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On 19 November 2019 - US, Europe, Asia mixed on earnings, trade uncertainty

Anne D Picker

Anne D Picker - Econoday

Weak results from US retailers Home Depot and Kohl’s add to worries.

US markets

US equities were mixed Tuesday on earnings news amid lack of visibility in the US-China trade talks. The Dow industrial average eased 0.4 percent, the S&P 500 slipped 0.1 percent, and the NASDAQ rose 0.2 percent.

Markets were cheered somewhat by a Bloomberg report that tariff reductions would be part of an interim trade deal, and that White House aides who resisted tariff relief were now open to partial reductions. On the negative side was President Trump’s casual comment that the US would simply raise tariffs further if the trade talks fail. Gloomy guidance from two big retailers raised worries about the outlook for consumer spending, which has been the primary support for the economy.

The Dow industrials were hurt by a selloff in Home Depot, the home goods store, down 5.4 percent, on disappointing revenues and same-store sales results, and a downgrade to its guidance. Kohl’s, the retailer, dropped 19.4 percent after earnings and revenues misses, and lower guidance. TJX, another retailer, rose 2 percent on earnings, revenues and same-store sales beats. The Medicines Company, a pharma, surged 19.7 percent on takeover speculation and positive clinical drug trials.

Among other sectors, health care outperformed, along with technology and financials. On the downside, energy was the worst performer, led by a selloff in oil prices amid concern over oversupply. Consumer discretionary shares also lagged on disappointing retail store results.

In US economic news, upward acceleration for residential investment is the indication from housing starts and permits. October starts just missed Econoday's consensus but at a 1.314 million annual rate they are, outside of August's 1.391 million, the strongest showing since May last year. Permits are the big positive in today's report, well above expectations at a 1.461 million rate, which is the strongest since the subprime housing bubble in 2007.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.32 to US$60.92, while gold rose by 60 cents to US$1,472.70. The US dollar rose against most major currencies. US Treasury 30-year bond yield fell 4 basis points to 2.26 percent, and the US 10-year note yield fell 3 basis points to 1.78 percent.

European markets

Major European equities indexes were narrowly mixed Tuesday after giving up initial gains amid uncertainty over US-China trade. The Europe-wide STOXX 600 declined 0.1 percent, the German DAX rose 0.1 percent, the French CAC fell 0.4 percent, and the UK FTSE-100 rose 0.2 percent.

Risk assets weakened on lack of evident progress in the trade talks, following Monday’s report that the two sides were deadlocked over the question of rolling back US tariffs. Travel & leisure, basic resources, and autos & parts outperformed while utilities, media, and oil & gas lagged.

Among companies reporting earnings, Sonova, the Swiss hearing aid company, dropped 8.1 percent on an earnings miss, while Julius Baer, the Swiss bank, rose 0.3 percent on positive results and a new share buyback plan. Celyad, a Belgian biopharma, surged by 17 percent on an earnings beat and positive results in clinical trials. Easyjet, the UK airline, rose 5.3 percent on positive earnings and traffic numbers.

Asia Pacific markets

Major Asian markets posted mixed results Tuesday, with a light regional data calendar and limited US-China trade news providing little guidance to investor sentiment. Despite serious and ongoing civil unrest in Hong Kong, the Hang Seng index was the strongest performer in the region, up 1.5 percent on the day, while the Shanghai Composite index also advanced, up 0.8 percent.

Australia’s All Ordinaries index closed 0.6 percent higher after minutes for the most recent Reserve Bank of Australia policy meeting reinforced expectations that there is a strong chance for further rate cuts in coming months. Japan’s Nikkei and Topix indices were among the weaker performers in the region, closing down 0.5 percent and 0.2 percent respectively.

The minutes for the RBA meeting held November 5 were broadly in line with the statement published after the meeting. Officials at that meeting left the main policy rate unchanged at a record low of 0.75 percent. This followed cuts of 25 basis point rates at the RBA's meetings in May, June and October. The minutes show that officials considered the option of cutting policy rates further at this meeting but concluded that the rate cuts already delivered in recent months meant there was a case to "wait and assess the effects" of these cuts. Despite leaving rates on hold this month officials advised that they are prepared to ease policy further if required.

Other data published Tuesday showed New Zealand producer output prices rose by 1.0 percent on the quarter in the three months to September after advancing 0.5 percent in the three months to June, with year-on-year growth slowing from 2.3 percent to 1.8 percent. Data released previously showed consumer price pressures also moderated in the three months to September, with the year-on-year change in the consumer price index falling from 1.7 percent to 1.5 percent.

Looking forward

On Wednesday in Asia/Pacific, the Japanese merchandise trade report is scheduled. In Europe, German PPI figures are due. In North America, releases are scheduled for the following: Canadian CPI, the US EIA Petroleum Status, and Federal Open Market Committee meeting minutes.

Global stock markets

 

Index

19 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27934.02

-102.20

-0.4

 

NASDAQ

8570.66

20.72

0.2

 

S&P 500

3120.18

-1.85

-0.1

Canada

S&P/TSX Comp

17011.4

-13.71

-0.1

Europe

 

 

 

 

UK

FTSE 100

7323.8

16.10

0.2

France

CAC

5909.05

-20.74

-0.4

Germany

XETRA DAX

13221.12

14.11

0.1

Italy

MIB

23329.21

-134.77

-0.6

Spain

Ibex 35

9259.2

1.20

0.0

Sweden

OMX Stockholm 30

1743.25

-1.92

-0.1

Switzerland

SMI

10366.02

18.84

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6914.09

42.36

0.6

Japan

Nikkei 225

23292.65

-124.11

-0.5

 

Topix

1696.73

-3.99

-0.2

Hong Kong

Hang Seng

27093.8

412.71

1.5

S. Korea

Kospi

2153.24

-7.45

-0.3

Singapore

STI

3238.87

-19.79

-0.6

China

Shanghai Comp

2933.99

24.79

0.8

Taiwan

TAIEX

11656.4

56.62

0.5

India

Sensex 30

40469.7

185.51

0.5

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.