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On 26 April 2019 - US stocks rise on strong headline GDP; Europe and Asia mixed on Friday

Anne D Picker

Anne D Picker - Econoday

Inventories give US GDP deceptive boost; Japanese economic data mixed.

US markets

US Stocks in the US posted solid gains on Friday led by the S&P up 0.5 percent and the Dow and Nasdaq at 0.3 percent each. On the week the Nasdaq, benefiting from strong gains for many technology shares, was up 1.9 percent to lift its year-to-date gain to 22.8 percent. Year-to-date, the S&P is up 17.3 percent with the Dow at 13.8 percent.

First-quarter US GDP was solid but not as strong as the 3.2 percent real annual growth rate may suggest. An inventory rise, which may be unwanted, contributed to the gain as did net exports where data for March still have yet to be released. Consumer spending was solid in the first quarter but did slow significantly to a 1.2 percent growth rate while residential investment posted its fifth straight quarterly contraction and continues to hold the economy back.

Amazon.com posted strong gains after posting quarterly earnings while Intel dropped very sharply after cutting its sales target. Discount chain Costco fell slightly despite raising its dividend and announcing a share buyback. General Electric rose sharply ahead of earnings which it will post on Tuesday.

These data reflect observations at 4:00 PM US ET. Brent spot crude fell US$2.09 to $72.15 while gold rose US$11.30 to $1,288.80. The US dollar firmed against the Australian and Canadian dollars but ended moderately lower against other major currencies. The yield on the US Treasury 30-year bond was unchanged at 2.95 percent while the yield on the 10-year note fell 3 basis points to 2.50 percent.

European markets

European stocks were slightly higher to flat on Friday led by the DAX at a 0.3 percent gain and with the CAC up 0.2 percent, the FTSE down 0.1 percent, and Spain's Ibex 35 up 0.1 percent going to the weekend's national elections. Germany's DAX was the only one of this group with a weekly gain, at 0.8 percent. Year-to-date, Italy's FTSE MIB leads the major European averages with an 18.6 percent gain while the FTSE trails at a 10.4 percent increase.

Out of France, drug maker Sanofi and aerospace manufacturer Safran both rose sharply after posting better-than-expected earnings and sales. Auto parts maker Continental AG of Germany reitereated its full-year outlook and posted a strong gain.

European economic news was light but did include the CBI Trends Survey out of the UK which showed a surprise deterioration in manufacturing conditions during April. The headline orders balance was minus 5 percent, down 6 percentage points versus its March reading for its weakest level since last October. Exports in April fell sharply. Output expectations for the coming three months were marked down significantly as were expected prices.

Asia Pacific Markets

News out of China at the beginning of the week held down Asian markets through the week on emerging expectations that future stimulus may be limited. Authorities in the country said they will continue to promote growth but cited "structural deleveraging" in order to cool the property market.

On Friday, Asian shares were flat to lower with the Hang Seng and Singapore Straits Times both up 0.2 percent, the All Ordinaries unchanged and with other major markets down including the Kospi at minus 0.5 percent and the Shanghai Composite at minus 1.2 percent. The Shanghai was down 5.6 percent for its worst weekly showing of the year to trim its year-to-date gain to 23.8 percent. Trailing on Asia's year-to-date score is South Korea's Kospi at a gain of 6.8 percent.

Japan's Topix slipped 0.1 percent on Friday with the Nikkei down 0.2 percent. Friday's economic news out of Japan was mixed. Japan's unemployment rate rose from 2.3 percent in February to 2.5 percent in March but is still close to the multi-decade low of 2.2 percent recorded in May 2018. Japan's participation rate increased to 61.9 percent in March, up from 61.4 percent in February and well above the 61.2 percent rate recorded 12 months earlier. Strong participation rates may reinforce the Bank of Japan's view that employment gains should eventually translate into stronger wage growth and help push inflation towards its 2.0 percent target.

Retail sales in Japan increased a better-than-expected 1.0 percent on the year in March vs growth of 0.6 percent in February though slowing on a monthly basis to plus 0.2 percent from 0.4 percent. Food and fuel sales led the gains while sales of motor vehicles, however, slowed. Japanese industrial production data were soft, falling a much sharper-than-expected 0.9 percent on the month reflecting weakness for vehicles, production machinery and fabricated metals.

Looking forward

Central Bank activities
1-May US FOMC Announcement
2-May UK Bank of England Announcement
The following indicators will be released this week...
Europe    
29-Apr Eurozone EC Economic Sentiment (April)
30-Apr Eurozone GDP Flash (Q1)
    Unemployment Rate (March)
30-Apr France GDP Flash (Q1)
    CPI (April Preliminary)
30-Apr Germany Unemployment Rate (April)
    CPI (April Preliminary)
30-Apr Italy CPI (April Preliminary)
    GDP (Q1 Preliminary)
1-May UK CIPS/PMI Manufacturing (April)
2-May Eurozone PMI Manufacturing (April)
2-May France PMI Manufacturing (April)
2-May Germany Retail Sales (March)
    PMI Manufacturing (April)
3-May Switzerland CPI (April)
3-May UK CIPS/PMI Services (April)
3-May Eurozone HICP Flash (April)
Asia Pacific
30-Apr China CFLP Manufacturing PMI (China)
1-May Japan PMI Manufacturing (April)
1-May New Zealand Labour Market Conditions (Q1)
2-May China PMI Manufacturing (April)
2-May Hong Kong GDP (Q1)
2-May India PMI Manufacturing (April)
Americas    
29-Apr US Personal Income & Outlays (February/March)
30-Apr Canada Monthly GDP (February)
30-Apr US Employment Cost Index (Q1)
    Consumer Confidence (April)
1-May US ISM Manufacturing (April)
2-May US Factory Orders (March)
3-May US Employment Situation (April)
    International Trade in Goods (March)
    ISM Non-Manufacturing (April)

Global Stock Markets

 

Index

26 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26543.33

81.25

0.3

 

NASDAQ

8146.4

27.72

0.3

 

S&P 500

2939.88

13.71

0.5

Canada

S&P/TSX Comp

16613.46

37.36

0.2

Europe

 

 

 

 

UK

FTSE 100

7428.19

-5.94

-0.1

France

CAC

5569.36

11.69

0.2

Germany

XETRA DAX

12315.18

32.58

0.3

Italy

MIB

21737.97

18.09

0.1

Spain

Ibex 35

9506

4.80

0.1

Sweden

OMX Stockholm 30

1689.04

-0.38

0.0

Switzerland

SMI

9724.27

30.21

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6473.16

2.55

0.0

Japan

Nikkei 225

22258.73

-48.85

-0.2

 

Topix

1617.93

-2.35

-0.1

Hong Kong

Hang Seng

29605.01

55.21

0.2

S. Korea

Kospi

2179.31

-11.19

-0.5

Singapore

STI

3356.95

6.67

0.2

China

Shanghai Comp

3086.4

-37.43

-1.2

Taiwan

TAIEX

10952.47

-87.39

-0.8

India

Sensex 30

39067.33

336.47

0.9

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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