On 19 June, 2017 – Stocks rallied on Macron’s win in France and FedSpeak
Speakers reassured investors that the economy was growing.
United States
US stocks followed those in Asia and Europe and gained on Monday. Both the S&P and Dow Jones industrials hit record highs. Technology stocks were in favor again. Investors appeared to regain confidence in the economy after upbeat comments from Federal Reserve officials. The Dow was up 0.7 percent, the S&P gained 0.8 percent and the Nasdaq jumped 1.4 percent.
Amazon.com’s Friday announcement that it would buy Whole Foods and an upbeat tone from Federal Reserve speakers seemed to help reassure investors after the U.S. central bank’s rate increase last week. The S&P’s financial sector was one of the benchmark’s strongest gainers after New York Federal Reserve President William Dudley said US inflation was a bit low but should rise alongside wages as the labor market continues to improve, allowing the Fed to continue gradually tightening monetary policy. The Fed commentary last week had surprised investors who expected more caution after some weak U.S. economic data.
Apple, Microsoft, Alphabet and Facebook advanced along with JPMorgan. Biogen gained on a broker upgrade. Clovis Oncology led the sector higher after the biopharmaceutical company announced positive late-stage trial data for its ovarian cancer drug. Micron and Integrated Device Technology advanced.
The economic calendar for the week remains relatively quiet, although traders are likely to keep an eye on new and existing home sales and leading economic indicators.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$7.25 to US$1,248.15. Copper futures were up 1.1 percent to US$2.61. WTI spot crude was down 63 US cents to US$44.11. Dated Brent spot crude was down 49 US cents to US$46.88. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. The currency declined against the Canadian dollar. The Dollar Index was up 0.4 percent. The yield on US Treasury 30 year bond was unchanged at 2.78 percent while the yield on the 10 year note was up 4 basis points to 2.19 percent.
Europe
European stocks rallied Monday after a decisive victory for Macron’s La République en Marche party in Sunday’s French election. French President Emmanuel Macron’s party won a clear parliamentary majority, giving him a strong mandate in parliament to pursue his pro-European Union, business-friendly reform plans. Brexit negotiations with the EU also began. The FTSE was up 0.8 percent, the CAC gained 0.9 percent, the DAX added 1.1 percent and the SMI was 0.7 percent higher.
The European Central Bank published the details of its emergency lifeline for banks in a bid to increase transparency regarding the rules and procedures of the facility. The bank released the text of its Emergency Liquidity Assistance, or ELA, agreement on its website.
Ipsen rose after receiving FDA approval for Dysport injection used for the treatment of lower limb spasticity in adults. Airbus climbed after unveiling an upgraded version of the world’s biggest passenger jet. Rolls-Royce advanced after the engine maker said last week that it had started 2017 well, with all businesses performing in line with expectations. Ocado soared on speculation that it could become an acquisition target for Amazon. Marks & Spencer Group and J Sainsbury advanced.
Aberdeen Asset Management increased after shareholders approved its merger with Standard Life. Shares of Standard Life also were higher. Cairn Energy tumbled after the Indian Income Tax Department ordered coercive action against the company. Novartis rose in Zurich after it received European approval for a blood cancer treatment known as Rixathon. Crédit Suisse gained on a broker upgrade. BNP Paribas, Société Générale and Crédit Agricole also advanced.
Asia Pacific
Stocks in the Asia Pacific region rose broadly — weaker than anticipated US housing and consumer sentiment data tempered expectations for interest rate increases and French voters gave President Emmanuel Macron a solid victory in Sunday’s second round parliamentary election.
The Shanghai Composite was up 0.7 percent while the Hang Seng jumped 1.2 percent. Shares rose as liquidity conditions eased and data showed that the property market continued to stabilize in May after stricter measures to curb demand. Stocks were up on optimism that MSCI will include China’s domestic shares in the index provider’s global equity indexes.
Both the Nikkei and Topix added 0.6 percent as the yen weakened. Sony, DeNA, Toshiba, Advantest, Komatsu and Sumco advanced. Nomura Real Estate Holdings slumped after saying a stake purchase in the company by Japan Post was no longer being considered. Takata plunged on reports it was planning to file for bankruptcy. May merchandise trade balance dropped into deficit after three consecutive months of surplus. Exports increased 14.9 percent from a year ago while imports jumped 17.8 percent. A finance ministry official noted it wasn’t uncommon for Japan to post a deficit in May because many manufacturers shut down factories during the “Golden Week” holidays, which limits exports.
Both the S&P/ASX and All Ordinaries were up 0.5 percent. Strength in the financial sector outweighed weakness in the retail sector after Amazon agreed to buy Whole Foods. The big four banks advanced after executives from the banks urged senators to consider major changes to a proposed A$6.2 billion levy. BHP Billiton and Rio Tinto were flat while energy stocks were mixed. Retailers JB Hi-Fi, Harvey Norman and Woolworths retreated.
The Kospi was up 0.5 percent with foreign buying lending the market support. The Sensex added 0.8 percent to hit a fresh record high on Monday after the Reserve Bank of India asked lenders to start bankruptcy process against 12 large loan defaulters.
Looking forward
Reserve Bank of Australia publishes minutes from its monetary policy meeting earlier this month. Second quarter residential property prices will be released. Germany posts May producer price index. The US reports second quarter current account.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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