On 30 May, 2017 – Investor sentiment hurt by fresh political risks in Europe

Stocks were mostly lower as investors await key economic data.
United States
US shares retreated after the long holiday weekend as weakness in the energy and financial sectors outweighed gains in technology shares. Oil prices declined with US crude slipping below the $50 a barrel mark, on concerns output cuts by the world’s big exporters may not be sufficient to lessen a global glut that has depressed the market for almost three years. The Dow Jones industrials were 0.2 percent lower while the S&P and Nasdaq retreated 0.1 percent.
Financial stocks including JPMorgan, Goldman Sachs Group and Bank of America declined. Apple and Microsoft however, advanced along with Amazon and Alphabet. CardConnect jumped after First Data agreed to buy the payment processor for $750 million. Pipeline operator Kinder Morgan, Chesapeake Energy and Devon Energy declined. Chevron also was lower.
April consumer spending and income both increased 0.4 percent on the month. For consumer spending, it was its biggest increase in four months. May consumer confidence eased slightly to a still high level of 117.9, down from 119.4 in April.
Dallas Fed President Robert Kaplan told CNBC that while he was concerned about the recent economic data, he expected two more rate increases in 2017. Fed Governor Lael Brainard said an increase is probably coming soon, though the Fed may want to delay if inflation remains soft.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.35 to US$1,262.70. Copper futures were up 0.1 percent to US$2.57. WTI spot crude was down 24 US cents to US$49.56. Dated Brent spot crude was down 51 US cents to US$51.78.
The US dollar was down against the yen, euro, pound, Swiss franc and the Australian dollar. The currency was unchanged against the Canadian dollar. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.88 percent while the yield on the 10 year note was down 4 basis points to 2.21 percent.
Europe
Stocks were mostly lower Tuesday — fresh political worries surrounding Britain, Italy and Greece dented investors’ risk appetite. Investors were also concerned about the mounting tensions with North Korea. The FTSE and SMI retreated 0.3 percent, the CAC was down 0.5 percent and the DAX was 0.2 percent lower.
Greece has warned that its recovery would be thrown into doubt if Brussels blocked a debt deal at the next meeting of euro area finance ministers. Media reports suggest that Athens may opt out of its next bailout payment if creditors cannot agree on debt relief. Speculation over a possible early election in Italy intensified after rivals Matteo Renzi and Beppe Grillo edged closer to a deal on rewriting Italy’s electoral law.
BMW declined after the company halted production of certain models because of a shortage of steering gears supplied by Robert Bosch. Banks including Deutsche Bank, Commerzbank, Crédit Agricole, Société Générale and BNP Paribas were lower. Barclays, Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered retreated.
International Consolidated Airlines Group dropped as British Airways continued to grapple with a massive IT system failure over the weekend that led to hundreds of flights being canceled. Ryanair Holdings rose after the carrier said that the slump of the British currency after the Brexit vote will likely lead to a 5 to 7 percent decline in average ticket prices for the full financial year.
May Eurozone economic confidence declined from a near decade high on weak services and retail sentiment. The economic confidence index declined to a still high 109.2 from a revised 109.7 in the previous month. French May consumer confidence strengthened to the highest level in nearly 10 years, while consumer spending rose for the first time in three months in April. British American Tobacco, Shire and Imperial Brands declined.
Asia Pacific
Asian stocks were also mixed Tuesday as fears about European political risks weighed on investors’ risk appetite and helped spur demand for safe-haven assets such as the Japanese yen and gold. Trading volumes remained thin across the region with public holidays in China, Hong Kong and Taiwan. Oil prices slipped on persisting concerns about oversupply while the yen rallied after a round of positive economic data.
The Nikkei was virtually unchanged (down 4.72 points) while the Topix added 0.2 percent. The yen strengthened amid the prospect of early elections in Italy and concerns about a Greek bailout. Takara Bio advanced 2.7 percent after announcing it had started first test of Phase II clinical trial of HF10 used to treat cancer. April household spending declined 1.4 percent from a year ago while retail sales jumped 3.2 percent and the jobless rate remained at a two-decade low of 2.8 percent.
The S&P/ASX added 0.2 percent and the All Ordinaries was 0.1 percent higher. The big four banks advanced after data showed building approvals increased at a faster-than-expected pace in April. Miners rebounded from Monday’s losses, with BHP Billiton, Rio Tinto and Fortescue Metals Group advancing before the release of May Chinese factory activity data.
The Kospi lost 0.4 percent on profit taking after rallying sharply earlier this month on expectations for strong corporate earnings. Indian shares hit record closing highs for the fourth day in a row with hopes of timely arrival of monsoon rains and continued optimism on the GST front supporting underlying sentiment. The Sensex was 0.2 percent higher.
Looking forward
Japan posts April industrial production. China reports CFLP manufacturing PMI. India reports first quarter gross domestic product. Germany releases April retail sales and May unemployment. The Eurozone releases May flash harmonized index of consumer prices and April unemployment. Canada reports first quarter gross domestic product and March monthly GDP. In the US, May Chicago PMI and April pending home sales index will be released. The Federal Reserve publishes its Beige Book in preparation for its June 13 and 14 FOMC meeting.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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