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On 19 March 2019 - Global stocks steady ahead of Federal Reserve policy meeting

Anne D Picker

Anne D Picker - Econoday

Data show weak US factory orders, steady UK unemployment, and a big drop in Australian house prices.

US markets

US stocks closed little changed Tuesday as investors remained confident that the Federal Reserve will signal continued policy stability when its meeting concludes Wednesday. The Dow fell 0.1 percent, the S&P was flat on the day, and the Nasdaq rose 0.1 percent. Mixed reports on the progress of US-China trade negotiations drove some intra-day volatility but the timing and terms of any agreement remain unclear. Chipmaker Nvidia posted solid gains after announcing a partnership to expand services in Japan and Korea, with Advanced Micro Devices also gaining after announcing its involvement with Google’s new computer game platform.

Factory orders were subdued in January, increasing just 0.1 percent on the month, as they did in December, broadly in line with other indicators pointing to weak conditions in the sector. Aircraft and vehicle orders were solid, but ex-transport orders fell for a third consecutive month, down 0.2 percent in January. Today’s data confirms the solid increase in capital goods orders and shipments reported last week in the durable goods report, suggesting equipment investment made a solid start to the quarter, but also indicates an unwanted increase in inventories.

These data reflect observations at 4:00 PM US ET. Gold advanced US$4.60 to US$1,306.10 while dated Brent spot crude fell US$0.09 to US$67.45. The US dollar made a small gain against the Australian dollar, was flat against the yuan and the yen, and weakened slightly against other major currencies. The yield on the US Treasury 30-year bond was unchanged at 3.02 percent while the 10-year note rose 1 basis point to 2.61 percent.

European markets

European markets advanced Tuesday, with the FTSE up 0.3 percent, the CAC gaining 0.2 percent and the DAX outperforming with an increase of 1.1 percent. Auto stocks rallied after the president of Peugeot identified Fiat Chrysler as among potential candidates for acquisition, while an upgrade to the sector’s outlook from a broker helped drive gains for Daimler, Volkswagen and Porsche. 

UK labour market data published Tuesday showed ongoing resilience. The claimant count measure of the unemployment rate increased from 2.8 percent in January to 2.9 percent in February, but the ILO measure fell from 4.0 percent to 3.9 percent. Job vacancies fell on the month, while year-on-year growth in average earnings eased from 3.5 percent to 3.4 percent. Today’s data will likely reinforce the assessment of officials at the Bank of England ahead of its meeting later this week that policy should remain on hold but that a tightening bias also remains warranted.

Germany’s ZEW survey showed respondents are less positive about current conditions but also less negative about prospects over the next six months, perhaps indicating confidence that current uncertainty on issues such as Brexit and the US-China trade deal will be resolved sometime soon. Italian trade data showed a bigger surplus in January and an increase in exports for the first time since October, while Swiss trade data also showed a slightly bigger trade surplus and stronger export growth in February.

Asia Pacific markets

Most Asian markets closed Tuesday little changed. The Shanghai Composite index, Japan’s Nikkei and Topix indices, Korea’s Kospi index, and Australia’s All Ordinaries index all fell 0.1 percent or 0.2 percent on the day, Taiwan’s TAIEX index was flat, and Hong Kong’s Hang Seng index and Singapore’s STI index both advanced 0.2 percent. India’s Sensex index was the strongest performer in the region with an increase of 0.7 percent.

Australian property prices fell 2.4 percent on the quarter in the three months to December, the fourth consecutive decline and the biggest drop on record, with prices down 5.1 percent on the year. Weakness in the headline index was mainly driven by a further slowdown in the two largest cities, Sydney and Melbourne, but prices also fell in other major cities.  In the minutes to the Reserve Banks of Australia's policy meeting held earlier this month, also published  Tuesday, officials described the slowdown in the residential property market as a “process of adjustment” but retained their assessment that the domestic economy is likely to expand by around 3.0 percent in 2019, supported by strong labour market conditions. Officials also retained the assessment about the policy outlook, judging that the chances of the next move in policy rates being higher or lower are “more evenly balanced” than they had been last year.

Looking forward

The minutes the Bank of Japan’s recent policy meeting will be published shortly. German and UK inflation data will be published Thursday, with the FOMC policy announcement the focus of the US data calendar.

Global stock markets

 

Index

Mar 19 2019

Daily Change

% Change Daily

North America

United States

Dow

25887.38

-26.72

-0.1

 

NASDAQ

7723.95

9.47

0.1

 

S&P 500

2832.57

-0.37

0.0

Canada

S&P/TSX Comp

16188.1

-63.27

-0.4

Europe

UK

FTSE 100

7324

24.81

0.3

France

CAC

5425.9

13.07

0.2

Germany

XETRA DAX

11788.41

131.35

1.1

Italy

MIB

21430.35

195.74

0.9

Spain

Ibex 35

9492.3

83.20

0.9

Sweden

OMX Stockholm 30

1615.14

10.13

0.6

Switzerland

SMI

9525.92

28.99

0.3

Asia/Pacific

Australia

All Ordinaries

6276.57

-7.01

-0.1

Japan

Nikkei 225

21566.85

-17.65

-0.1

 

Topix

1610.23

-3.45

-0.2

Hong Kong

Hang Seng

29466.28

57.27

0.2

S. Korea

Kospi

2177.62

-1.87

-0.1

Singapore

STI

3220.92

7.96

0.2

China

Shanghai Comp

3090.97

-5.45

-0.2

Taiwan

TAIEX

10512.32

-0.38

0.0

India

Sensex 30

38363.47

268.40

0.7

Source: Haver Analytics

Note: all releases are listed in local time.

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