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On 29 October 2019 - US, Europe flat to lower on trade, earnings; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Web search leader Google hit by rare earnings miss.

US markets

US equities ended flat to lower Tuesday after a report raised uncertainty over an expected US-China trade pact next month. The Dow industrials eased 0.07 percent, the S&P 500 was off 0.08 percent, and the NASDAQ fell 0.6 percent.

Reuters reported a White House official said the two sides may not be ready to sign an interim US-China trade deal at the APEC meeting next month in Chile, in contrast to recent reports and the market’s hopeful expectation. President Trump and Chinese President Xi are scheduled to meet on Nov. 17 in Santiago.

Among sectors, health care was the biggest winner, with pharma and hospitals leading on earnings. Materials outperformed, led by precious metals miners and chemicals, along with financials, led by banks. Consumer discretionary shares lagged on weakness in retail. Technology suffered from weakness in hardware and internet stocks. Communications services were the laggards, with an unusual earnings miss at Google, down 2.1 percent, the primary culprit.

Among other companies reporting, Healthcare Inc., the hospital operator, rallied 6.4 percent after an earnings beat and raising its guidance. Big pharma companies Pfizer, up 2.5 percent, and Merck, up 3.5 percent, rose on positive earnings surprises. Akamai, the cloud computing company, fell 1.8 percent on an earnings disappointment. Grubhub, the food deliverer, plunged 43 percent after cutting its revenue forecast and warning of rising competition.

In US economic news, erosion in the consumer's assessment of the labor market held down the Conference Board's index, with October coming in at 125.9 and below Econoday's consensus for 128.8. Those saying jobs are hard to get rose 8 tenths to 11.8 percent in a closely watched reading; however, that decline is offset by a 2.4 percentage point rise in those saying jobs are plentiful, now at 46.9 percent. In a separate report, the pending home sales index rose by a sharp and better-than-expected 1.5 percent in September, which points to robust existing home sales. The index level of 108.7 is the best in two years, reflecting benefits from favorable mortgage rates and a strong jobs market.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 44 cents to US$61.13, while gold fell by US$4.40 to US$1491.30. The US dollar fell against most major currencies. The US Treasury 30-year bond yield was down 1 basis point to 2.33 percent while the 10-year note yield fell 1 basis point to 1.84 percent.

European markets

Most major European equities indexes edged down Tuesday on mixed earnings news after a week of gains, and on less positive US-China trade headlines. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX was off a marginal 0.02 percent, the French CAC rose 0.2 percent and the UK FTSE-100 slipped 0.3 percent.

UK stocks were under pressure amid uncertainty over Brexit as Parliament appeared headed toward new elections, and on a drop in shares of oil supermajor BP on an earnings miss. Risk assets more broadly were undercut by a Reuters report that the US and China may not be ready to sign an interim trade pact next month, as had been expected.

Outperformers included construction & materials, travel & leisure, and chemicals. Underperformers included telecom, oil & gas, technology, and utilities.

Decliners after earnings included: BP, down 3.9 percent after missing on earnings and revenues. Hunting, a UK oil driller, was off 1.0 percent after cutting its annual guidance. Stora Enso, the Finnish paper company, fell 5.5 percent after an earnings miss. Orsted, the Danish power company dropped 7.4 percent after cutting its growth targets. Deutsche Boerse, the German stock exchange, fell 2.4 percent on an earnings miss to drag financials lower.

Big gainers after earnings included Fresenius Medical, a German kidney dialysis company, up 4.8 percent, Gruppo Campari, the Italian drinks-maker, up 1.2 percent, and Modern Times Group, the Swedish entertainment company, up 14.9 percent.

In economic news, house prices showed a stronger than expected 0.2 percent monthly rise in October, according to the Nationwide. This followed a 0.2 percent decline in September and lifted the annual inflation rate from 0.2 percent to 0.4 percent, in line with its the average over the last half-year.

Asia Pacific markets

Major Asian markets posted mixed results Tuesday, with the regional data calendar again very light. Japan’s Nikkei and Topix indices advanced 0.5 percent and 0.9 percent respectively after solid gains on Wall Street Monday, while Australia’s All Ordinaries index closed only marginally higher, up 0.1 percent.

Hong Kong’s Hang Seng index fell 0.4 percent after HSBC reported a bigger-than-expected drop in pre-tax profits for the third quarter. Shanghai’s Composite index dropped 0.9 percent, with sentiment reported to have been impacted by a report in state media warning investors against irrational speculation in blockchain technology and virtual currencies.

Looking forward

On Wednesday, the big news will be the Federal Open Market Committee monetary policy announcement and the Fed chair’s press conference. The Bank of Canada will also announce its latest monetary policy decision. In economic data, in Asia/Pacific, Australian CPI and Japanese retail sales data are scheduled. In European data, reports on Eurozone EC Economic Sentiment, French consumer manufactured goods consumption, French GDP, German CPI, German unemployment rate, and Italian business and consumer confidence, will be released. In the US, ADP employment and GDP figures are due.

Global stock markets

 

Index

29 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27071.46

-19.26

-0.1

 

NASDAQ

8276.85

-49.13

-0.6

 

S&P 500

3036.89

-2.53

-0.1

Canada

S&P/TSX Comp

16418.14

30.61

0.2

Europe

 

 

 

 

UK

FTSE 100

7306.26

-25.02

-0.3

France

CAC

5740.14

9.57

0.2

Germany

XETRA DAX

12939.62

-2.09

0.0

Italy

MIB

22680.74

-14.90

-0.1

Spain

Ibex 35

9400.1

-32.90

-0.3

Sweden

OMX Stockholm 30

1742.32

-17.99

-1.0

Switzerland

SMI

10257.69

25.89

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6848.47

5.95

0.1

Japan

Nikkei 225

22974.13

106.86

0.5

 

Topix

1662.68

14.25

0.9

Hong Kong

Hang Seng

26786.76

-104.50

-0.4

S. Korea

Kospi

2092.69

-0.91

0.0

Singapore

STI

3197.04

11.51

0.4

China

Shanghai Comp

2954.18

-25.87

-0.9

Taiwan

TAIEX

11333.87

18.85

0.2

India

Sensex 30

39831.84

581.64

1.5

*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.