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On 21 June 2019 - Global shares mixed: Week-long rally fizzles on Friday

Anne D Picker

Anne D Picker - Econoday

UK chipmaker warns over Huawei, Trump and Xi expected to meet at G-20.

US markets

US shares ended a strong week marginally lower with both the Dow and S&P down 0.1 percent and the Nasdaq down 0.2 percent. Oil prices along with oil shares were bid higher on a report that President Trump pulled back from launching a limited strike against Iran yesterday. On trade, the US president and his Chinese counterpart Xi Jinping are expected to renew talks together at next week's Group of 20 summit.

Despite Friday's dip for the indexes, the week proved very positive boosted first by Mario Draghi's comments on Tuesday pointing to a possible rate cut by the European Central Bank that was followed on Wednesday by the Federal Reserve's shift away from a neutral to an accommodative bias. The Dow gained 2.4 percent on the week and is up 14.5 percent so far this year and the Nasdaq up 3.0 percent in the week for a year-to-date gain of 21.0 percent.

Economic data on Friday were mixed led by a sharp rise in existing home sales that included a jump in both prices and supply. Averages in the data were also positive but less so, however. Nearly flat was the signal from the June PMI flashes with manufacturing at a standstill and growth in services continuing to slow significantly.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude was up US$0.73 at US$65.30 while gold jumped US$7.20 to $1,404.10. The US dollar fell versus most major currencies, especially against the euro; it rose against the yuan and the Canadian dollar. The yield on the US Treasury 30-year bond was up 5 basis points at 2.59 percent while the yield on the 10-year note was up 4 basis points at 2.06 percent.

European markets

European shares were little changed Friday with the DAX down 0.1 percent and the FTSE down 0.2 percent. On the week, the DAX gained 2.0 percent and the FTSE 0.8 percent.

Technology shares were on the defensive after UK chipmaker IQE issued a sales warning tied to the blacklisting of China's Huawei. IQE shares fell 26 percent dragging others in the sector lower including STMicroelectronics and Dialog Semiconductor.

Economic news was mostly favorable with the Eurozone composite PMI flash for June edging higher to 52.1 as growth in services continues to offset contraction in manufacturing. France put in an especially good showing and posted growth for both manufacturing and services. Yet Germany shows continued troubles with manufacturing where the June flash index, at 45.4, remains deep in the sub-50 contraction column.

Asia Pacific Markets

Most major Asian markets closed lower on Friday but held onto gains over the week, with investors focused on a mix of global monetary policy developments, trade issues, and concerns about the potential for conflict between the US and Iran. Chinese shares outperformed on the day, with the Shanghai Composite index closing up 0.5 percent and extending its weekly gain to 4.2 percent. Hong Kong’s Hang Seng index fell 0.5 percent but remained the strongest regional performer on the week, up 5.0 percent after the government suspended plans to allow residents to be extradited to mainland China.

Australia’s All Ordinaries index fell 0.5 percent on the day but finished up 1.5 percent on the week. Japanese shares closed down on the day after subdued inflation and PMI data and also underperformed on the week, with the Nikkei index dropping 1.0 percent on Friday and finishing the week up 0.7 percent, and the Topix index falling 0.9 percent on the day and 0.1 percent on the week.

Japanese inflation data released Friday showed a small dip in both headline and underlying measures of inflation in May, 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 0.7 percent on the year in May after advancing 0.9 percent in April. This fall in headline inflation in May was largely driven by a weaker increase in utilities charges, and a bigger drop in transportation and communication costs, with the change in food prices and housing costs relatively steady. Core CPI inflation, which excludes fresh food prices, moderated from 0.9 percent to 0.8 percent, while the BoJ's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, moderated from 0.6 percent to 0.5 percent.

The flash estimate for the Japan manufacturing PMI index for June was 49.5, down from the final estimate of 49.8 for May. Respondents again cited US-China trade tensions as a significant factor weighing on activity and sentiment. This survey has indicated contraction in the Japanese manufacturing sector for four of the last five months.

Looking forward

Central Bank activities

Jun-25

Japan

BOJ MPB Minutes

Jun-26

NZ

RBNZ Announcement

 

 

 

The following indicators will be released this week...

Europe

 

 

Jun-24

Germany

IFO Survey (June)

Jun-25

France

Business Climate Indicator (June)

 

UK

CBI DistributiveTrades (June)

Jun-26

Germany

GfK Consumer Climate (July)

Jun-27

Eurozone

EC Economic Sentiment (June)

 

Germany

CPI (June p)

 

Italy

Business and Consumer Confidence (June)

Jun-28

Eurozone

HICP Flash (June)

 

France

Consumer Mfgd Goods (May)

 

 

CPI (June p)

 

 

PPI (May)

 

Italy

CPI (June p)

 

Switzerland

KOF Swiss Leading Indicator (June)

 

UK

GDP (Q1 f)

Asia Pacific

 

 

Jun-25

Hong Kong

Merchandise Trade (May)

 

NZ

Merchandise Trade (May)

 

Singapore

Industrial Production (May)

Jun-27

Australia

CPI (Q2)

Jun-28

Japan

Industrial Production (May)

 

 

Retail Sales (May)

 

 

Unemployment Rate (May)

Americas

 

 

Jun-25

US

Consumer Confidence (June)

 

 

New Home Sales (May)

 

 

S&P Corelogic Case-Shiller HPI (April)

Jun-26

US

Durable Goods (May)

 

 

International Trade In Goods (May)

Jun-27

US

GDP (Q1 f)

Jun-28

Canada

BOC Business Outlook Survey (Q2)

   

Monthly GDP (April)

 

US

Chicago PMI (June)

   

Consumer Sentiment (June f)

   

Personal Income and Outlays (May)

Global Stock Markets

 

Index

21 Jun 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26719.13

-34.04

-0.1

 

NASDAQ

8031.71

-19.63

-0.2

 

S&P 500

2950.46

-3.72

-0.1

Canada

S&P/TSX Comp

16525.43

-49.40

-0.3

Europe

 

 

 

 

UK

FTSE 100

7407.5

-16.94

-0.2

France

CAC

5528.33

-7.24

-0.1

Germany

XETRA DAX

12339.92

-15.47

-0.1

Italy

MIB

21388.63

27.19

0.1

Spain

Ibex 35

9227.2

18.70

0.2

Sweden

OMX Stockholm 30

*

*

*

Switzerland

SMI

9922.83

-55.69

-0.6

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6734.3

-33.64

-0.5

Japan

Nikkei 225

21258.64

-204.22

-1.0

 

Topix

1545.9

-14.00

-0.9

Hong Kong

Hang Seng

28473.71

-76.72

-0.3

S. Korea

Kospi

2125.62

-5.67

-0.3

Singapore

STI

3321.4

6.89

0.2

China

Shanghai Comp

3001.98

14.86

0.5

Taiwan

TAIEX

10803.77

18.76

0.2

India

Sensex 30

39194.49

-407.14

-1.0

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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