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On 27 September 2019 - US off, Europe gains, on dueling trade headlines; Asia mostly down

Anne D Picker

Anne D Picker - Econoday

US market shaken by reported US threat to curb capital flows to China.

US markets

US equities declined Friday after a report the Trump administration is weighing new limits on US capital flows into China. The Dow industrials eased by 0.3 percent, the S&P 500 fell 0.5 percent, and the NASDAQ dropped 1.1 percent.

The report, along with defiant rhetoric from the Chinese foreign minister in a UN speech, spurred a risk-off move out of trade-sensitive, cyclical shares, especially technology stocks. A selloff was already under way in semiconductors after US chipmaker Micron (down 3.5 percent) warned late Thursday its profits would fall short of expectations because of the US-China trade war. Software, internet, and telecom shares were hit hardest, while banks, steel, retail, and parcels/logistics fared better.

Among companies in focus, Progress Software fell 7.0 percent after an earnings beat but revenue miss. Box, a business technology company, dropped 6.4 percent after an analyst downgrade. Wells Fargo, the bank, rose 3.8 percent after announcing Charles Scharf would be its new CEO. Scharf was CEO at another bank, BNY Mellon, which fell 4.5 percent on the news.

In US economic news, fizzling capital goods orders are the unwelcome key to what at the headline levels, at plus 0.2 percent overall and plus 0.5 percent ex-transportation, look like a better-than-expected durable goods orders report. But core capital goods orders (nondefense ex-air) fell 0.2 percent, which misses Econoday's consensus for no change and include a major downward revision to July. Meanwhile, personal income and consumer spending corrected in August what were uneven readings in July, with income up 0.4 percent versus only a 0.1 percent July gain and with spending up only 0.1 percent in August following July's revised 0.5 percent rise.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 98 cents to US$61.76, while gold fell by US$7.80 to US$1,503.60. The US dollar fell against most major currencies but ended higher versus the British pound. The US Treasury 30-year bond yield fell 2 basis points to 2.13 percent while the 10-year note yield fell 1 basis point to 1.68 percent.

European markets

European equities rose Friday on upbeat US-China trade headlines, with UK shares leading the way after sterling weakened on a signal from the Bank of England that it is considering a rate cut. The Europe-wide STOXX 600 rose 0.5 percent, the German DAX gained 0.8 percent, the French CAC was up 0.4 percent, and the UK FTSE-100 jumped 1.0 percent.

Mining shares listed in London led the FTSE 100 higher, along with other export-oriented shares, which benefit when sterling declines. Anglo American Group, the UK miner, rose 2.5 percent. Ashmore Group, a UK asset manager, rose 3.2 percent after an analyst upgrade. Among shares in the Stoxx 600, outperformers included basic resources, travel & leisure, autos & parts, and banks, while underperformers included utilities, real estate, and health care.

In economic data, Eurozone economic sentiment was surprisingly weak in September. A 101.7 headline reading on the EU Commission's measure was 1.4 points short of its unrevised August reading and well below the market consensus. It was also the worst outturn since February 2015.

Asia Pacific markets

Major Asian markets were again mixed Friday but generally closed lower on the week, with the regional data calendar very light at the end of the week and US-China trade developments still the major focus of attention. CNBC reported that US-China trade negotiations will resume in Washington D.C. on October 10. Chinese data published Friday showed profits in the industrial sector fell 2.0 percent in year-on-year terms in August after they rose 2.6 percent in July, likely reinforcing support among officials for more policy measures to support domestic activity and offset the impact of weaker external demand.

The Shanghai Composite index rose marginally Friday, up 0.1 percent on the day, but finished the week down 2.5 percent, with local investors reported to have reduced their risk exposure ahead of national holidays next week. Hong Kong's Hang Seng index fell 0.3 percent on the day and 1.8 percent on the week. Japanese shares were among the weakest regional performers Friday, with the Nikkei and Topix indices down 0.8 percent and 1.2 percent respectively, resulting in weekly losses of 0.8 percent and 0.7 percent respectively. Australia's All Ordinaries index outperformed on both the day and the week with a gain of 0.6 percent and a modest drop of 0.2 percent respectively, with many investors anticipating another cut in policy rates at the Reserve Bank of Australia's meeting next week.

Looking forward

Central Bank activities

Oct-01

Japan

Tankan Report

Oct-02

Australia

RBA Announcement

Oct-04

India

Reserve Bank of India policy announcement

 

US

Fed Chair Jerome Powell to speak

The following indicators will be released this week...

Europe

 

 

Sep-30

Eurozone

Unemployment Rate (August)

 

Germany

CPI (September p)

 

 

Retail Sales (August)

 

 

Unemployment Rate (September)

 

Italy

CPI (September p)

 

Switzerland

KOF Swiss Leading Indicator (September)

 

UK

GDP (Q2 f)

Oct-01

Eurozone

PMI Manufacturing Index (September)

 

France

PMI Manufacturing Index (September)

 

Germany

PMI Manufacturing Index (September)

 

Switzerland

Adjusted Real Retail Sales (August)

 

UK

CIPS/PMI Manufacturing Index (September)

Oct-02

Switzerland

CPI (September)

 

UK

PMI Construction (September)

Oct-03

Eurozone

PMI Composite (September)

 

 

PPI (August)

 

 

Retail Sales (August)

 

France

PMI Composite (September)

 

Germany

PMI Composite (September)

 

UK

CIPS/PMI Services Index (September)

Asia Pacific

 

 

Sep-30

China

CFLP Manufacturing PMI (September)

 

 

PMI Manufacturing Index (September)

 

Japan

Industrial Production (August)

 

 

Retail Sales (August)

Oct-01

India

PMI Manufacturing Index (September)

 

Japan

PMI Manufacturing Index (September)

 

 

Unemployment Rate (August)

Oct-03

Japan

PMI Composite (September)

 

Singapore

PMI (September)

Americas

 

 

Sep-30

US

Chicago PMI (September)

Oct-01

Canada

Monthly GDP (July)

 

US

Construction Spending (August)

 

 

ISM Mfg Index (September)

 

 

PMI Manufacturing Index (September)

Oct-02

US

ADP Employment (September)

Oct-03

US

Factory Orders (August)

 

 

Jobless Claims (Week of Sept. 28)

 

 

ISM Non-Mfg Index (September)

 

 

Motor Vehicle Sales (September)

Oct-04

Canada

Ivey Purchasing Managers Index (September)

 

 

Merchandise Trade (August)

 

US

Employment Situation (September)

 

 

International Trade (August)

Global stock markets

 

Index

27 Sep 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26820.25

-70.87

-0.3

 

NASDAQ

7939.63

-91.03

-1.1

 

S&P 500

2961.79

-15.83

-0.5

Canada

S&P/TSX Comp

16694.27

-96.13

-0.6

Europe

 

 

 

 

UK

FTSE 100

7426.21

75.13

1.0

France

CAC

5640.58

20.01

0.4

Germany

XETRA DAX

12380.94

92.40

0.8

Italy

MIB

22017.4

69.73

0.3

Spain

Ibex 35

9184.1

54.40

0.6

Sweden

OMX Stockholm 30

1646.6

14.99

0.9

Switzerland

SMI

10037.81

27.10

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6824.09

38.52

0.6

Japan

Nikkei 225

21878.9

-169.34

-0.8

 

Topix

1604.25

-19.02

-1.2

Hong Kong

Hang Seng

25954.81

-87.12

-0.3

S. Korea

Kospi

2049.93

-24.59

-1.2

Singapore

STI

3125.63

-0.18

0.0

China

Shanghai Comp

2932.17

3.08

0.1

Taiwan

TAIEX

10829.68

-42.31

-0.4

India

Sensex 30

38822.57

-167.17

-0.4

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.