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On 27 June 2019 - Global shares: US flat to higher awaiting US-China talks, Europe flat to lower, Asia better

Anne D Picker

Anne D Picker - Econoday

Mixed signals ahead of Trump-Xi meeting keep markets on edge.

US markets

US equities ended flat to mostly higher Thursday as uncertainty and mixed signals continued ahead of the weekend’s trade talks between President Trump and President Xi. Risk-on sentiment during the Asian hours and European morning gave way to caution later Thursday as comments from US officials limited rising euphoria about prospects for a truce in the US-China trade war.

The Dow industrials eased by a marginal 0.04 percent; the S&P 500 rose 0.4 percent, and the NASDAQ gained 0.7 percent. 

Among companies in focus: Boeing was off 2.7 percent amid reports of new problems with its troubled 737 MAX aircraft. Walgreens (up 4.3 percent) gained after beating Wall Street estimates on strong prescription drug sales. Telecom CenturyLink (up 6.6 percent), and TripAdvisor (up 5.8 percent) advanced on analyst ratings upgrades. Consumer staples companies Conagra (down 12.3 percent) and Nordstrom (down 2.2 percent) were down on negative ratings action.

In economic news, the third estimate of first-quarter GDP rose 3.1 percent and was unchanged from the second estimate. But consumer spending did not live up to expectations, at only a 0.9 percent growth rate in the quarter vs. 1.3 percent in the prior estimate and expectations for 1.3 percent.  Price data in Thursday's report were moderate but slightly higher than expected with the overall GDP price index at a 0.9 percent growth rate and the core at 1.3 percent.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude was down US$0.20 at US$66.29 while gold rose by US$0.77 at $1408.22. The US dollar was down slightly against most major currencies. The yield on the US Treasury 30-year bond was down 4 basis points at 2.53 percent while the yield on the 10-year note was down 4 basis points at 2.01 percent.

European markets

Most European equities markets gave up morning gains to end flat to lower Thursday as rising expectations ahead of the weekend meeting of President Trump and President Xi fell back to earth. The European STOXX 600 ended unchanged, the German DAX rose 0.2 percent, the French CAC eased 0.1 percent, the UK FTSE 100 eased 0.2 percent, and the Italian FTSE MIB rose 0.3 percent. 

Markets initially traded higher, with the Stoxx 600 up 0.4 percent, after the South China Morning Post reported that the US and China would call a truce in the trade war and resume negotiations. But White House economic adviser Larry Kudlow said there was no such agreement, and that the US was still pressing for aggressive and unlikely Chinese commitments. Reuters reported that another US official downplayed prospects for US removal of sanctions against China's Huawei. And the Wall Street Journal said Xi would press Trump for concessions.

Italy outperformed on news pointing to an accord between Italy’s populist government and the European Commission on Italian debt, while the Dax was lifted by Bayer’s strong performance. Bayer rallied 9.3 percent on news Elliott Management had taken a stake in the pharma maker, and on news it was resolving a burdensome lawsuit.

Banks did better on the Italy news, and retail stocks traded better on earnings news. Among retailers reporting, Hennes & Mauritz (up 14 percent), Serco and Zumtobel  (up 7 percent) were among the best performers, and Christian Hansen Holdings results (down 9 percent) disappointed to lead the decliners. Energy shares underperformed. Royal Dutch Petroleum was down 1.1 percent, and British Petroleum fell 0.7 percent.

In economic news, the EU Commission's gauge (ESI) fell 1.9 points to a lower than expected 103.3 in June. The drop more than reversed May's 1.3 point gain and made for the weakest reading since August 2016. Meanwhile, Italian business sentiment deteriorated in June. At 99.3, the climate indicator was down 0.9 points versus May, reversing more than half of that month's 1.4-point bounce. German consumer prices were stronger than expected in June. A provisional 0.3 percent monthly increase in the CPI lifted the annual inflation rate by 0.2 percentage points versus its final May outturn to 1.6 percent, the second strongest reading so far in 2019.

Asia Pacific Markets

Asian markets rallied Thursday as investors gained confidence that the G20 summit will deliver progress towards resolving US-China trade disputes. The South China Morning Post reported the two sides have tentatively agreed to another truce in the trade war and will resume talks aimed at resolving the dispute. SCMP said the two sides were already drafting press releases announcing the truce.

Separately, The Wall Street Journal reported after the close of trading in Asia that China is set to insist that the US drop punitive tariffs and remove its ban on the sale of US technology to Huawei Technologies before the dispute can be settled. President Trump and President Xi are scheduled to meet Saturday. 

Hong Kong’s Hang Seng index outperformed with a gain of 1.4 percent on the day while Japan's Nikkei and Topix indices both closed up 1.2 percent. The Shanghai Composite index advanced 0.7 percent, while Australia’s All Ordinaries index gained 0.4 percent. 

Retail sales in Japan increased 1.2 percent on the year in May, picking up from revised growth of 0.4 percent in April and matching the consensus forecast. This was largely driven by a rebound in motor vehicle sales, with food and fuel sales growth slowing. Household spending data for May are scheduled for publication next week. Chinese data showed growth in industrial profits picked up but remained weak in May.

Looking forward

On Friday, Japan will issue reports on industrial production and the unemployment rate. Releases in Europe include: Eurozone HICP flash, French CPI and PPI, Italian CPI, Swiss KOF leading indicator, UK GDP data. In North America: Canadian BOC business outlook survey, and Canadian monthly GDP. In the US, personal income and outlays, Chicago PMI, and consumer sentiment will be released.

Global Stock Markets

 

Index

27 Jun 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26526.58

-10.24

0.0

 

NASDAQ

7967.76

57.79

0.7

 

S&P 500

2924.92

11.14

0.4

Canada

S&P/TSX Comp

16307.73

-4.49

0.0

Europe

 

 

 

 

UK

FTSE 100

7402.33

-14.06

-0.2

France

CAC

5493.61

-7.11

-0.1

Germany

XETRA DAX

12271.03

25.71

0.2

Italy

MIB

21110.87

53.73

0.3

Spain

Ibex 35

9147.8

-9.60

-0.1

Sweden

OMX Stockholm 30

1616.94

12.71

0.8

Switzerland

SMI

9859.76

21.63

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6743.01

26.88

0.4

Japan

Nikkei 225

21338.17

251.58

1.2

 

Topix

1553.27

18.93

1.2

Hong Kong

Hang Seng

28621.42

399.44

1.4

S. Korea

Kospi

2134.32

12.47

0.6

Singapore

STI

3328.6

27.35

0.8

China

Shanghai Comp

2996.79

20.51

0.7

Taiwan

TAIEX

10773.9

121.35

1.1

India

Sensex 30

39586.41

-5.67

0.0

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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