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On 18 October 2019 - Global shares: US, Europe off on bearish company news; Asia down

Anne D Picker

Anne D Picker - Econoday

Boeing, Johnson & Johnson weigh on US markets; automakers depress Europe.

US markets

US equities slipped Friday as bad news from Boeing and Johnson & Johnson led the major averages lower, despite generally favorable corporate earnings. The Dow industrials fell 1.0 percent, the S&P 500 declined 0.4 percent, and the NASDAQ was off 0.8 percent.

The Federal Aviation Administration said Boeing misled the FAA by withholding pilot messages about the flight-control system that was blamed for crashes of its 737 Max planes. Boeing was off 6.8 percent and was a big weight on the Dow industrials. In other corporate news, Johnson & Johnson fell 6.2 percent on news it would recall its baby powder after regulators found asbestos in some powder samples.

Weaker Chinese GDP figures Friday added to concerns about a global slowdown. Meanwhile, Federal Reserve speakers this week appeared to leave the door open to a rate cut Oct. 30, but their comments this week left market participants uncertain about whether the Fed would deliver the expected cut.

Software and internet stocks were another notable laggard Friday, with Facebook off 2.3 percent on worries over its proposed Libra digital currency. Elsewhere, American Express, the financial services company, fell 2 percent after cutting its guidance. On the positive side, Coca-Cola gained 1.8 percent after an earnings beat and raising its guidance on better organic growth.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 62 cents to US$59.32, while gold fell by US$2.70 to US$1,494.30. The US dollar fell against most major currencies. The US Treasury 30-year bond yield rose 1 basis points to 2.25 percent while the 10-year note yield was unchanged at 1.75 percent.

European markets

European equities edged down Friday on corporate warnings and uncertainty over the fate of the EU-UK Brexit deal. The Europe-wide STOXX 600 eased 0.3 percent, the German DAX was down 0.2 percent, the French CAC declined 0.7 percent, and the UK FTSE-100 was off 0.4 percent.

Parliament is scheduled to vote on the EU-UK Brexit agreement Saturday, with the outcome evidently too close to call. Some reports said an alliance of Labour Party and former Conservative Party members appeared likely to succeed in rejecting the pact and forcing yet another extension in the Brexit timetable past Oct. 31.

European market sentiment reflected the global slowdown narrative, with weaker Chinese growth figures adding to the worries, and more big goods-makers citing slowing global growth. Volvo, the big Swedish truckmaker, Friday reported its orders dropped in the third quarter, and predicted demand would fall next year in Europe and the Americas. Volvo managed to rise 2.4 percent on an earnings beat, but many other automakers fell, with Renault off 5.5 percent after cutting its earnings and revenue guidance. 

Meanwhile, food companies were hit after Danone, the French yogurt company (down 8.4 percent), slashed its sales forecast for 2019.

Among shares in the Stoxx 600, outperformers included basic resources, insurance, and telecom. Underperformers included autos, food & beverage, travel & leisure, and technology.

Asia Pacific markets

Most major Asian markets closed lower Friday after Chinese data showed economic growth slowed in recent months, with performance mixed across the region over the week. The Shanghai Composite index closed down 1.3 percent on the day, extending its losses on the week to 1.8 percent. Australia’s All Ordinaries index fell 0.5 percent on the day and advanced 0.5 percent on the week, while Hong Kong's Hang Seng index also fell 0.5 percent on the day and gained 1.6 percent on the week. Japan’s Nikkei and Topix indices were little changed on the day, up 0.2 percent and down 0.1 percent respectively, but posted strong gains on the week, up 4.4 percent and 2.6 percent respectively.

Chinese data showed weaker GDP growth in the three months to September but some improvement in monthly data for September. China's economy expanded at a 6.0 percent year-on-year pace in the three months to September, moderating from 6.2 percent in the three months to June and just below the consensus forecast of 6.1 percent. This extends the downward trend in year-on-year growth rates seen since early 2018 but remains within the government's 6.0 to 6.5 percent growth target range for 2019. GDP grew 1.5 percent on the quarter, down slightly from the 1.6 percent increase recorded previously.

Chinese industrial production advanced 5.8 percent on the year in September, picking up strongly from 4.4 percent in August. This rebound was driven by by strong activity in manufacturing and mining, with growth in utilities output steady. Retail sales grew 7.8 percent on the year in September, up moderately from 7.5 percent in August and reflecting offsetting moves among key categories. Fixed asset investment grew 5.4 percent year-to-date in September, unchanged from August, with growth similarly steady in the manufacturing, mining, power production, and property sectors.

Japanese inflation data published Friday showed declines in headline and underlying measures of inflation in September, providing more evidence that reaching the Bank of Japan's 2.0 percent inflation target remains a slow process. The headline consumer price index rose 0.2 percent on the year in September, down from 0.3 percent in August and its lowest level since February, largely driven by weaker transportation and communication prices. Core CPI, which excludes fresh food prices, rose 0.3 percent on the year, down from 0.5 percent previously, while the BoJ’s preferred measure of underlying inflation, CPI excluding fresh food and energy prices, rose 0.5 percent, down from 0.6 percent previously.

BoJ officials have in recent weeks advised that monetary policy will be eased further "without hesitation" if they consider that the "momentum" towards meeting their inflation target is "lost". Headline inflation has now fallen in four of the last five months. and this latest decline may be enough for them to reach this conclusion ahead of their next policy meeting at the end of the month.

Looking forward

Central Bank activities

 

Oct-24

Eurozone

ECB Policy Announcement

The following indicators will be released this week...

Europe

 

 

Oct-21

Germany

PPI (September)

Oct-22

UK

Public Sector Finances (September)

Oct-23

Eurozone

EC Consumer Confidence Flash (October)

 

France

Business Climate Indicator (October)

Oct-24

Eurozone

PMI Composite Flash (October)

 

France

PMI Composite Flash (October)

 

Germany

PMI Composite Flash (October)

Oct-25

Germany

Gfk Consumer Climate (November)

   

Ifo Survey (October)

Asia Pacific

 

 

Oct-21

China

House Price Index (September)

 

Japan

Merchandise Trade (September)

Oct-23

New Zealand

Merchandise Trade (September)

 

Singapore

CPI (September)

Oct-24

Hong Kong

Merchandise Trade (September)

 

Japan

PMI Composite Flash (October)

Oct-26

Singapore

Industrial Production (September)

Americas

 

 

Oct-22

Canada

BoC Business Outlook Survey (Q3)

 

 

Retail Sales (August)

 

US

Existing Home Sales (September)

Oct-24

US

Durable Goods Orders (September)

 

 

Jobless Claims (Week of Oct. 19)

 

 

New Home Sales (September)

 

 

PMI Composite Flash (October)

Oct-25

US

Consumer Sentiment (October f)

Global stock markets

 

Index

18 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26770.2

-255.68

-1.0

 

NASDAQ

8089.54

-67.31

-0.8

 

S&P 500

2986.2

-11.75

-0.4

Canada

S&P/TSX Comp

16377.12

-49.18

-0.3

Europe

 

 

 

 

UK

FTSE 100

7150.57

-31.75

-0.4

France

CAC

5636.25

-36.82

-0.7

Germany

XETRA DAX

12633.6

-21.35

-0.2

Italy

MIB

22321.77

-53.90

-0.2

Spain

Ibex 35

9329.8

-10.20

-0.1

Sweden

OMX Stockholm 30

1697.91

15.04

0.9

Switzerland

SMI

9965.49

-43.45

-0.4

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6758.36

-33.16

-0.5

Japan

Nikkei 225

22492.68

40.82

0.2

 

Topix

1621.99

-2.17

-0.1

Hong Kong

Hang Seng

26719.58

-128.91

-0.5

S. Korea

Kospi

2060.69

-17.25

-0.8

Singapore

STI

3114.16

-11.98

-0.4

China

Shanghai Comp

2938.14

-39.19

-1.3

Taiwan

TAIEX

11180.22

-6.66

-0.1

India

Sensex 30

39298.38

246.32

0.6

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.