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On 24 September 2019 - Global shares: US off on impeachment talk; Europe flat to down; Asia firms

Anne D Picker

Anne D Picker - Econoday

Weak US data, Trump trade comments add to risk-off tone.

US markets

US equities reversed early gains to end weaker Tuesday on US-China trade worries, weak US data, and as the House of Representatives headed toward impeachment of President Trump. The Dow industrials declined 0.5 percent, the S&P 500 fell 0.8 percent, and the NASDAQ fell 1.5 percent.

Equities markets advanced in the morning after Treasury Secretary Steven Mnuchin offered a positive outlook for US-China trade talks, but the market fell back after a weak US consumer confidence report, after harsh words about Chinese trade practices from President Trump, and news that House Speaker Nancy Pelosi would support an impeachment inquiry.

Retail stocks were among the worst performers, with Amazon weighing on the indexes with a decline of 2.4 percent. Energy and communications services also underperformed, with the FAANG stocks suffering. Energy stocks were hit by a selloff in crude oil prices. ConocoPhilips was off 1.5 percent, and ExxonMobil fell 1.3 percent.

Among companies in focus, Autozone, the car parts retailer, fell 4.3 percent despite beating earnings and revenues forecasts. CarMax, the online car seller, gave up early gains to end down 0.2 percent despite its own positive earnings surprises. Facebook closed down 2.9 percent amid reports it will acquire CTRL-Labs, a software company.

In US economic news, the US consumer confidence index dropped unexpectedly in September to 125.1 from 134.2 and 135.8 in August and July. Nevertheless, this index has been trending higher this year in continued contrast to the rival consumer sentiment index, which has been slumping noticeably. Separately, Richmond Fed district manufacturing activity slumped back into contraction in September, down 10 points to minus 9.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 88 cents to US$62.56, while gold rose by US$9.10 to US$1,540.80. The US dollar fell against most major currencies. The US Treasury 30-year bond yield fell 9 basis points to 2.09 percent while the 10-year note yield was down 9 basis points to 1.64 percent.

European markets

European equities ended flat to weaker as UK stocks were hurt by fallout from the latest Brexit news. The Europe-wide STOXX 600 was unchanged, the German DAX eased 0.3 percent, the French CAC was unchanged, and the UK FTSE-100 slipped 0.5 percent.

UK exporters were hit by sterling’s rise after the UK Supreme Court declared Prime Minister Boris Johnson’s suspension of Parliament to be unlawful. The ruling has diminished prospects for a hard Brexit but left the outlook uncertain, and have also raised the prospect that Johnson may be obliged to resign.

Among shares in the Stoxx 600, outperformers included travel & leisure, utilities, health care, and retail, while underperformers included basic resources, autos & parts, oil & gas, and banks.

Among companies in focus, Total, the French supermajor oil company, declined 1.9 percent on weak oil prices, despite raising its dividend and raising its guidance. Norsk Hydro, the Norwegian aluminum miner, fell 3.9 percent after announcing cost-cutting measures. Carlsberg, the Danish beer company, rose 0.5 percent after announcing share buybacks.

In economic news, Ifo's latest survey found a marginal and much as expected improvement in German business sentiment in September. At 94.6, the climate indicator was 0.3 points above its August level, unwinding just a portion of that month's 1.3 point drop. That said, this was the first increase since May and only the second since September 2018.

Asia Pacific markets

Most major Asian markets posted modest gains Tuesday, with a light regional data calendar keeping investors focused on external developments and ongoing US-China trade developments. The Nikkei and Topix indices advanced 0.1 percent and 0.4 percent respectively as trading resumed in Japan after Monday’s holiday, with flash PMI data and comments from Bank of Japan Governor Haruhiko Kuroda providing only limited guidance. The Shanghai Composite index closed up 0.3 percent while Hong Kong’s Hang Seng index advanced 0.2 percent. Australia’s All Ordinaries index underperformed with a modest 0.1 percent drop.

Flash PMI survey data for Japan indicate that weakness in the manufacturing sector has extended into September but that conditions have improved in the services sector. The flash estimate for the manufacturing headline index was 48.9, down from the final estimate of 49.3 for August, and if confirmed by final data due early next month would be the lowest reading since June 2016. Survey respondents reported a bigger drop in output as well as weaker employment and confidence about the outlook, but a smaller fall in new orders and new export orders. The flash estimate for the service sector’s headline index was 52.8, down from the final estimate of 53.3 for August. Respondents in the services sector reported weaker growth in output, a fall in employment, and weaker sentiment about the outlook in September, but stronger growth in new orders and new export orders.

BoJ Governor Kuroda spoke Tuesday but his comments were in line with those made after last week’s policy meeting. He again highlighted that downside risks from the global economy have increased and noted that this could weigh on Japanese firms’ investment plans and help bring about a loss of momentum towards meeting the BoJ’s inflation target. Based on this assessment, Governor Kuroda said that he is “more positive about further easing” but has “no preconception” ahead of the next policy meeting scheduled for late October.

Reserve Bank of Australia Governor Philip Lowe also spoke Tuesday after the close of local trading, providing an update of his assessment of economic conditions and the policy outlook. His comments were also broadly in line with those made at the last policy meeting at the start of the month. He noted that cuts to policy rates made in June and July were done in order “to help make more assured progress” towards the RBA’s employment and inflation objectives and repeated that rates will likely remain low for “an extended period”. He also stressed that further monetary easing may be required and that officials are prepared to take this step. The RBA’s next policy meeting will be held next week.

Looking forward

On Wednesday in Asia/Pacific, the Bank of Japan monetary policy board minutes are due, along with the Reserve Bank of New Zealand’s policy announcement. In data, the New Zealand merchandise trade report is scheduled. In European data, the UK CBI Distributive Trades report is due. In North America, new home sales and EIA Petroleum Status figures are due.

Global stock markets

 

Index

24 Sep 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26807.77

-142.22

-0.5

 

NASDAQ

7993.63

-118.83

-1.5

 

S&P 500

2966.6

-25.18

-0.8

Canada

S&P/TSX Comp

16798.33

-68.87

-0.4

Europe

 

 

 

 

UK

FTSE 100

7291.43

-34.65

-0.5

France

CAC

5628.33

-2.43

0.0

Germany

XETRA DAX

12307.15

-35.18

-0.3

Italy

MIB

21901.01

1.13

0.0

Spain

Ibex 35

9118.2

24.60

0.3

Sweden

OMX Stockholm 30

1633.09

-4.57

-0.3

Switzerland

SMI

9991.31

-6.08

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6856.59

-4.47

-0.1

Japan

Nikkei 225

22098.84

19.75

0.1

 

Topix

1622.94

6.71

0.4

Hong Kong

Hang Seng

26281

58.60

0.2

S. Korea

Kospi

2101.04

9.34

0.5

Singapore

STI

3155.46

12.22

0.4

China

Shanghai Comp

2985.34

8.26

0.3

Taiwan

TAIEX

10918.01

-1.01

0.0

India

Sensex 30

39097.14

7.11

0.0

*Markets closed

 

 

 

 

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.