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On 24 April 2019 - Global shares on Wednesday mixed following Tuesday's US rally

Anne D Picker

Anne D Picker - Econoday

Economic data downbeat; takeover news in US and Europe.

US markets

Amid light news and following Tuesday's strong gains, US shares eased very slightly. The Dow fell 0.2 percent to 26,597 while the Nasdaq and S&P, both coming off record closes yesterday, also eased 0.2 percent.

Boeing shares rose on improved cash flow and despite missing quarterly revenue estimates after the grounding of the 737 MAX. The company also suspended share buybacks. Caterpillar fell on falling margins and weak sales in Asia.

EBay rose sharply after raising sales and profit forecasts, while AT&T fell sharply after missing quarterly sales expectations. Anadarko Petroleum surged after Occidental Petroleum made a counter offer to Chevron's bid for the company. But oil shares, which jumped yesterday, were mostly weaker in Wednesday's session.

Durable goods orders will be posted on Thursday and first-quarter GDP on Friday, following what was yesterday's much stronger-than-expected showing for new home sales. Yet data on Wednesday are hinting that the rush to lock in low mortgage rates may already be fading. The composite index from the Mortgage Bankers Association fell a steep 7.3 percent in the April 19 week reflecting a third straight very sharp decline in the refinance index, down 11.0 percent in the week, and a 4.0 percent decline in the purchase index that ends five straight though modest gains. Rates, which are down roughly 50 basis points since the beginning of the year, were steady in the week with the average 30-year conforming loan up 2 basis points at 4.46 percent. It's too early for the dip in the purchase index to lower expectations for home sales but the latest news, right when home sales data are starting to show life, is unwelcome.

These data reflect observations at 4:00 PM US ET. Brent spot crude rose US$0.04 to $74.53 while gold rose US$6.00 to $1,278.45. The US dollar firmed against the Australian and Canadian dollars and also against the euro and pound. The US currency was little changed against the Swiss Franc and the yuan and weakened against the yen. The yield on the US Treasury 30-year bond fell 4 basis points to 2.94 percent while the 10-year note yield also fell 4 basis points to 2.52 percent.

European markets

European shares were mostly weaker Wednesday as the FTSE posted a sharp 0.7 percent loss and the CAC fell 0.3 percent. The DAX, however, rallied with a 0.6 percent gain.

German software firm SAP surged to a record high on news that US hedge fund Elliott has a 1 percent stake in the company. Credit Suisse also rose sharply after beating earnings estimates and voicing confidence in its outlook. UK communications service provider KCOM posted very a strong gain after agreeing to a takeover offer by a pension fund.

Oil companies, including Shell and British Petroleum, retreated after yesterday's strong gains for the group that followed news that the US is not extending Iranian oil waivers. Gold miner Centamin rose on a strong quarterly update while mining company Anglo American fell sharply on an analyst downgrade.

Economic news in the session was downbeat including April's Ifo survey which points to no improvement for German business conditions this month. At 99.2, the headline business climate index was 0.5 points down from March and on the soft side of consensus. The latest fall reflected fresh declines in both expectations and current conditions, the latter down for the sixth time in seven months. Morale continued to fall in manufacturing and is now at its lowest point since December 2012. By contrast, services strengthened for a second consecutive month as did construction, but trade lost some ground following gains in February and March. Ifo's findings are much in line with the flash PMI survey which, on the back of the struggling manufacturing sector, also seemingly ruled out any bounce-back in economic activity at the start of the second quarter.

In France, sentiment in manufacturing unexpectedly worsened in April. A 101 headline reading was down in the month and at its lowest reading since March 2015. The deterioration was mainly due to weaker past output which recorded its poorest performance in three years. New business also dipped and both personal production expectations and general production expectations also moved in the wrong direction. Yet the decline in manufacturing morale was not matched in services (unchanged at 105) or retail trade (105 after 103) although construction (111 after 112) was a little softer.

Asia Pacific Markets

Asian stocks mostly retreated Wednesday including the Kospi with a 0.9 percent decline, the Topix at a 0.7 percent dip and the Hang Seng which fell 0.5 percent. Yet the All Ordinaries, up 0.9 percent following yesterday's oil-related 1.0 percent jump, appeared to get a boost from weak Australia inflation data.

Reports of progress in U.S.-China trade talks continue to have little effect on Asian shares amid wide expectations that an agreement will be reached. US trade officials will visit Beijing on April 30 for more talks.

Australia’s dollar dropped sharply following a decline in headline consumer prices which posted a disappointing 1.3 percent year-on-year increase in the March quarter, down from 1.8 percent in the December quarter and further below the Reserve Bank of Australia's target range of 2.0 percent to 3.0 percent. Inflation has now been below this range for three consecutive quarters and is at its lowest level since late 2016. The drop was largely driven by a sharp fall in transport costs in response to lower global oil prices. But price changes were also subdued for other major categories including food, housing, and communication. Reserve Bank of Australia policy makers consider the chances whether the next move in policy rates will be higher or lower to be evenly balanced, but the latest data will likely strengthen speculation that a rate cut may be considered in upcoming meetings.

Looking forward

The Bank of Japan is expected to issue monetary policy announcement. In the UK the CBI Industrial Trends Survey will be posted while US data will be led by durable goods orders and weekly jobless claims.

Global Stock Markets

 

Index

24 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26597.05

-59.34

-0.2

 

NASDAQ

8102.01

-18.81

-0.2

 

S&P 500

2927.25

-6.43

-0.2

Canada

S&P/TSX Comp

16586.52

-82.88

-0.5

Europe

 

 

 

 

UK

FTSE 100

7471.75

-51.32

-0.7

France

CAC

5576.06

-15.63

-0.3

Germany

XETRA DAX

12313.16

77.65

0.6

Italy

MIB

21724.44

-172.40

-0.8

Spain

Ibex 35

9456.4

-70.80

-0.7

Sweden

OMX Stockholm 30

1680.72

8.54

0.5

Switzerland

SMI

9655.67

20.60

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6470.61

59.54

0.9

Japan

Nikkei 225

22200

-59.74

-0.3

 

Topix

1612.05

-10.92

-0.7

Hong Kong

Hang Seng

29805.83

-157.41

-0.5

S. Korea

Kospi

2201.03

-19.48

-0.9

Singapore

STI

3362.43

8.96

0.3

China

Shanghai Comp

3201.61

3.02

0.1

Taiwan

TAIEX

11027.64

1.96

0.0

India

Sensex 30

39054.68

489.80

1.3

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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