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On 16 August 2019 - Global shares: US, Europe up on stimulus hopes; Asia steady

Anne D Picker

Anne D Picker - Econoday

Oversold market recovers but sentiment shaky.

US markets

Major US stock indexes recovered from oversold conditions Friday amid talk of government stimulus to boost flagging economies. The Dow industrials rose 1.2 percent, the S&P 500 gained 1.4 percent, and the NASDAQ gained 1.7 percent.

Markets eyed a report that the German government was willing to boost deficits to support its economy. Also in focus: news of a Chinese government plan to lift incomes, and expectations for ECB policy accommodation after dovish policy-maker comments. Market sentiment remains subdued, in light of weaker corporate earnings, the global growth slowdown, and ongoing tensions, especially the situation in Hong Kong. There’s also talk that an improving US-China trade picture gives the Fed less room to cut rates.

In corporate news, Nvidia was up 7.3 percent to boost chip stocks after an earnings beat and favorable guidance. General Electric rebounded by 9.7 percent to help lift industrials after plunging Thursday on a report of questionable accounting practices. On Friday buyers stepped in after GE rebutted the report, and the CEO bought $2 million in shares.

These data reflect observations at 4:00 PM US ET: Dated Brent spot rose crude 25 cents to US$58.64, while gold fell US$9.40 to US$1523.60. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield rose 8 basis points to 2.04 percent while the yield on the 10-year note rose 6 basis points to 1.56 percent.

In economic news, US housing data were mixed but positive with a much lower-than-expected rate for housing starts and a much higher-than-expected rate for permits. Starts, at a total 1.191 million annual rate, were dragged lower by a sharp fall for multi-family homes to a 315,000 annual rate and 2.8 percent contraction from July last year. Yet starts for single-family homes, which are key for the residential component of GDP, actually rose to an 876,000 rate for a 1.9 percent year-on-year gain. The news on permits, at a total 1.336 million rate, is strong throughout including a jump for multi-family homes to a 498,000 rate for an 11.9 percent yearly gain and a solid rise for single-family homes to a rate of 838,000.

European markets

European equities rose Friday, with bank shares leading, on talk of German fiscal stimulus and hopes for ECB easing. The Europe-wide STOXX 600 rose 1.2 percent, the German DAX was up 1.3 percent, the French CAC rose 1.2 percent, and the UK FTSE 100 gained 0.7 percent.

German news magazine Der Spiegel reported the German government was ready to use deficit spending to boost the economy if it is in recession. And Olli Rehn, the Finnish central banker, Thursday called for a big stimulus package from the ECB to boost the Eurozone.

Banks outperformed, along with utilities, retail, technology, and media. Real estate, oil and gas, basic resources, and chemicals underperformed. Among bank shares, Royal Bank of Scotland rose 2.5 percent, while Barclays rose 1.9 percent.

In economic news, the adjusted Eurozone trade balance balance showed a €17.9 billion surplus in June, down from a slightly smaller revised €19.6 billion in May. Unadjusted, the surplus stood at €20.6 billion, some €2.0 billion smaller than a year ago. The shrinkage in the adjusted headline masks a contraction in exports compounded by a rise in imports. Exports fell a seasonally adjusted 0.6 percent on the month to €194.3 billion while imports rose 0.3 percent to €176.4 billion.

Asia Pacific markets

Most major Asian markets traded in relatively narrow ranges Friday but there was considerable variation in their performance over the week. The Shanghai Composite index closed up 0.3 percent on the day and was the strongest performer on the week with a gain of 1.8 percent, with investor sentiment boosted by suggestions that recent weakness in the economy will prompt additional policy measures. News of extra policy support from Hong Kong’s government also provided some boost to the Hang Seng index, closing up 0.9 percent on the day and limiting the weekly loss to 0.8 percent. Hong Kong airline Cathay Pacific announced after the close of trading Friday that its chief executive officer, Paul Hogg would step down after pressure from Chinese authorities about airline staff who had participated in recent protests.

Japanese shares were little changed on the day, with the Nikkei and Topix indices both up 0.1 percent on the day and falling 0.8 percent and 0.9 percent on the week respectively. Australia’s All Ordinaries index fell 0.1 percent on the day and was among the weakest performers in the region over the week with a decline of 2.7 percent.

Singapore trade data for July showed some improvement in exports, broadly in line with Chinese data published last week showing a moderate rebound in external demand. Singapore's non-oil domestic exports fell 11.2 percent on the year in July after falling a revised 17.4 percent in June and increased 3.7 percent on the month after falling 7.8 percent previously. Export growth improved for seven of Singapore's top ten trading partners in July, including the United States, China and the European Union, though exports to Japan were weaker.

Revised Hong Kong GDP data for the three months to June confirm the domestic economy contracted for the third time in the last five quarters, with GDP falling by a seasonally adjusted 0.4 percent compared with the advance estimate for a drop of 0.3 percent. This follows an increase of 1.3 percent in the three months to March. The weakness shown in today's GDP data is broadly in line with monthly PMI survey data over this period, with US-China trade tensions and recent civil unrest in Hong Kong weighing on activity. Hong Kong's government announced an economic support package earlier this week aimed at providing a boost to low-income households, small businesses, and parts of the services sector.

Looking forward

Central Bank activities

 

Aug-19

Australia

RBA meeting minutes

Aug-21

US

FOMC minutes

Aug-22

Eurozone

ECB minutes

 

US

Fed Jackson Hole Conference

Aug-23

US

Fed Jackson Hole Conference

Aug-24

US

Fed Jackson Hole Conference

The following indicators will be released this week...

Europe

 

 

Aug-19

Eurozone

HICP (July)

Aug-20

Germany

PPI (July)

 

Switzerland

Merchandise Trade (July)

 

UK

CBI Industrial Trends (August)

Aug-21

UK

Public Sector Finances (July)

Aug-22

Eurozone

PMI Composite Flash (August)

 

 

EC Consumer Confidence Flash (August)

 

France

PMI Composite Flash (August)

 

Germany

PMI Composite Flash (August)

 

UK

CBI Distributive Trade (August)

Aug-23

Switzerland

Adjusted Real Retail Sales (July)

 

UK

Nationwide HPI (August)

Asia Pacific

 

 

Aug-19

Japan

Merchandise Trade (July)

Aug-22

Japan

PMI Manufacturing Flash Index (August)

Aug-23

Japan

CPI (July)

 

New Zealand

Retail Trade (Q2)

 

Singapore

CPI (July)

Americas

 

 

Aug-20

Canada

Manufacturing Sales (June)

Aug-21

Canada

CPI (July)

 

US

Existing Home Sales (July)

Aug-22

US

Jobless Claims (Week of Aug. 17)

Aug-23

Canada

Retail Sales (June)

 

US

New Home Sales (July)

Global stock markets

 

Index

16 Aug 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

25886.01

306.62

1.2

 

NASDAQ

7895.99

129.38

1.7

 

S&P 500

2888.68

41.08

1.4

Canada

S&P/TSX Comp

16149.79

137.26

0.9

Europe

 

 

 

 

UK

FTSE 100

7117.15

50.14

0.7

France

CAC

5300.79

63.86

1.2

Germany

XETRA DAX

11562.74

150.07

1.3

Italy

MIB

20322.59

302.31

1.5

Spain

Ibex 35

8670.4

151.40

1.8

Sweden

OMX Stockholm 30

1519.41

23.70

1.6

Switzerland

SMI

9728.39

122.13

1.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6485.93

-4.85

-0.1

Japan

Nikkei 225

20418.81

13.16

0.1

 

Topix

1485.29

1.44

0.1

Hong Kong

Hang Seng

25734.22

238.76

0.9

S. Korea

Kospi

1927.17

-11.20

-0.6

Singapore

STI

3115.03

-11.06

-0.4

China

Shanghai Comp

2823.82

8.03

0.3

Taiwan

TAIEX

10420.89

93.76

0.9

India

Sensex 30

37350.33

38.80

0.1

*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.