Although exports growth improved to some major trading partners, including the United States, China, and Japan, this was outweighed by weaker growth in exports to the European Union and other countries in the region. Total imports fell 4.8 percent on the year after falling a revised 0.6 percent previously.

Looking forward

On Thursday in Asia, Japanese merchandise trade and Australian labor force reports are due. In Europe, Swiss merchandise trade and UK retail sales reports are scheduled. In US data, jobless claims, Philadelphia Fed, and leading indicators will be released.

Global Stock Markets

 

Index

17 Jul 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27219.85

-115.78

-0.4

 

NASDAQ

8185.21

-37.59

-0.5

 

S&P 500

2984.42

-19.56

-0.7

Canada

S&P/TSX Comp

16484.21

-17.47

-0.1

Europe

 

 

 

 

UK

FTSE 100

7535.46

-41.74

-0.6

France

CAC

5571.71

-42.67

-0.8

Germany

XETRA DAX

12341.03

-89.94

-0.7

Italy

MIB

22079.38

-124.70

-0.6

Spain

Ibex 35

9284.2

-92.90

-1.0

Sweden

OMX Stockholm 30

1598.06

-32.51

-2.0

Switzerland

SMI

9942.01

91.49

0.9

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6764.05

28.25

0.4

Japan

Nikkei 225

21469.18

-66.07

-0.3

 

Topix

1567.41

-1.33

-0.1

Hong Kong

Hang Seng

28593.17

-26.45

-0.1

S. Korea

Kospi

2072.92

-18.95

-0.9

Singapore

STI

3364.87

4.84

0.1

China

Shanghai Comp

2931.69

-5.93

-0.2

Taiwan

TAIEX

10828.48

-57.57

-0.5

India

Sensex 30

39215.64

84.60

0.2

Note: all releases are listed in local time.

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