Earnings season began Friday and will pick up pace going forward.
United States
Both the Dow Jones industrials and S&P closed once again at new record highs. Disappointing economic data led to the belief by the financial markets that the Federal Reserve would have to pause in its tightening cycle. The Dow was up 0.4 percent, the S&P gained 0.5 percent and the Nasdaq added 0.6 percent. The indices were up for the week as well. The Dow was up 1.0 percent, the S&P added 1.4 percent and the Nasdaq jumped 2.6 percent.
Shares of JP Morgan declined even after the bank beat forecasts for earnings and revenue. Wells Fargo shares dropped after it reported its revenue rose slightly less than expected, while Citigroup retreated after reporting a 3 percent drop in second quarter profit on a slowdown in trading. NetApp posted a standout gain to its best closing level in over three years. Amazon.com edged higher. A lawmaker called for a hearing on how Amazon’s plans to buy Whole Foods Market will potentially impact consumers.
June retail sales unexpectedly declined for a second consecutive month. Sales were down 0.2 percent but were 2.8 percent higher from the same month a year ago. Excluding auto sales, retail sales declined a monthly 0.2 percent in June following the 0.3 decline in May. June consumer prices were flat after edging down in May. Excluding food and energy prices, core consumer prices crept up by 0.1 percent for the third consecutive month. Consumer prices were up by 1.6 percent compared to the same month a year ago, a deceleration from the 1.9 percent increase in growth in May. The annual rate of growth in core consumer prices came in at 1.7 percent in June, unchanged from the previous month. June industrial production climbed 0.4 percent after inching up by a revised 0.1 percent in May.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$5.30 to US$1,236.80. Copper futures were up 1.1 percent to US$2.69. WTI spot crude was up 46 US cents to US$46.54. Dated Brent spot crude was up 49 US cents to US$48.91. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index dropped 0.7 percent. The yield on US Treasury 30 year bond was up 1 basis point to 2.92 percent while the yield on the 10 year note was down 1 basis point to 2.33 percent.
Europe
European markets were mostly lower Friday but all advanced on the week thanks to Wednesday’s strong rally. Markets jumped mid-week after Federal Reserve Chair Janet Yellen’s comments about gradual policy tightening. The FTSE was down 0.5 percent Friday while the DAX slipped 0.1 percent. The CAC was virtually unchanged (down 0.09 point) and the SMI added 0.3 percent. For the week, the FTSE was up 0.4 percent, the CAC gained 1.8 percent, the DAX added 2.0 percent and the SMI was 1.7 percent higher.
MorphoSys jumped after receiving FDA approval for a psoriasis drug. EDF climbed after its US unit announced the acquisition of 11 wind farm sites in Scotland. AstraZeneca declined adding to Thursday’s following reports that its Chief Executive may be leaving the company. Ashmore Group retreated after the investment manager said assets under management in the quarter ended June 30 increased by 5.0 percent to $58.70 billion.
Skanska dropped in Stockholm after announcing major project writedowns amounting to £70 million in the US and the UK. Givaudan rallied while Sika gained and Lonza advanced. Roche and Novartis were higher. Credit Suisse, Julius Baer and UBS declined. Bank stocks were under pressure after JPMorgan Chase reported results that fell short of expectations. Barratt Development and Persimmon declined. Thanks to firmer metals prices, Anglo American and Fresnillo were higher.
Europe’s passenger car registrations increased at a slower pace in June. Passenger car registrations were up 2.1 percent across the EU, slower than May’s 7.6 percent increase. May Eurozone merchandise trade surplus was €19.7 billion up from €18.6 billion in April. Exports were up 2.1 percent from April and imports by 1.6 percent.
Asia Pacific
Asian stocks were mixed as investors digested Fed Chair Janet Yellen’s measured comments on the second day of her Congressional testimony and looked ahead to earnings from several US banks due later in the day. Ms Yellen spoke about the dual risks of inflation and the factors holding down productivity growth.
The Shanghai Composite edged up 0.1 percent after Fitch Ratings maintained the country’s sovereign ratings at ‘A+’ with ‘stable’ outlook, but warned a further increase in economy’s overall leverage and tighter monetary conditions will constrain growth prospects over the medium term. On the week, the index added 0.1 percent. The Hang Seng was up 0.2 percent on the day and jumped 4.1 percent for the week.
The Nikkei was up 0.1 percent and the Topix gained 0.4 percent. For the week, the former was up 1.0 percent and the latter, 1.1 percent. Fast Retailing shares tumbled after the owner of clothing retail chain Uniqlo reported third-quarter earnings that missed estimates.
Both the S&P/ASX and All Ordinaries were up 0.5 percent on the day and 1.1 percent on the week. Lenders ANZ, Commonwealth and NAB advanced ahead of earnings from three major US banks due later in the global market day. Energy majors Woodside Petroleum, Oil Search, Santos and Origin Energy climbed along with oil prices. Rio Tinto and BHP Billiton were higher while gold miners Evolution, Regis Resources and Northern Star were lower on the day.
The Kospi was up 0.2 percent Friday and 1.5 percent for the week. The Sensex slipped 0.1 percent but added 2.1 percent for the week.
Looking forward

Central Bank activities

July 20

Eurozone

European Central Bank Monetary Policy Announcement

Japan

Bank of Japan Monetary Policy Announcement

The following indicators will be released this week…

Europe

July 18

Eurozone

Harmonized Index of Consumer Prices (June)

Germany

ZEW Survey (July)

UK

Consumer Price Index (June)

Producer Price Index (June)

July 20

UK

Retail Sales (June)

Asia

July 17

China

Gross Domestic Product (Q2, 2017)

Industrial Production (June)

Retail Sales (June)

July 20

Japan

Merchandise Trade Balance (June)

Americas

July 17

United States

Empire State Manufacturing (July)

July 18

United States

Import/Export Prices (June)

July 19

United States

Housing Starts (June)

Canada

Manufacturing Sales (May)

July 20

United States

Initial Unemployment Claims (week ending prior Saturday)

Philadelphia Fed Manufacturing (July)

July 22

Canada

Consumer Price Index (June)

Retail Sales (May)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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