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On 28 October 2019 - Global shares: US, Europe, Asia up on earnings, US-China trade progress

Anne D Picker

Anne D Picker - Econoday

Trade-sensitive sectors, luxury goods lead gains.

US markets

US equities rose Monday on corporate news and upbeat comments from Chinese officials on prospects for a US-China trade deal.  The Dow industrials rose 0.5 percent, the S&P 500 gained 0.6 percent, and the NASDAQ advanced 1.0 percent.

Trade negotiators “agreed to properly resolve their core concerns and confirmed that the technical consultations of some of the text agreement were basically completed,” China’s Ministry of Commerce said Saturday. The statement followed a call Friday with Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

Communications services, technology, and health care outperformed while defensive sectors and energy stocks fell. AT&T, the telecom, jumped 4.3 percent after raising its guidance, and on news that activist investor Elliott Management had approved its three-year plan. Walgreen’s, the pharmacy, gained 0.7 percent after recording an earnings and revenues beat, but noting challenging business conditions.

General Motors was off 0.3 percent after the United Auto Workers ratified an agreement to end a 40-day strike. UAW talks are set to begin with Ford and Fiat Chrysler. Tiffany, the jeweler, rocketed 32 percent on news it was the target of a takeover by French luxury goods conglomerate LVMH.

In US economic news, the trade deficit in goods narrowed sharply in September to a much lower-than-expected $70.4 billion, but the bad news is both exports and imports, in an indication of economic slowing, fell sharply. Exports dropped 1.6 percent in the month for year-on-year contraction of 3.0 percent, showing an oversized 12.6 percent monthly decline in foods, feeds & beverages that will raise talk of issues with China.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil fell 76 cents to US$61.27, while gold fell by US$9.60 to US$1,495.70. The US dollar fell against most major currencies. The US Treasury 30-year bond yield was up 5 basis points to 2.34 percent while the 10-year note yield rose 5 basis points to 1.85 percent.

European markets

Most major European equities indexes edged up Monday on China’s confirmation that the US and China are nearing a trade pact. The Europe-wide STOXX 600 rose 0.3 percent, the German DAX  gained 0.4 percent, the French CAC rose 0.1 as did the UK FTSE-100. 

The US-China trade news helped lift trade-sensitive sectors, especially autos & parts, basic resources, and machinery, while defensive sectors underperformed. German automaker Daimler was up 1.3 percent. ASML, the Dutch memory chipmaker, was a leader, up 1.2 percent. Glencore, the British-Swiss miner, rose 2.2 percent.

Banks underperformed, as HSBC fell 3.8 percent after downgrading its 2020 guidance on challenging business conditions, and announcing a restructuring.  Among other companies in focus, French luxury retailer LVMH eased 0.5 percent on news it may buy Tiffany, the jeweler. Other luxury goods names were higher, including Swiss watchmaker Swatch, up 0.6 percent, and Salvatore Ferragamo, the Italian clothing company, up 4.2 percent.

UK stocks underperformed after news that the European Union agreed to delay Brexit until Jan. 31 next year on Monday. Markets remained uncertain on the Brexit outlook as Parliament weighed general elections.

Asia Pacific markets

Most Asian markets closed higher Monday, following the lead set by Wall Street Friday after positive US earnings reports and further signs of progress in US-China trade negotiations. The Shanghai Composite index closed up 0.9 percent, while Hong Kong’s Hang Seng index advanced 0.8 percent and Japan’s Nikkei index gained 0.3 percent. Australia’s All Ordinaries index, however, underperformed and closed flat on the day ahead of major earnings reports and key inflation data later in the week, while Japan’s Topix index also finished the day unchanged.

The regional data calendar was bare Monday but Hong Kong’s Financial Secretary, Paul Chan, provided details over the weekend about GDP data scheduled for publication later in the week. This data will show that Hong Kong’s economy has fallen into recession, contracting for the second consecutive quarter in the three months to September. Chan cited the impact of anti-government protests in recent months as a major factor dragging on domestic activity and advised that it would now be "extremely difficult” for the economy to meet the government’s previous forecast for GDP growth of zero to 1.0 percent growth this year.

Looking forward

On Tuesday in Europe, Nationwide house prices will be posted in the UK as will M4 money supply. Producer prices are due from Italy. In the US, consumer confidence, pending home sales, and S&P Corelogic Case-Shiller HPI data will be released.

Global stock markets

 

Index

28 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27090.72

132.66

0.5

 

NASDAQ

8325.98

82.86

1.0

 

S&P 500

3039.42

16.87

0.6

Canada

S&P/TSX Comp

16387.53

-16.96

-0.1

Europe

 

 

 

 

UK

FTSE 100

7331.28

6.81

0.1

France

CAC

5730.57

8.42

0.1

Germany

XETRA DAX

12941.71

47.20

0.4

Italy

MIB

22695.64

86.65

0.4

Spain

Ibex 35

9433

2.80

0.0

Sweden

OMX Stockholm 30

1760.31

13.00

0.7

Switzerland

SMI

10231.8

34.71

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6842.52

1.54

0.0

Japan

Nikkei 225

22867.27

67.46

0.3

 

Topix

1648.43

-0.01

0.0

Hong Kong

Hang Seng

26891.26

223.87

0.8

S. Korea

Kospi

2093.6

5.71

0.3

Singapore

STI

*

*

*

China

Shanghai Comp

2980.05

25.12

0.8

Taiwan

TAIEX

11315.02

18.90

0.2

India

Sensex 30

39250.2

192.14

0.5

Note: all releases are listed in local time.

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