On 23 January, 2017 – Global stocks began the week on a negative note
Investors watched and listened to policy talk from the new US president.
United States
Stocks declined amid renewed concerns about protectionist policies under US President Donald Trump. Trump told a meeting of corporate executives he plans to impose a major border tax, although he also promised a massive tax cut for the middle class and companies. The new president also signed an executive order to renegotiate NAFTA and signed an order indicating his intention to withdraw from the Trans-Pacific Partnership. The Dow Jones industrials slipped 0.1 percent, the S&P was down 0.3 percent and the Nasdaq was virtually unchanged (down 2.39 points).
Real estate and phone company stocks gained as bond yields declined. Investors pored over the latest crop of company earnings and deal news. They also had their eye on Washington, where President Donald Trump reaffirmed plans to slash regulations on businesses and tax foreign goods entering the country. Aetna was lower after a federal judge rejected the health insurer’s plan to buy rival Humana for about $34 billion. Aetna said it is reviewing the opinion and is considering an appeal. McDonald’s was down after it reported a fourth-quarter drop in sales at established US locations.
Qualcomm declined on news that Apple is suing the maker of semiconductors, one of its major suppliers, for $1 billion in a patent fight. Halliburton slid after the oilfield service company warned of weaker demand in markets outside North America and its revenue missed forecasts. United Continental was down after six of the airline’s flights were cancelled and 200 more were delayed Sunday because of a computer problem. Kate Spade climbed after Bloomberg News reported that the handbag maker has attracted takeover interest from Coach, Michael Kors and international companies. Sprint gained on news the mobile phone carrier is buying a 33 percent stake in Tidal, the music streaming service owned by artists including Jay-Z.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$12.30 to US$1,212.85. Copper futures were up 0.76 percent to US$2.65. WTI spot crude was up US$1.05 to US$52.42. Dated Brent spot crude was down 15 US cents to US$55.34. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was down 6 basis points to 2.99 percent while the yield on the 10 year note declined 7 basis points to 2.40 percent.
Europe
European stocks indices were down as traders across the pond had their first opportunity to react to Donald Trump’s inauguration speech. He signed executive orders on trade including his intention to withdraw from the Trans-Pacific Partnership. The FTSE and DAX each lost 0.7 percent and the CAC and SMI were down 0.6 percent each.
Hospital operator Rhoen-Klinikum was lower after its supervisory board appointed Stephan Holzinger as chairman of the management board. Both Commerzbank and Deutsche Bank declined along with Société Générale, BNP Paribas and Crédit Agricole. In London, Royal Bank of Scotland, Barclays and HSBC finished lower. Royal Dutch Shell declined after agreeing to sell its 50 percent stake in a petrochemical joint venture for $820 million. Essentra retreated after the plastic components manufacturer issued a profit warning, saying it expects operating profit to be below its previous guidance. Generali was higher in Milan after reports that Intesa Sanpaolo is interested in taking a stake in the company.
Eurozone January flash consumer confidence rose for a fifth consecutive month. Confidence edged up 0.2 point from December putting the EU Commission’s flash measure at minus 4.9 — the highest level since April 2015. The improvement also means sentiment is now nearly 2 points above its average mark in 2016 and almost 5 points higher than its March 2016 trough.
Asia Pacific
Asian stocks were mixed Monday. The US dollar weakened broadly after Donald Trump was sworn in as the 45th President of the United States Friday with a raft of bold promises to put America first, adding to concerns about possible protectionism.
The Shanghai Composite was up 0.4 percent after the People’s Bank of China last week eased tight liquidity before the Lunar New Year holidays beginning January 27. The Hang Seng edged up 0.1 percent as investors waited to see how US President Donald Trump’s protectionist policies influence relations with China.
The Nikkei was down 1.3 percent and the Topix was 1.2 percent lower. Exporters declined thanks to a firmer yen. Sony, Hitachi, Honda Motor, Panasonic and Mazda Motor retreated. Takata tumbled to extend losses for the sixth straight session. Uniqlo parent Fast retailing was lower after industry data showed Japan’s supermarket sales declined in December after rising in the previous two months. Toshiba advanced after reports that Canon was mulling an investment in its chip unit. Sharp was up after its parent Foxconn announced plans to invest $7.0 billion to make flat panels in the United States.
The S&P/ASX was down 0.8 percent and the All Ordinaries declined 0.7 percent. Supply chain logistics group Brambles slumped after a profit warning. Real estate agent McGrath tumbled after the company warned its full-year results will be lower than forecasts. Bellamy’s Australia, which is facing a class action suit alleging misleading conduct, was lower. Ruralco advanced on solid first quarter earnings. Gold miners Evolution, Newcrest Mining and Regis Resources gained as gold hovered near a two-month high on uncertainty surrounding future US trade policies under Trump’s administration.
The Kospi was virtually unchanged (up 0.38 point). The Sensex was up 0.3 percent.
Looking Forward
January flash manufacturing PMI will be released for Japan. Flash manufacturing, services and composite PMIs will also be released for the Eurozone, France and Germany. Flash manufacturing will be released in the US along with December existing home sales.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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