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On 27 March 2019 - Global stocks mixed as concerns about the economic outlook remain the key focus

Anne D Picker

Anne D Picker - Econoday

UK Prime Minister Theresa May says she will step down if parliament passes Brexit deal.

US markets

US stocks fell Wednesday, with the recent inversion of the US government yield curve sustaining concerns about the near-term economic outlook. The Dow closed down 0.1 percent on the day, the S&P fell 0.5 percent, and the Nasdaq underperformed with a fall of 0.6 percent. Boeing outperformed with a moderate rise after providing more details about software and training updates for its 737 MAX aircraft, while Apple also gained after three days of declines.

US trade data published Wednesday showed an unexpectedly large drop in the trade deficit from US$59.9 billion in December to US$51.1 billion in January, reflecting both a narrower goods deficit and a bigger services surplus. Exports rose 0.9 percent on the month, boosted by stronger exports of food and vehicles, while imports fell 2.6 percent, partly reflecting lower oil imports. The bilateral trade deficit with China also fell but remains large. Canada also reported a smaller trade deficit in January, with stronger global oil prices boosting the value of its energy exports and resulting in the first increase in headline exports in six months.

These data reflect observations at 4pm US ET. Gold fell US$6.60 to US$1,314.80 while dated Brent spot crude fell US$0.19 to US$67.78. The US dollar fell against the pound and the yen but made solid gains against other major currencies. The yield on the US Treasury 30-year bond fell 5 basis points to 2.82 percent while the 10-year note fell 4 basis points to 2.38 percent.

European markets

European markets closed little changed Wednesday, with the FTSE and the DAX flat on the day and the CAC down 0.1 percent. German bank Commerzbank outperformed with a strong gain after reporting a sharp increase in net profits, while Fiat Chrysler advanced on a report that it could be the target for a takeover bid by Renault.

European government bond yields fell after comments from European Central bank Mario Draghi suggesting that officials could keep policy rates on hold for longer. President Draghi noted that if there are “further delays to inflation convergence” then the ECB could again adjust the guidance it gives to investors about how long it expects to keep policy rates at low levels, as it did at its meeting earlier in the month. He also argued that recent data showing weaker growth in the Eurozone area does not necessarily indicate that a more prolonged and more serious slowdown is imminent and expressed confidence that the ECB has the policy instruments to deliver on its mandate.

French data showed an increase in producer price inflation from 1.7 percent in January to 2.1 percent in February, but this was mainly driven by a surge in one volatile category, coke and refined petroleum products. Other categories posted little change in prices on the month, indicating that underlying price pressures remain subdued. The Confederation of British Industry’s survey of the distributive trade sector showed an unexpected and sharp fall in sales in March, though this appears to reflect the impact of the timing of Easter holidays, which fell in late March and early April in 2018 but will fall later in April in 2019. Italian data showed an improvement in headline business sentiment in March, but this was mainly driven by the services sector, with the measure of manufacturing sentiment falling. Consumer sentiment was also reported to have weakened.

United Kingdom Prime Minister Theresa May has told legislators in her Conservative Party that she will step down if they support the government’s Brexit deal and secure its approval in parliament. Parliament is today voting on a series of options proposed by various legislators in another attempt to identify an approach that may gain the support of a majority.

Asia Pacific Markets

Asian markets were again mixed Wednesday, with Japanese and Chinese indices partly reversing moves made Tuesday. Japan’s Nikkei and Topix indices fell 0.2 percent and 0.5 percent respectively, with selling taking place after shareholders secured their rights to fiscal year-end dividends. Auto-makers underperformed on the day. The Shanghai Composite index rose 0.9 percent on the day with other regional indices also posting moderate gains.

The Reserve Bank of New Zealand left its policy rate unchanged at a record low of 1.75 percent Wednesday but officials changed their assessment of the policy outlook and now consider that the next move in this rate is likely to be lower after previously advising that the next move could be up or down. Officials noted that the global economic outlook had continued to weaken and that central banks in other countries had eased their expected monetary policy stances. This, they noted, had put upward pressure on New Zealand's currency, likely making it more difficult for inflation to increase towards the mid-point of the RBNZ's target range of 1.0 percent to 3.0 percent. Officials also noted domestic growth had slowed in 2018 and argued that balance of risks to the outlook has shifted to the downside. Reflecting this assessment, officials retained their view that policy rates should be kept “at an expansionary level for a considerable period”.

Looking forward

The Asia data calendar is clear Thursday while German inflation data will be the main focus in Europe. US GDP and jobless claims data are scheduled for release, with senior Fed officials also set to speak.

Global Stock Markets

 

Index

Mar 27 2019

Daily Change

% Change Daily

North America

United States

Dow

25625.59

-32.14

-0.1

 

NASDAQ

7643.38

-48.14

-0.6

 

S&P 500

2805.37

-13.09

-0.5

Canada

S&P/TSX Comp

16132.53

-22.63

-0.1

Europe

UK

FTSE 100

7194.19

-2.10

0.0

France

CAC

5301.24

-6.14

-0.1

Germany

XETRA DAX

11419.04

-0.44

0.0

Italy

MIB

21194.19

54.79

0.3

Spain

Ibex 35

9229.9

46.80

0.5

Sweden

OMX Stockholm 30

1565.85

-8.31

-0.5

Switzerland

SMI

9390.59

1.29

0.0

Asia/Pacific

Australia

All Ordinaries

6217.63

4.50

0.1

Japan

Nikkei 225

21378.73

-49.66

-0.2

 

Topix

1609.49

-8.45

-0.5

Hong Kong

Hang Seng

28728.25

161.34

0.6

S. Korea

Kospi

2145.62

-3.18

-0.1

Singapore

STI

3198.39

-1.89

-0.1

China

Shanghai Comp

3022.72

25.63

0.9

Taiwan

TAIEX

10542.7

-16.50

-0.2

India

Sensex 30

38132.88

-100.53

-0.3

Source: Haver Analytics

Note: all releases are listed in local time.

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