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On 26 March 2019 - Global stocks bounce back despite subdued data

Anne D Picker

Anne D Picker - Econoday

Brexit outlook remains unclear as UK parliament set to vote on potential options.

US markets

US stocks posted solid gains Tuesday after recent losses, though incoming data continue to indicate subdued economic conditions. The Dow closed up 0.6 percent on the day while the S&P and the Nasdaq both gained 0.7 percent.

The Richmond Fed’s survey of regional manufacturing conditions showed a fall in its headline index from 16 in February to 10 in March, in line with other indications of slowing growth in the sector. Respondents reported weaker shipments and new orders but stronger employment and confidence about the outlook. The Conference Board’s measure of consumer confidence fell from 131.4 in February to 124.1 in March, with concerns about labour market conditions appearing to be the main factor driving this drop. The Redbook survey of retail sales showed year-on-year growth picked up from 4.9 percent to 5.3 percent in the March 23 week.

Housing market data published Tuesday were mixed. Housing starts fell 8.7 percent on the month in February, but revisions showed stronger growth over the December and January period. Housing permits, less affected by weather, fell 1.6 percent on the month in February. In year-on-year terms, starts fell 9.9 percent while permits are down 2.0 percent. The S&P Corelogic Case-Shiller home price index showed an increase of 0.1 percent on the month in January after a gain of 0.3 percent in December, with year-on-year growth in the index slowing from 4.1 percent to 3.6 percent. The Federal Housing Finance Agency’s index, however, showed stronger growth of 0.6 percent on the month, up from 0.3 percent in December, with year-on-year growth relatively steady at 5.6 percent.

These data reflect observations at 4:00 PM US ET. Gold fell US$6.90 to US$1,322.10 while dated Brent spot crude rose US$0.87 to US$68.08. The US dollar fell against the Australian dollar and the Canadian dollar, was flat against the pound, and made moderate gains against other major currencies. The yield on the US Treasury 30-year bond rose 1 basis point to 2.87 percent while the 10-year note gained 2 basis points to 2.42 percent.

European markets

European markets gained Tuesday, with the FTSE up 0.4 percent, the CAC outperforming with an increase of 0.9 percent, and the DAX closing 0.6 percent higher. French plane-maker Airbus advanced further Tuesday after Chinese President Xi Jingping announced Monday that China will purchase around US$35 billion worth of its aircraft.

The European data calendar was relatively light Tuesday. Revised French GDP data left previous estimates of growth little changed, with the economy still estimated to have expanded by 0.3 percent on the quarter in the three months to December and the estimate of year-on-year growth revised from 0.9 percent to 1.0 percent. INSEE's survey of French firms reported a fall in its measure of business sentiment from 103 in February to 102 in March, continuing the recent downward trend and taking the index to its lowest level since March 2016, while GfK’s survey of German consumers showed a fall in its measure of consumer confidence from 10.7 to 10.4.

United Kingdom’s parliament is expected on Wednesday to start holding a series of non-binding “indicative” votes in an effort to find a potential Brexit outcome that can command the support of a majority of legislators. It remains unclear whether parliament will approve a particular option and, even if it does, whether the government would accept it, in which case a general election could be triggered. 

Asia Pacific Markets

Asian markets varied widely Tuesday. Japan’s Nikkei and Topix indices both rebounded after sharp losses on Monday, closing the day up 2.2 percent and 2.6 percent respectively. Computer game manufacturer Nintendo outperformed after reports that it will introduce new products later in the year, with electronics producer Sharp also rising on expectations that it will supply components for the new product. The Shanghai Composite index, however, fell 1.5 percent, with concerns about the global growth outlook still weighing on investor sentiment. Markets elsewhere in the region generally posted moderate gains Tuesday.

Singapore industrial production showed some volatility in February, with weaker month-on-month growth but a rebound in year-on-year growth. As with previously released trade data, the change in growth between January and February likely reflected to some extent the impact of the timing of lunar new year holidays. This impact was also evident in Hong Kong trade data published Tuesday, which showed a wide deficit and a sharp fall in exports in February. Officials, noted however, that the fall in exports over January and February combined was less pronounced and outweighed by a bigger fall in imports over that period. New Zealand trade data showed a shift in the balance from a revised deficit of NZ$948 million in January to a surplus of NZ$12 million in January, with a strong rebound in exports growth and a smaller recovery in imports growth.

Looking forward

The Reserve Bank of New Zealand is expected to leave policy rates on hold when its meeting concludes shortly. The European data calendar is relatively light Wednesday, with trade and inventories data scheduled for release in the US.

Global Stock Markets

 

Index

Mar 26 2019

Daily Change

% Change Daily

North America

United States

Dow

25657.73

140.90

0.6

 

NASDAQ

7691.52

53.98

0.7

 

S&P 500

2818.46

20.10

0.7

Canada

S&P/TSX Comp

16155.2

89.34

0.6

Europe

UK

FTSE 100

7196.29

18.71

0.3

France

CAC

5307.38

46.74

0.9

Germany

XETRA DAX

11419.48

72.83

0.6

Italy

MIB

21139.4

79.80

0.4

Spain

Ibex 35

9183.1

3.20

0.0

Sweden

OMX Stockholm 30

1574.16

0.50

0.0

Switzerland

SMI

9389.3

83.80

0.9

Asia/Pacific

Australia

All Ordinaries

6213.13

4.41

0.1

Japan

Nikkei 225

21428.39

451.28

2.2

 

Topix

1617.94

40.53

2.6

Hong Kong

Hang Seng

28566.91

43.56

0.2

S. Korea

Kospi

2148.8

3.94

0.2

Singapore

STI

3200.28

17.36

0.5

China

Shanghai Comp

2997.09

-45.94

-1.5

Taiwan

TAIEX

10559.2

79.72

0.8

India

Sensex 30

38233.41

424.50

1.1

Source: Haver Analytics

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.