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On 22 July 2019 - US, Europe flat to higher in cautious trading; Asia off

Anne D Picker

Anne D Picker - Econoday

US tech shares better on Goldman upgrade, US-China trade hopes.

US markets

US stocks were flat to better Monday with tech shares outperforming on favorable sell-side commentary and on hopeful headlines from US-China trade talks. The Dow industrials rose 0.1 percent; the S&P rose 0.3 percent, and the NASDAQ gained 0.7 percent.

Markets reacted favorably to reports China is arranging to buy more US farm products, and news that top US officials are heading to Beijing for talks next week. Tech shares also benefited from news White House officials were meeting with US tech companies to discuss allowing more business with Huawei. Market leaders Facebook, Alphabet, and Amazon rose ahead of their earnings reports due this week. Energy shares were mostly lower despite rising oil prices on Mideast worries.

Goldman Sachs upgraded semiconductor equipment shares Monday, which lifted Applied Materials by 6.1 percent and Lam Research Corporation by 4.4 percent. Health care shares underperformed, with Johnson & Johnson (down 1.3 percent) continuing to suffer from lawsuits related to its talcum powder. Harley-Davidson fell 1.7 percent after UBS warned of possible sales weakness in the motorcycle maker’s key second quarter.

Among companies reporting earnings, oil driller Haliburton rose 9.2 percent after an earnings beat, and health care company DaVita gained 4.9 percent after raising its profits outlook.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up 79 cents to US$63.44 while gold rose US$7.05 to US$1,425.20. The US dollar rose against most major currencies. The yield on the US Treasury 30-year bond yield was down 1 basis point at 2.57 percent while the yield on the 10-year note was unchanged at 2.05 percent.

European markets

European equities edged up Monday as Mideast tensions lifted oil prices and traders were cautious ahead of pending earnings news and monetary policy decisions due Thursday from the European Central Bank and from the Federal Reserve next week. The Europe-wide STOXX 600 rose 0.1 percent, the German DAX rose 0.2 percent, the French CAC was up 0.3 percent, and the UK FTSE 100 rose 0.1 percent. The Italian FTSE MIB gained 0.4 percent.

Oil prices rose as markets focused on diplomatic efforts to contain fallout from the Iranian seizure of a UK-flagged oil tanker in the Persian Gulf on Friday, which helped oil stocks outperform. Royal Dutch Shell was among the leaders, up 0.7 percent, and French oil major Total rose 0.3 percent. Auto shares also outperformed, with insurance and telecom notable underperformers in the Stoxx 600.

Italian shares did better on hopes for a more market-friendly government if snap elections are held. Markets are anticipating a showdown between coalition partners Deputy Premier Matteo Salvini of the rightist Northern League and Luigi Di Maio of the Five Star Movement, leading either to new elections or a new prime minister for the existing government.

Among companies in focus, Dutch tech firm Koninklijke Philips was up 5.4 percent after an earnings beat.

In economic news, UK stocks were depressed by a report from the think tank NIESR that UK growth has stalled and may already be in recession, due to Brexit worries. Bank of England Chief Economist Haldane was quoted saying Brexit is hitting the UK economic outlook.

Asia Pacific Markets

Most major Asian markets closed lower Monday following the lead set by US shares on Friday, with sentiment also impacted by tensions between Iran and the United Kingdom and an escalation in political unrest in Hong Kong over the weekend. Hong Kong’s Hang Seng index fell 1.4 percent on the day after large public protests Sunday were followed by vandalism of government buildings, the deployment of tear-gas by police, and street violence aimed at protesters.

The Shanghai Composite index also posted a heavy fall, down 1.3 percent, after the introduction today of a new Nasdaq-style exchange for domestic technology firms. The 25 companies initially listed on the STAR market, operated by the Shanghai Stock Exchange, were all heavily over-subscribed at their initial public offerings and are estimated to have risen by an average of 140 percent on the first day of trading.

Elsewhere in the region, shares in Japan also weakened with the Nikkei and Topix indices closing down 0.2 percent and 0.5 percent respectively. Shares of Asahi Group Holdings fell sharply after the company announced it will issue shares to purchase the Australian operations of Anheuser Busch InBev. Australia’s All ordinaries index fell 0.1 percent on the day.

The regional data calendar was light Monday. Hong Kong's headline consumer price index increased 3.3 percent on the year in June, its highest level since mid-2016 and accelerating sharply from 2.8 percent in May. Officials attributed this sharp pick-up in inflation in June mainly to a surge in pork prices caused by recent shortages and advised that the near-term outlook for pork supply will likely drive moves in inflation again in the next few months.

Looking forward

On Tuesday, the Singapore CPI will be posted while in Europe the UK CBI Industrial Trends report and the Eurozone European Commission consumer confidence report are due. In the US, existing home sales are scheduled for release.

Global Stock Markets

 

Index

22 Jul 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27171.9

17.70

0.1

 

NASDAQ

8204.14

57.65

0.7

 

S&P 500

2984.48

7.87

0.3

Canada

S&P/TSX Comp

16512.19

26.25

0.2

Europe

 

 

 

 

UK

FTSE 100

7514.93

6.23

0.1

France

CAC

5567.02

14.68

0.3

Germany

XETRA DAX

12289.4

29.33

0.2

Italy

MIB

21735.7

94.24

0.4

Spain

Ibex 35

9163.5

-7.00

-0.1

Sweden

OMX Stockholm 30

1600.88

-4.54

-0.3

Switzerland

SMI

9922.37

-14.66

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6781.25

-5.00

-0.1

Japan

Nikkei 225

21416.79

-50.20

-0.2

 

Topix

1556.37

-7.59

-0.5

Hong Kong

Hang Seng

28371.26

-394.14

-1.4

S. Korea

Kospi

2093.34

-1.02

0.0

Singapore

STI

3357.22

-20.74

-0.6

China

Shanghai Comp

2886.97

-37.23

-1.3

Taiwan

TAIEX

10944.53

71.34

0.7

India

Sensex 30

38031.13

-305.88

-0.8

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.