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On 20 June 2019 - Global shares: Asia, Europe, US up on rate-cut hopes, better mood on US-China trade

Anne D Picker

Anne D Picker - Econoday

Worries over US-Iran clash limit gains after downing of US drone.

US markets

US equities rose again Thursday in continued response to the Federal Reserve’s dovish policy signal, and talk of US-China trade talks resuming. The market’s buoyant mood was tempered by worries over the prospect of conflict after the downing of a US military drone aircraft by Iran, and provocative rhetoric from President Trump.

The Dow industrials gained 0.9 percent; the S&P 500 rose 1.0 percent, and the NASDAQ was up 0.8 percent.

Energy stocks led the gains as oil prices rallied on the Mideast tensions. Exxon Mobil rose 1.7 percent and Conoco Phillips gained 1.8 percent.

Among companies in focus: Slack Technologies, the messaging platform, rose 49 percent in its first day of public trading. Other recent tech IPOs did not fare so well on their first day of trading, including Lyft and Uber. General Electric led the industrials higher with a gain of 2.8 percent.

Other notable gainers included Darden Restaurants, up 1.1 percent, after a profits beat. Oracle rose 8.2 percent, after a profits beat and a better-than-expected revenue projection.  Shares of Carnival Corporation, the cruise-ship business, dropped 7.6 percent as it said bookings for its cruises were off and cited US restrictions on trips to Cuba. Other cruise operators fell as well, including Norwegian Cruise Holdings, down 2.5 percent.

In economic news, the Philadelphia Fed's manufacturing index dropped to 0.3 in June, for a 16.3 point decline from May. Yet outside of the headline index details in the report are less alarming. New orders did slow but not very much and remain respectable and solid at 8.3 with unfilled orders even stronger at 10.2.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up US$2.75 at US$64.57 while gold jumped US$25.85 at $1358.90.  The US dollar fell sharply against most major currencies especially against the Swiss franc and the yuan. The yield on the US Treasury 30-year bond was unchanged at 2.54 percent while the yield on the 10-year note was unchanged at 2.02 percent.

European markets

European equities rose again Thursday on continued reaction to the Fed’s dovish policy signal, and on news that the Bank of England had cut its growth forecast, which suggested rate cuts were a prospect. Markets also reacted favorably to a report that the European Commission might not press Italy so hard for action on its fiscal deficits.

Hopes for progress on US-China trade talks added to the improved market sentiment. On the negative side, stock gains were limited by worries over escalating tensions in the Middle East with the downing of a US drone.

The European STOXX 600 rose 0.6 percent, the German DAX percent gained 0.4 percent, the French CAC gained 0.3 percent, and the UK FTSE 100 rose 0.3 percent. The Italian FTSE MIB index was the star performer, up 0.7 percent.

Among stocks in focus, SAP rose 1.5 percent after its competitor, Oracle, raised its profit estimate. Delivery Hero, the food deliverer, rose 9.7% after raising its revenue forecast. On the downside, Deutsche Bank dropped 2.6% on news US regulators are probing the bank for money laundering.

Asia Pacific Markets

Most major Asian markets closed higher Thursday on after the Fed provided a clear signal at its meeting Wednesday that rate cuts are likely in coming months. The Bank of Japan also reiterated that it will loosen policy further if required after keeping rates on hold at its meeting.

Chinese shares performed particularly strongly as hopes were boosted that next week’s meeting between President Trump and President Xi may ease US-China trade tensions. The Shanghai Composite index advanced 2.4 percent on the day, while Hong Kong’s Hang Seng index closed up 1.2 percent. Australia’s All Ordinaries index rose 0.6 percent, while Japan’s Nikkei and Topix indices gained 0.6 percent and 0.3 percent respectively.

The Bank of Japan's Monetary Policy Board left monetary policy settings unchanged at the conclusion of its June meeting. As it has been since early 2016, the BoJ's short-term policy rate for excess reserves remains at minus 0.1 percent while the target level for the long-term 10-year yield remains at around zero percent. Officials' assessment remains that the economy is "expanding moderately" and they expect this to continue. In his post-meeting press conference, BoJ Governor Haruhiko Kuroda noted that officials do not believe additional policy stimulus is necessary at present but stressed that they would act "without hesitation" if required. Data released after the meeting showed a rebound in activity in both Japan’s manufacturing and services sectors in April.

New Zealand data showed the economy expanded 0.6 percent on the quarter in the three months to March, unchanged from the growth recorded in the three months to December. Year-on-year growth picked up from 2.3 percent to 2.5 percent.  On a sectoral basis, stronger growth in the manufacturing sector was offset by weaker growth in the services sector. Growth in household consumption slowed from 1.0 percent to 0.4 percent, while investment in fixed assets strengthened, up 2.4 percent after increasing 1.5 percent previously. Net exports and government spending also made strong positive contributions to headline growth, as they did in the previous quarter.

Looking forward

In Europe Friday, the PMI composite flash will be released for the Eurozone, France, and Germany. UK will issue its public sector financers report. From Canada, retail sales, and in the US, existing home sales data.

Global Stock Markets

 

Index

20 Jun 2019

Daily Change

% Change Daily

North America

United States

Dow

26753.17

249.17

0.9

 

NASDAQ

8051.34

64.02

0.8

 

S&P 500

2954.18

27.72

0.9

Canada

S&P/TSX Comp

16574.83

63.04

0.4

Europe

UK

FTSE 100

7424.44

20.90

0.3

France

CAC

5535.57

17.12

0.3

Germany

XETRA DAX

12355.39

46.86

0.4

Italy

MIB

21361.44

140.06

0.7

Spain

Ibex 35

9208.5

-22.70

-0.2

Sweden

OMX Stockholm 30

1628.29

15.89

1.0

Switzerland

SMI

9978.52

16.87

0.2

Asia/Pacific

Australia

All Ordinaries

6767.94

39.40

0.6

Japan

Nikkei 225

21462.86

128.99

0.6

 

Topix

1559.9

4.63

0.3

Hong Kong

Hang Seng

28550.43

348.29

1.2

S. Korea

Kospi

2131.29

6.51

0.3

Singapore

STI

3314.51

26.34

0.8

China

Shanghai Comp

2987.12

69.32

2.4

Taiwan

TAIEX

10785.01

9.67

0.1

India

Sensex 30

39601.63

488.89

1.2

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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