On 09 October, 2017 - Traders cautious as earnings season looms

Global stocks were mixed in thin holiday trading.

United States

Stocks showed a lack of direction Monday before the three major indices ended the day in negative territory. The Dow Jones industrials and Nasdaq slipped 0.1 percent while the S&P declined 0.2 percent. While the stock markets were open today, the bond markets, banks and non-essential federal government offices were closed. Later in the week, earnings season will get underway with major banks releasing their third quarter results.

Steel, trucking and airline stocks were weak while tobacco and gold stocks advanced. Gains in Microsoft and other technology stocks failed to offset a dip in Medtronic and other healthcare stocks. Medtronic declined after the medical device maker warned that its quarterly profit would be impacted after Hurricane Maria negatively impacted operations in Puerto Rico. Advanced Micro Devices, Nvidia and Micron Technology were higher.

Shares of cinema stocks including AMC Entertainment Holdings and Regal Entertainment tumbled after domestic opening weekend ticket sales for science fiction sequel “Blade Runner 2049” fell short of expectations. GE shares sank after the conglomerate named a new CFO and said it gave activist investment firm Trian Fund Management a board seat. Tesla declined after pushing back the unveiling of its big rig truck to mid-November. Viacom was down on a broker downgrade.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$16.95 to US$1,278.75. Copper futures were virtually unchanged at US$3.03. WTI spot crude was up 23 US cents to US$49.52. Dated Brent spot crude was up 5 US cents to US$55.67. The US dollar was up against the Swiss franc and the Canadian and Australian dollars. It declined against the euro, pound and yen. The Dollar Index was down 0.1 percent. The US bond market was closed for the Columbus Day holiday.

European markets

Most European stock markets advanced Monday. After a positive start, the markets pared their gains and settled into a sideways trend for the rest of the day. Traders, while disappointed by the weak Chinese services data, were encouraged by the strong German industrial production numbers. Light trading activity in the United States also played a role, as banks and the bond market were closed for the Columbus Day holiday. The FTSE edged 0.2 percent lower. However, the CAC and SMI inched up 0.1 percent and the DAX added 0.2 percent.

Deutsche Bank declined — CEO John Cryan hasn't yet met with one of the bank's top investors but plans to do so according to Bloomberg. Airbus declined after its CEO warned of turbulent times ahead. Crédit Agricole was down after the bank's CEO said the bank would consider acquisitions in order to offer a full range of services for German customers according to Handelsblatt. Accor advanced after making an A$1.18 billion takeover bid for Australian hotels operator Mantra Group. In London, easyJet declined after The New York Times reported that the airline's talks with the insolvent carrier Air Berlin over the sale of up to 30 planes are at risk of falling apart. Air France KLM was lower after it reported September traffic data.

Anglo American, Rio Tinto and Glencore declined because of the disappointing Chinese data. BP and Royal Dutch Shell also were lower. CaixaBank rallied in Madrid after its board agreed to shift its registered domicile out of Catalonia. Novartis, Roche and Credit Suisse declined. Gold miners Fresnillo and Randgold Resources rose as gold prices climbed to their strongest level in more than a week, with renewed concerns over North Korea’s nuclear ambitions helping to spur safe-haven demand.

Germany's industrial production expanded the most since July 2011. August output jumped a monthly 2.6 percent after slipping a revised 0.1 percent in July. According to the Bank of France, gross domestic product is expected to climb 0.5 percent again in the third quarter, in line with the released on September 11.

Asia Pacific

Most indices that traded advanced Monday. Chinese markets led the surge as traders returned to their desks after the week-long "Golden Week" holidays. However, trading remained light across the region due to holidays in Japan, South Korea and Taiwan.

The Shanghai Composite was up 0.8 percent while the Hang Seng retreated 0.5 percent. The Caixin composite output index fell to 51.4 in September from 52.4 in August, driven by weaker increases in output at both manufacturing and services companies. Activity in the services sector expanded at its slowest levels in almost two years.

Both the S&P/ASX and All Ordinaries were 0.5 percent higher. Mining stocks closed broadly lower despite copper registering its largest weekly gain since late August. Gold miners Newcrest and Northern Star gained as gold rebounded from two month lows. Mantra Group soared after it received an A$1.18 billion bid from France's Accor Hotels. WorleyParsons shares entered a trading halt after the engineering group entered into a binding agreement to acquire AFW UK for an enterprise value of A$303 million.

The Sensex edged up 0.1 percent after the GST Council lowered the tax rates on 27 items and the World Bank said that the ongoing slowdown in India's economic growth is an "aberration" due to temporary disruptions in preparation for the GST.

Looking Forward

Germany and the UK posts August merchandise trade. France and the UK post August industrial production. In the US, September NFIB will be released.

Global Stock Markets

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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