On 30 January, 2017 – Global stocks retreated Monday
Investors reacted negatively to US President Trump’s executive order on immigration.
United States
Stocks retreated Monday, following the declines in Europe and Asia. Although the indices climbed off their worst levels, the Dow Jones industrials and S&P dropped 0.6 percent while the Nasdaq was down 0.8 percent. Profit taking in part contributed to the declined but also contributing were the concerns about the impact of President Donald Trump’s new immigration policies.
December personal income was up 0.3 percent after edging up 0.1 percent in November. Personal spending climbed 0.5 percent after increasing 0.2 percent in the previous month. December pending home sales index jumped 1.6 percent to 109.0 after tumbling 2.5 percent to 107.3 in November.
Energy stocks declined along with the price of crude. Airline stocks tumbled reflecting concerns about the related impact of Trump’s new immigration policies. American Airlines, United Continental and Delta Air Lines declined. Delta said its essential information technology systems were restored following an outage Sunday, but said it scrubbed more flights Monday and warned that further cancellations were possible.
Rite Aid plunged after Walgreens said it will cut the price it is paying to buy its rival to no more than $7 per share from $9. That came after the companies said they will sell more of Rite Aid’s stores to get antitrust regulators to approve the deal. Walgreens said it may have to sell up to 1,200 Rite Aid stores, about a quarter of the company’s total.
Tempur Sealy hit a three-year low after it said retailer Mattress Firm is moving to terminate its supply contracts with the company. Tempur Sealy said it made 21 percent of its net sales last year to Mattress Firm. Bank of America and Fifth Third Bancorp were lower. Caterpillar and Jacobs Engineering were lower. Vulcan and DuPont also declined. Fitbit dropped after the company posted weak fourth-quarter sales and said it will eliminate about six percent of its jobs or about 110 positions.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$7.95 to US$1,192.80. Copper futures were down 0.8 percent to US$2.67. WTI spot crude was down 52 US cents to US$52.65. Dated Brent spot crude was down 28 US cents to US$55.24. The US dollar was up against the pound. The currency declined against the yen, Swiss franc and the Canadian dollar. However, it was unchanged against the euro and Australian dollar. The Dollar Index was up 0.2 percent. The yield on US Treasury 30 year bond was up 3 basis points to 3.09 percent while the yield on the 10 year note edged up 1 basis point to 2.49 percent.
Europe
European markets retreated in reaction to US President Donald Trump’s travel ban on the entry of refugees and people from seven Muslim-majority countries over the weekend. The announcement rattled markets and stoked demand for safe-haven assets. The FTSE was down 0.9 percent, the SMI declined 0.7 percent and both the CAC and DAX lost 1.1 percent. Investors were also cautious before the Bank of Japan, Federal Reserve and Bank of England policy meetings.
Banks and commodity-related stocks were among the weakest performers Monday given the uncertainty over US trade policy and the economy under Trump. Travel stocks were also under pressure due to the travel ban.
Deutsche Bank, Commerzbank, BNP Paribas, Société Générale and Crédit Agricole finished lower. Utilities RWE and rival E.ON declined. Randgold Resources gained after saying it is in discussions to resolve an illegal sit-in which started at the company’s Tongon mine in Côte d’Ivoire late on January 26 by some employees demanding annual ex gratia payments. Vodafone Group climbed after it said it is in discussions with the Aditya Birla Group about an all share merger of Vodafone India and Idea Cellular. Lloyds Banking Group weakened after the UK government announced that it has reduced its stake in the company to 4.998 percent. Barclays and Royal Bank of Scotland retreated.
Eurozone economic confidence strengthened for a fifth consecutive month in January to the highest level in nearly six years. The economic confidence index rose to 108.2 in January — the highest since March 2011. Spain’s fourth quarter gross domestic product climbed 0.7 percent on the quarter and 3.1 percent from the same quarter a year ago.
Asia Pacific
Stocks declined in thin holiday trading. Investors were disappointed by the lackluster US GDP data and the US immigration ban on seven predominantly Muslim countries. Markets in China, Hong Kong, Malaysia, Singapore, South Korea and Taiwan were closed for Lunar New Year holidays.
The Nikkei was down 0.5 percent and the Topix lost 0.4 percent. A firmer yen clouded the outlook for exporters and a weak reading on US GDP growth weighed on banking stocks. A heavy week of economic data combined with monetary policy decisions in the US, UK and Japan also kept investors nervous. Fast Retailing, Fanuc and SoftBank were lower. Honda Motor, Nintendo, Panasonic and Sony ended virtually unchanged as investors prepare for a busy earnings season. Toshiba tumbled after a report that several trust banks are preparing to sue the company for damages over its 2015 accounting scandal. December retail sales were up 0.6 percent from a year ago, rising for a second consecutive month.
Both the S&P/ASX and All Ordinaries dropped 0.9 percent after Trump’s executive order on immigration. The big four banks declined. BHP Billiton and Fortescue Metals Group were lower despite a surge in iron ore and copper prices. Lower oil prices pulled down oil stocks, with Beach Energy, Oil Search, Origin Energy and Santos closing lower.
The Sensex slipped 0.1 percent after rising four consecutive days.
Looking Forward
France and the Eurozone release flash fourth quarter gross domestic product. The Eurozone also posts January flash harmonized index of consumer prices and December unemployment rate. France posts December consumption of manufactured goods. Germany releases December retail sales. In the US, November Case-Shiller house price index, January consumer confidence and Chicago PMI will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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