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On 28 August 2019 - US up as energy leads; Europe mixed, Asia flat

Anne D Picker

Anne D Picker - Econoday

Month-end positioning helps lift shares despite ongoing yield-curve inversion.

US markets

Major US stock indexes advanced Wednesday, with energy stocks lifted by rising oil prices, and financials and industrial shares also outperforming. The Dow industrials rose 1.0 percent, the S&P 500 was up 0.7 percent, the NASDAQ gained 0.4 percent, and the Russell 2000 gained 1.2 percent. 

Some analysts cited month-end positioning before the long US holiday weekend as a factor behind the day’s gains. Gains occurred nearly across the board, with utilities the sole losing sector, despite further inversion of the US Treasury yield curve which is regarded as a gloomy indication. Energy shares were the best performers as NYMEX WTI futures prices ended up about 1.5 percent on supportive oil inventories data. Petroleum driller Apache was a leader, up 3.1 percent, while oil supermajor ConoccoPhilips was up 2 percent.

Financials were lifted by a rebound in bank shares after Tuesday’s losses. Materials shares rose, with industrial metals and paper stocks leading. Industrials rose, with airlines and trucking firms setting the pace. On the downside, software shares underperformed to drag technology stocks lower.

Among companies in focus, luxury goods maker Tiffany rose 3 percent after a quarterly earnings beat and reaffirming its full-year guidance. Software company Autodesk dropped 6.8 percent on a big earnings miss and cut to its guidance. PC maker Hewlett Packard rose 3.3 percent after raising its full-year earnings outlook, despite a quarterly earnings and revenues miss. 

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil rose 47 cents to US$60.46, while gold fell US$2.90 to US$1,548.40. The US dollar gained against most major currencies. The yield on the US Treasury 30-year bond yield was unchanged at 1.94 percent as was the yield on the 10-year note at 1.47 percent. The US Treasury yield curve inverted further Wednesday, with the 3-mo/10-year note inversion at one point reaching 55 basis points, a level not seen since 2007.

European markets

Major European equities markets were mixed to lower Wednesday as political news remained in focus, along with worries about fallout for the global economy from the US-China trade war. In Brexit news, the queen agreed to allow suspension of Parliament to give the UK Conservative government more latitude to proceed with a hard Brexit. In Italy, parties continued slow progress toward forming a coalition government. 

The Europe-wide STOXX 600 eased by 0.1 percent, the German DAX slipped by 0.2 percent, and the French CAC was off 0.3 percent. The UK FTSE-100 rose 0.4 percent,  with UK exporters doing better as sterling dropped on the Brexit news. The FTSE MIB Italian index reversed early declines to end unchanged. 

Outperforming sectors in the Stoxx 600 included oil and gas, basic resources, and retail. Underperformers included insurance, technology, construction and materials, and financials. UK homebuilders were hit hard by Brexit worries, with UK builder Persimmon down 2.9 percent and builder Taylor Wimpey down 3.6 percent.

In economic news,  Eurozone annual growth of M3 money supply weighed in at 5.2 percent in July, up fully 0.7 percentage points versus the unrevised June reading and matching its most robust performance since February 2009. In turn, this lifted the 3-month moving average from 4.7 percent to 4.8 percent, beating market expectations and its highest mark since the fourth quarter of 2017. Separately, GfK's measure of German consumer confidence was confirmed at 9.7 in August, a tick short of its July mark, and is expected to maintain that level next month. The findings of the latest survey were on the firm side of the market consensus but still suggest that household morale is at its lowest level since April 2016.

Asia Pacific markets

Action was subdued across major Asian markets Wednesday, with relatively modest moves in US shares Tuesday and a bare regional data calendar giving little guidance to investors. Developments in the US-China trade dispute were limited with Chinese authorities again setting the yuan reference rate close to its weakest level in more than 11 years.

The Shanghai Composite index fell 0.3 percent on the day, while Hong Kong’s Hang Seng index closed down 0.2 percent. Australia’s All Ordinaries index outperformed most of its regional peers with an increase of 0.5 percent, while Japan’s Nikkei and Topix indices were up 0.1 percent and unchanged respectively.

Looking forward

On Thursday in Asia/Pacific, the Australian private new capital and expenditure report is due. In Europe, Eurozone EC Economic Sentiment, French consumer manufactured goods consumption, French GDP, and German unemployment rate data are due. In the US, the following reports are due: EIA natural gas, Fed balance sheet, GDP, international trade in goods, jobless claims, and pending home sales.

Global stock markets

 

Index

28 Aug 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26036.1

258.20

1.0

 

NASDAQ

7856.88

29.93

0.4

 

S&P 500

2887.94

18.78

0.7

Canada

S&P/TSX Comp

16271.65

88.06

0.5

Europe

 

 

 

 

UK

FTSE 100

7114.71

25.13

0.4

France

CAC

5368.8

-18.29

-0.3

Germany

XETRA DAX

11701.02

-29.00

-0.3

Italy

MIB

20990.71

-0.59

0.0

Spain

Ibex 35

8747.1

18.20

0.2

Sweden

OMX Stockholm 30

1529.13

-1.68

-0.1

Switzerland

SMI

9758.19

-27.89

-0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6600.77

35.15

0.5

Japan

Nikkei 225

20479.42

23.34

0.1

 

Topix

1490.35

0.66

0.0

Hong Kong

Hang Seng

25615.48

-48.59

-0.2

S. Korea

Kospi

1941.09

16.49

0.9

Singapore

STI

3056.47

-11.05

-0.4

China

Shanghai Comp

2893.76

-8.43

-0.3

Taiwan

TAIEX

10434.29

47.06

0.5

India

Sensex 30

37451.84

-189.43

-0.5

*Markets closed

 

 

 

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.