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On 22 May 2019 - Global shares mixed: US slips, Europe and Asia narrowly mixed

Anne D Picker

Anne D Picker - Econoday

US set to widen China tariffs; Boeing, British Steel, Hikvision in the news.

US markets

US Treasury Secretary Steven Mnuchin confirmed earlier reports that the US is at least a month away from extending 25 percent tariffs against an additional $300 billion of Chinese exports. The Dow fell 0.4 percent on Wednesday's session with the Nasdaq also down 0.4 percent.

Donald Trump cut short a meeting with Nancy Pelosi after the House Speaker accused the president of engaging in "a cover-up" as the House seeks access to the president's tax returns and testimony from top advisors.

Boeing fell sharply on news that Air China, China Southern and China Eastern are seeking claims against the company for delayed deliveries of the grounded 737 Max. Home improvement chain Lowe's fell very sharply after posting quarterly earnings as did high-end department chain Nordstrom which cut its profit and sales forecasts. Target, however, rose sharply after beating profit and sales expectations. Chipmaker Analog Devices, despite issuing downbeat guidance, rose after beating earnings expectations.

Economic news was headed by FOMC minutes from the April 30 and May 1 policy meeting that confirmed the Fed is settled in a wait-and-see mode. Jerome Powell took the position in his FOMC press conference that the moderation underway in core inflation was transitory, a view the financial markets saw as hawkish and with which, in the language of the minutes, "many" of the 17 FOMC members agreed. Only "some" of the members saw the opposite, that is an increasingly downside risk for inflation. In an irony given the ongoing breakdown of US-China trade relations, members at the time of the meeting saw global risks and uncertainties as having moderated.

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was down US$1.20 to $70.83 while gold was US$0.90 lower at $1,273.60. The US dollar rose against the pound, the Canadian dollar, the euro and the yuan; it was little changed against the Australian dollar and fell against the yen and the Swiss franc. The yield on the US Treasury 30-year bond fell 4 basis points to 2.81 percent while the yield on the 10-year note was also down 4 basis points to 2.39 percent.

European markets

European stocks were narrowly mixed Wednesday with Germany's DAX up 0.2 percent, France's CAC down 0.1 percent, and the UK's FTSE up 0.1 percent.

The FTSE held steady but the pound fell sharply as opposition builds in parliament against Theresa May's latest efforts to win support for a Brexit withdrawal agreement, one that would reportedly include a vote on holding another referendum.

Company news includes British Steel being placed in compulsory liquidation, which puts 5,000 UK jobs at risk, and reports that UK chip designer ARM will suspend business with Huawei in compliance with the US blacklisting. SimCorp of Denmark rose very sharply after the software firm beat quarterly expectations and affirmed guidance while UK retailer Marks & Spencer fell very sharply on soft profit growth. Economic data out of the UK includes a strong 0.6 percent rise in the April CPI that reflects increases in housing and services price as well as energy costs. Core prices were less robust posting a 0.3 percent monthly gain. Year-on-year, the overall CPI was up 2.1 percent with the core unchanged at 1.8 percent and below 2 percent for the eighth month in a row.

Asia Pacific Markets

Chinese shares weakened again Wednesday on worries over widening US sanctions against Chinese firms, with the Shanghai composite off 0.5 percent. Markets were rattled by a report that the US may blacklist Hikvision, a Chinese surveillance technology company, and might sanction other Chinese firms. Hikvision shares dropped 5.5 percent. Most other Asian markets were flat to higher as gains were limited by bearishness linked to the US-China trade dispute.

Japan's Nikkei 225 edged up 0.1 percent but the broader Topix fell 0.3 percent as markets reacted to news of another drop in Japanese exports and remained depressed by worry over the global market for Japanese goods. Hong Kong's Hang Seng index rose 0.2 percent, amid conflicting news on the trade story, including the delay in US sanctions on Huawei. The Singapore Straits Times index was unchanged. Korea's KOSPI rose 0.2 percent on reported foreign buying, and as the Korean won rose in response to an official warning against further declines. Samsung rose 0.8 percent as it continued to benefit from weakness in its Chinese competitors, especially Huawei.

Australia's All Ordinaries edged up 0.2 percent, as the market continued to respond to the unexpected election win by the business-friendly Liberal National coalition. Markets are buoyed by widespread expectation of rate cuts next month from the Reserve Bank of Australia, alongside promised tax cuts. Property and home construction shares have been buoyant in response to the rate hopes, plus relaxed rules on mortgage lending. Still, trade worries limited the gains. India's Sensex rose 0.4 percent on sustained bullishness following the reelection of the business-friendly Prime Minister Narendra Modi. Property, banking, and auto shares were notable gainers.

Japan saw a batch of economic reports. On the positive side, Japan's private sector machinery orders (excluding volatile items) rose 3.8 percent on the month in March, accelerating from February's 1.8 percent rise and much stronger than the consensus forecast for an unchanged reading. Also somewhat positive, the Reuters Tankan index came in better than expected at 12 in May, but it still fell from 19 in December. On the negative side, Japan's merchandise trade exports fell by a larger-than-expected 2.4 percent on the year in April, the fifth consecutive monthly year-on-year drop. Imports posted the second monthly year-on-year increase in a row, rising by a sharper than expected 6.4 percent. Contributing to the year-on-year decline in Japan's exports in April was a 6.3 percent drop in exports to China after dropping 9.4 percent previously.

Looking forward

Asia opens with the PMI manufacturing flash out of Japan followed by CPIs out of both Singapore and Hong Kong. First-quarter GDP and the Ifo Survey for May will be posted in Germany and May's business climate indicator in France. Composite PMI flashes for May will be posted for the Eurozone as well as Germany and France. The US will post new home sales for April.

Global Stock Markets

 

Index

22 May 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

25776.61

-100.72

-0.4

 

NASDAQ

7750.84

-34.88

-0.4

 

S&P 500

2856.27

-8.09

-0.3

Canada

S&P/TSX Comp

16327.35

-99.12

-0.6

Europe

 

 

 

 

UK

FTSE 100

7334.19

5.27

0.1

France

CAC

5378.98

-6.48

-0.1

Germany

XETRA DAX

12168.74

25.27

0.2

Italy

MIB

20573.31

-125.30

-0.6

Spain

Ibex 35

9232.2

-6.90

-0.1

Sweden

OMX Stockholm 30

1595.64

-7.27

-0.5

Switzerland

SMI

9645.04

20.88

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6598.08

13.69

0.2

Japan

Nikkei 225

21283.37

10.92

0.1

 

Topix

1546.21

-4.09

-0.3

Hong Kong

Hang Seng

27705.94

48.70

0.2

S. Korea

Kospi

2064.86

3.61

0.2

Singapore

STI

3183.14

-0.12

0.0

China

Shanghai Comp

2891.7

-14.27

-0.5

Taiwan

TAIEX

10457.22

-7.28

-0.1

India

Sensex 30

39110.21

140.41

0.4

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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