On 17 May, 2017 – Stocks stumble around the globe

Political turmoil in the US sent investors running to safe havens.
United States
Stocks tumbled suffering their worst trading day in eight months after investors sought safe havens given the continuing turmoil in Washington. The latest developments in Washington have intensified worries about whether or when President Donald Trump will be able to implement proposals for business-friendly policies such as tax cuts and deregulation, which have underpinned the record setting rally for shares. The Dow Jones industrials and S&P were down 1.8 percent and the Nasdaq lost 2.6 percent.
Bank stocks, which outperformed in the post-election rally, were the worst hit. Bank of America, Morgan Stanley, Goldman Sachs and JPMorgan retreated. American Eagle Outfitters moved sharply lower after the apparel retailer reported weaker than expected first quarter earnings and provided disappointing guidance. Urban Outfitters also posted a notable loss after reporting first quarter results that came in below expectations. Red Robin Gourmet Burgers jumped higher after the restaurant chain reported better than expected first quarter results and provided upbeat guidance. Cypress Semiconductor, Integrated Device Technology and Silicon Labs retreated.
Cisco Systems reported its sixth straight fall in quarterly revenue largely due to declines in its router business. The company’s net income rose to $2.52 billion or 50 cents per share in the third quarter ended April 29 from $2.35 billion or 46 cents per share a year earlier. Revenue fell 0.5 percent to $11.94 billion.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$23.20 to US$1,257.40. Copper futures were down 0.35 percent to US$2.54. WTI spot crude was up 31 US cents to US$48.97. Dated Brent spot crude was up 48 US cents to US$52.13. The US dollar declined against the yen, euro, pound and Swiss franc. The currency was up against the Canadian dollar and virtually unchanged against the Australian dollar. The Dollar Index was down 0.7 percent. The yield on US Treasury 30 year bond was down 8 basis points to 2.91 percent while the yield on the 10 year note was down 10 basis points to 2.22 percent.
Europe
Stocks tumbled Wednesday and ended the day solidly in negative territory. Investors headed for safe havens given the growing concerns over the political turmoil in the US. Investors are becoming doubtful that President Donald Trump will be able to implement tax reform and deregulation as the problems for his administration continue to mount. The FTSE was the best performing index losing only 0.2 percent. The CAC dropped 1.6 percent and both the DAX and SMI were 1.4 percent lower.
ThyssenKrupp advanced. In Paris, Ubisoft Entertainment tumbled after the firm cut its mid-term sales forecast and rejected the possibility of a hostile takeover by Vivendi. Bouygues slipped as a stronger performance in telecoms enabled the conglomerate to narrow its first-quarter net loss. British Land declined in London. The property developer reported an 85 percent drop in pre-tax profit for the year ended March and said it expects Brexit uncertainty to continue as companies draw up contingency plans. Shares in CRH and Ashtead along with Peers Land Securities Group and Intu Properties also declined.
Lloyds Banking Group rallied after the government said it had sold its remaining shares in the bank in a landmark moment for the UK banking sector nearly a decade after the £20.3 billion taxpayer-backed rescue. Tullow Oil increased after announcing an oil discovery in Northern Kenya. ABN Amro dropped in Amsterdam even though profits were above estimates. Miners Glencore and Anglo American retreated.
Final April harmonized index of consumer prices was up 1.9 percent on the year returning to the European Central Bank’s inflation target of ‘below, but close to 2 percent.’ The UK unemployment rate declined in the first quarter despite a slowdown in economic growth, while earnings growth remained weak amid rising inflation. The ILO jobless rate eased to 4.6 percent in the three months to March — the lowest since 1975. The number of unemployed was down 53,000 from the previous quarter to 1.54 million in the three months to March.
Asia Pacific
Stocks tumbled Wednesday as oil prices declined and safe-haven assets such as the yen and gold were higher on renewed worries about intensifying political situation in the US. Both the Nikkei and Topix lost 0.5 percent as the US currency weakened after April housing starts data disappointed along with fresh worries over the Trump administration. Economic reports painted a mixed picture of the Japanese economy, with core machinery orders falling short of expectations in March, while industrial output declined less than initially estimated in the month.
Automakers Honda Motor and Toyota declined as the yen pushed higher to reach its strongest level in more than a week. Lower US yields pulled down banking stocks including Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial.
Australian shares tumbled to their lowest level in seven weeks as banks extended recent declines on concerns about the surprise levy introduced in the federal budget. Disappointing wage growth and consumer confidence data also weighed on markets. The S&P/ASX dropped 1.1 percent while the All Ordinaries was 1.0 percent lower. The big four banks declined while miners Rio Tinto and Fortescue Metals Group rallied. Gold miners also posted strong gains as gold prices hit two-week high amid Trump concerns.
The Shanghai Composite and Hang Seng both declined 0.2 percent. The Kospi slipped 0.1 percent as growing doubts over US political leadership triggered profit taking after a recent rally. The Sensex was up 0.2 percent to a new record high helped by strong capital inflows. Hopes of an interest rate cut by the Reserve Bank of India, encouraging earnings news from Tata Steel and the US dollar’s weakness in overseas markets helped investors shrug off Asian and European markets weakness.
Looking Forward
Japan posts its first estimate of first quarter gross domestic product. Australia releases April labour force survey. France releases first quarter ILO unemployment. The UK reports April retail sales. In the US, the May Philadelphia Fed business outlook survey, April leading indicators 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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