On 10 May, 2017 – Global shares mixed once again

With little new economic news to guide, trading was listless Wednesday.
United States
With little new economic data and the end of earnings season in sight, US shares once again hovered around the unchanged mark. The Dow Jones industrials were down 0.2 percent while both the S&P and Nasdaq were up 0.1 percent. Energy companies rallied along with the price of crude after US inventories declined on the week. Consumer-focused companies were down following weak first quarter reports from Priceline and Disney. Analysts said that investors are waiting for signs about economic growth and success of the Trump administration’s business-friendly agenda. There was little reaction in the markets to President Donald Trump’s surprise decision to fire FBI Director James Comey Tuesday evening.
According to Boston Federal Reserve Bank President Eric Rosengren, the Fed should begin plotting the shrinking of its $4.5 trillion balance sheet after its next rate increase as he warned again over the risks of the economy overheating. Once the central bank’s target rate exceeds 1 percent policymakers should consider beginning a very gradual normalization of the Federal Reserve’s balance sheet. Mr Rosengren’s remarks come after he said last month that the Fed should begin shrinking the balance sheet “relatively soon”. The Boston Fed is not a voter on the FOMC this year.
Disney declined after the company reported lower than expected quarterly revenue and a decline in the number of ESPN subscribers. Allergan was lower after the Botox-maker posted a quarterly loss as it took a write down on the value of its stake in Teva Pharmaceutical. Priceline dropped after the travel website operator forecast current quarter earnings below expectations. Wendy’s posted a smaller-than-expected drop in net income as it invests in its turnaround.
Adidas will sell its TaylorMade, Adams Golf and Ashworth golf brands to US private equity group KPS Capital Partners for $425 million. Adidas said that around half the $425 million would be paid in cash and the rest in a combination of secured note and contingent considerations. Calpine surged Wednesday afternoon after a report that the US power company is exploring a sale. The company, which owns and operates mostly natural gas and geothermal power plants in North America, was reported by Dow Jones to be exploring a sale and to have attracted interest from private-equity firms.
Boeing declined after reports that the company halted flights of its next generation 737 MAX, scheduled to enter service this summer. The company said routine quality inspections had found cracks in one batch of engine parts. The company said it was not a serious design flaw. Toyota said it expected operating profit for the year that will end in March to fall by one-fifth as market conditions in the United States get tougher and the yen strengthens. It expects North American sales to decline as low gasoline prices eat into demand for its more fuel-efficient sedans.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.55 to US$1,222.95. Copper futures were down 0.1 percent to US$2.50. WTI spot crude was up US$1.48 to US$47.36. Dated Brent spot crude was up US$1.52 to US$50.25. The US dollar was up against the yen, euro and the Swiss franc. It declined against the pound and the Canadian and Australian dollars. The Dollar Index was up 0.1 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 2 basis points to 3.04 percent and 2.41 percent respectively.
Europe
Stocks were mixed Wednesday at the end of the trading day after beginning with a weak start. Profit taking played a role after the markets reached a 21-month high during Tuesday’s session. Investors were cautious after US President Donald Trump abruptly fired Federal Bureau of Investigation Director James Comey. Traders are continuing to monitor the tensions with North Korea due to reports that the country could be preparing to conduct its sixth nuclear test in just over a decade. Energy stocks received a boost in late trade. The FTSE was up 0.6 percent and the DAX edged up 0.1 percent. The CAC was virtually unchanged (up2.45 points) and the SMI was 0.3 percent lower.
HeidelbergCement was lower after reporting a first-quarter loss. EDF climbed after reporting a slide in first-quarter sales. AXA slipped after saying it plans to list part of its US operations in New York. Aviva was up after announcing the sale of its shareholdings in Spanish life insurance and pension joint ventures. Barratt Developments advanced after the UK homebuilder said it expects pre-tax profit for the full year 2017 to be at the top end of current estimates.
ITV was down after its total revenue for the first quarter edged down 1 percent. Roche Holding declined in Zurich after its Tecentriq immuno-oncology drug failed in a late-stage clinical trial. ING Groep rallied in Amsterdam after its first-quarter net profit topped estimates. Next, ABF and Kingfisher advanced.
French March industrial production was up 2 percent on the month after it declined 1.7 percent in February. The French trade deficit declined more-than-expected in March, as exports rose faster than imports. The trade deficit narrowed to €5.4 billion in March from €6.4 billion in February.
Asia Pacific
Most Asian stock indices advanced Wednesday as investors digested corporate earnings and US President Donald Trump’s abrupt dismissal of FBI Director James Comey. Tensions surrounding North Korea also kept underlying sentiment cautious.
The Shanghai Composite dropped 0.9 percent after inflation data painted a mixed picture of the economy, reaffirming that there has been a loss of momentum in the Chinese economy. Asset prices in the mainland have been under pressure amid efforts by authorities to deleverage the economy and control financial risks. April’s consumer price index was up 1.2 percent from a year ago while the producer price index eased to a reading of 6.4 percent. The Hang Seng added 0.5 percent.
The Nikkei and Topix were up 0.3 percent and 0.2 percent respectively. Investors shrugged off concerns surrounding regional security and political developments in the U.S. The yen weakened against the dollar, helping lift exporters’ shares. Mitsubishi Motors soared after it forecast higher financial results in fiscal 2017.
Both the S&P/ASX and All Ordinaries added 0.6 percent thanks to an uptick in oil, metals and gold prices that lifted commodity-related stocks. BHP Billiton, Rio Tinto and Fortescue Metals Group were higher as were energy majors Woodside Petroleum and Origin Energy. Gold Miners Newcrest and Northern Star rallied as gold prices rebounded from eight-week lows. Banks however, ended mostly lower as investors pondered a $6 billion tax increase unveiled in the budget.
The Kospi dropped 1.0 percent on fresh concerns over North Korea’s nuclear program. Liberal politician Moon Jae In won South Korea’s presidential election after nine years of conservative rule. The Sensex jumped 1.1 percent after the Indian Meteorological Department (IMD) said it expects higher monsoon rainfall this year than previously forecast as concerns over the El Nino weather condition have eased.
Looking Forward
The UK reports March industrial production and merchandise trade. The Bank of England announces its monetary policy decision and publishes its Quarterly Inflation Report. In the US, April producer prices and weekly jobless claims, money supply and Fed balance sheet will be released.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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