Skip Header

On 25 January 2019 - US stocks close higher after government shutdown ends; border wall remains unfunded

Anne D Picker

Anne D Picker - Econoday

Starbucks beats estimates but Intel and Vodafone disappoint.

US markets

US stocks ended the week with solid gains Friday after the Administration and Congress reached a short-term deal to re-open the government. The Dow closed 0.7 percent higher on the day, with the S&P up 0.8 percent and the Nasdaq outperforming with an increase of 1.3 percent. For the week, the Dow rose 0.1 percent, as did the Nasdaq, while the S&P fell 0.2 percent.

The Nasdaq’s outperformance Friday partly reflected strong gains from Starbucks after it reported fourth-quarter earnings of US$0.75 per share, well above analysts’ expectations for US$0.65 per share. Same-store sales were reported to have risen 4.0 percent, beating forecasts for 2.9 percent growth. The company also raised its guidance for fiscal 2019 earnings from a range of US$2.61-2.66 per share to US$2.68-2.73 per share.

Intel, however, fell sharply on Friday after reporting weaker-than-expected revenue and earnings guidance after Thursday’s market close. The chip manufacturer expects to earn US$0.87 per share in the first quarter, falling short of analysts’ expectations for US$1.01 per share.

Durable goods and home sales data scheduled for release Friday were delayed by the government shutdown, but agreement to end the shutdown for the next three weeks was reached later in the day shortly before the market close. Funding has been approved to re-open the government until February 15 but this agreement does not include funding for a border wall. It remains unclear whether the impasse between the Administration and Congress will be resolved before this new deadline, with President Trump insisting over the weekend that he will continue with his efforts to secure funding for a wall.

These data reflect observations at 4:00 PM US ET. Gold was up US$16.75 to US$1302.75 and dated Brent spot crude was up US$0.44 to US$61.52. The US dollar was weaker against most major currencies, with the Australian dollar, the pound, and the Canadian dollar recording the biggest gains on the day. The yield on the US Treasury 30 year bond was little changed at 3.07 percent while the 10 year note was up four basis points at 2.75 percent.

European markets

Major European indices were mixed on the day. The FTSE fell 0.1 percent, while the SMI lost 0.2 percent on the day, but the CAC and DAX recorded strong gains of 1.3 percent and 1.4 percent respectively. On the week, the FTSE fell 2.3 percent, the CAC advanced 1.0 percent, the CAX gained 0.7 percent, and the SMI fell 1.1 percent.

Renault advanced after comments from Japanese trade minister Hiroshige Seko urging the auto-maker to retain its alliance with Nissan, despite the resignation of chief executive and chairman, Carlos Ghosn, who remains detained by Japanese authorities on financial misconduct charges. Renault currently owns a 43 percent stake in Nissan, while Nisan has a 15 percent stake in Renault. Speaking on the weekend, French President Emmanuel Macron also spoke of the need to preserve this alliance. Swedish telco Ericsson advanced after reporting strong sales growth, reinforcing confidence that it will be able to win market share from Chinese rival Huawei, but UK telco Vodafone fell sharply on disappointing earnings.

Germany’s Ifo survey was the main focus of the regional data calendar Friday and provided more evidence of weaker conditions in the domestic economy. The survey’s main sentiment indicator fell from 101.0 in December to 99.1 in January, its steepest fall since April 2013 and matching it lowest level since December 2014. This drop reflects a weaker assessment of current conditions but was mainly driven by survey respondents’ more gloomy views about the outlook. Sentiment was weaker across all major sectors of the economy. UK data published Friday also indicated that retail sales were sluggish in January.

Asia Pacific Markets

Most Asian markets finished the week with gains on Friday. Japan’s Nikkei and Topix indices advanced 1.0 percent and 0.9 percent respectively, Australia’s All Ordinaries index rose 0.5 percent, and Hong Kong’s Hang Seng index gained 1.7 percent. On the week, the Nikkei, Topix and All Ordinaries indices all rose 0.5 percent, with the Hang Seng index up 1.8 percent.

Tech company Tencent, listed in Hong Kong, posted solid gains on Friday on news that Chinese authorities have approved two new video game products. This is the first time the company has had new products approved for distribution in mainland China since March 2018, though the products approved are not expected to be very profitable, with some of the company’s more popular global products still not permitted. Authorities have restricted distribution of video games on concerns about their impact on children.

Looking forward

Central Bank activities

Jan 30

United States

FOMC Monetary Policy Announcement

   

Federal Reserve Chair Press Conference

     

The following indicators will be released this week...

Europe

   

Jan 30

EZ

EC Business & Consumer Sentiment (January)

 

France

Gross domestic Product (Q4.2018 flash)

   

Consumption of Manufactured Goods (December)

Jan 31

EZ

Gross domestic Product (Q4.2018 flash)

   

Unemployment (December)

 

Germany

Retail Sales (December)

   

Unemployment (January)

 

Italy

Gross domestic Product (Q4.2018 flash)

 

Spain

Gross domestic Product (Q4.2018 flash)

Feb 1

EZ

PMI Manufacturing (January)

   

Harmonized Index of Consumer Prices (January flash)

 

Germany

PMI Manufacturing (January)

 

France

PMI Manufacturing (January)

 

Italy

PMI Manufacturing (January)

 

UK

PMI Manufacturing (January)

     

Asia Pacific

 

Jan 30

Japan

Retail Sales (December)

 

Australia

Consumer Price Index (Q4.2018)

Jan 31

Japan

Industrial Production (December)

 

China

CFLP Manufacturing Index (January)

Feb 1

Japan

Unemployment (December)

   

PMI Manufacturing (January)

 

China

PMI Manufacturing (January)

 

India

PMI Manufacturing (January)

     

Americas

   

Jan 28

United States

Dallas Fed Manufacturing Survey (January)

Jan 29

United States

International Trade in Goods

   

Consumer Confidence (January

   

S&P Case Shiller House Price Index (November)

Jan 30

United States

ADP Private Employment (January)

   

Gross Domestic Product (Q4. 2018 advance)

   

Pending Home Sales (December)

Jan 31

Canada

Monthly Gross Domestic Product (November)

   

Industrial Product Price Index (December)

 

United States

Initial Unemployment Claims (week ending prior Saturday)

   

Personal Income and Spending (December)

   

Chicago PMI (January)

   

Employment Cost Index (Q4.2018)

Feb 1

United States

Employment Situation Report (January)

   

PMI Manufacturing (January)

   

ISM Manufacturing (January)

   

Consumer Sentiment (January final)

   

Construction Spending (December)

Global Stock Markets

 

Index

25 Jan 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

24737.20

183.96

0.7

 

NASDAQ

7164.86

91.40

1.3

 

S&P 500

2664.76

22.43

0.8

Canada

S&P/TSX Comp

15366.05

85.27

0.6

Europe

 

 

 

 

UK

FTSE 100

6809.22

-9.73

-0.1

France

CAC

4925.82

53.86

1.1

Germany

XETRA DAX

11281.79

151.61

1.4

Italy

MIB

19810.52

246.04

1.3

Spain

Ibex 35

9185.20

35.20

0.4

Sweden

OMX Stockholm 30

1501.12

12.72

0.9

Switzerland

SMI

8922.49

-14.90

-0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

5971.05

40.51

0.7

Japan

Nikkei 225

20773.56

198.93

1.0

 

Topix

1566.10

13.50

0.9

Hong Kong

Hang Seng

27569.19

448.21

1.7

S. Korea

Kospi

2177.73

32.70

1.5

Singapore

STI

3202.25

11.52

0.4

China

Shanghai Comp

2601.72

10.03

0.4

Taiwan

TAIEX

9969.61

92.49

0.9

India

Sensex 30

36025.54

-169.56

-0.5

*Markets closed
Data 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.