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On 29 April 2019 - US stocks rise on strong headline GDP; Europe and Asia mixed on Friday

Anne D Picker

Anne D Picker - Econoday

Europe up after Spanish election; US-China talks at 'critical point'.

US markets

Shares in the US rose modestly in a narrow session ahead of a Federal Reserve announcement on Wednesday and monthly employment data on Friday. The Dow posted a fractional gain while both the Nasdaq and S&P edged further into record ground with respective gains of 0.1 and 0.2 percent.

There are no expectations the Fed will move on rates though Chairman Jerome Powell's spin on recent economic data, which includes a mix of strong GDP and weak inflation, could affect the outlook for future rate moves. Also affecting the outlook will be the April employment report where strong payroll growth is once again the expectation.

Company news was light ahead of another rush of earnings releases this week beginning on Tuesday. American Airlines rose in Monday's session on a broker upgrade while Intel fell on a broker downgrade as did IT service provider Cognizant.

Personal income and outlays data broke down the consumer components of last week's first-quarter GDP report, showing sharp acceleration for durables spending in March that may be pointing to discretionary momentum going into the current quarter. The headline on income was soft but details showed respectable gains for wages & salaries.

What was, however, unquestionably soft in the data was the core PCE price index which unexpectedly fell to a 1.6 percent yearly rate for the lowest reading since January 2018. This rate is materially below the Fed's 2 percent target and shifts the scales, however slightly, toward rate cuts not rate hikes.

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was down US$0.18 to $72.00 while gold was US$6.30 lower at $1,279.80. The US dollar weakened against the euro and the pound, was little changed against the yuan, the Swiss franc and the Canadian dollar, and firmed against the yen. The yield on the US Treasury 30-year bond rose 2 basis points to 2.97 percent while the yield on the 10-year note rose 3 basis point to 2.53 percent.

European markets

Victory for Prime Minister's Pedro Sanchez's socialist's in Spain is a perceived plus for pro-European policies and helped give Spanish bonds and European shares a modest lift. Spain's IBEX edged 0.1 percent higher as did Germany's DAX. The FTSE and the CAC both rose 0.2 percent.

Spanish bank group Santander posted a solid gain in the session as did other financial shares including Italy's Intesa Sanpaolo and France's BNP Paribas. In company news, French retailer SMCP posted a sharp gain on earnings as did French drugmaker Sanofi which won a US label expansion for its cholesterol drug Praluent to include easing risks of heart attack and stroke.

The day's economic data was led the EU Commission's economic sentiment index which lost more ground in April. A 1.6 point monthly decline put the index at 104.0, its tenth fall in a row and its lowest reading since September 2016. Except for services which held unchanged, morale otherwise showed broad-based weakness. Inflation readings in the report were equally disappointing and raise the risk that current policy stance may not be loose enough for the European Central Bank to attain its price stability goals. The results also hint at subdued results for tomorrow's Eurozone GDP Flash.

Asia Pacific Markets

Asian equities ended mixed Monday ahead of Tuesday's release of CFLP manufacturing data out China. Chinese markets continue to be held down by policy uncertainties but other markets did better Monday, led by gains in South Korea and Singapore on bullish earnings news. Japan's markets are closed for an extended holiday.

Worries about waning government stimulus plans and uncertain US-China trade talks gave traders an excuse to trim long positions in Chinese equities, as valuations appeared stretched. Sentiment remained tentative as markets awaited CFLP data and the outcome of the Federal Reserve's Federal Open Market Committee meeting due Wednesday.

The Shanghai composite lost 0.8% while Korean markets advanced on expectations for strong earnings from Samsung Electronics due on Tuesday, with the KOSPI up 1.7%. The Singapore Straits index rose 1.5% on upbeat earnings from DBS Group, the largest Southeast Asian lender, which lifted other financials. The Hang Seng rose 1.0%. The Australian All Ordinaries index fell 0.4%.

In Chinese economic news, hopes for additional government stimulus have taken a hit on surprisingly strong Chinese data released last week. US Treasury Secretary Steven Mnuchin's comment Monday that US-China trade talks were at a "critical point" left traders on edge, along with caution ahead of Wednesday's FOMC policy statement. Markets are concerned the Fed may be obliged to toughen its stance in light of recent US economic data including last week's strong 3.2 percent annual growth rate for first-quarter GDP.

Chinese industrial profits rebounded by 13.9% year-on-year in March, after declining by 14.0% in February. Next up is China's CFLP manufacturing PMI to be released Tuesday morning local time, where no change or only a fractional growth rate is the consensus.

Looking forward

China's CFLP data will offer a key look at April's manufacturing activity. Data out of Europe will be very heavy and will include Eurozone GDP and unemployment data and German and French CPI data. The employment cost index will be posted in the US as will consumer confidence and pending home sales.

Global Stock Markets

 

Index

29 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26554.39

11.06

0.0

 

NASDAQ

8161.85

15.45

0.2

 

S&P 500

2943.03

3.15

0.1

Canada

S&P/TSX Comp

16600.37

-13.09

-0.1

Europe

 

 

 

 

UK

FTSE 100

7440.66

12.47

0.2

France

CAC

5580.98

11.62

0.2

Germany

XETRA DAX

12328.02

12.84

0.1

Italy

MIB

21788.54

50.57

0.2

Spain

Ibex 35

9517.2

11.20

0.1

Sweden

OMX Stockholm 30

1693.31

4.27

0.3

Switzerland

SMI

9740.48

16.21

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6449.64

-23.52

-0.4

Japan

Nikkei 225

*

*

*

 

Topix

*

*

*

Hong Kong

Hang Seng

29892.81

287.80

1.0

S. Korea

Kospi

2216.43

37.12

1.7

Singapore

STI

3407.02

50.07

1.5

China

Shanghai Comp

3062.5

-23.90

-0.8

Taiwan

TAIEX

10939.06

-13.41

-0.1

India

Sensex 30

*

*

*

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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