On 31 August, 2017 – Most stock indices advanced Thursday on positive economic data from China and the US

However, inflation remains weak in Europe and the US.
United States
Stocks advanced Thursday — investors were hopeful that Washington’s latest promises for the long-awaited tax reform plan would be announced soon. US Treasury Secretary Steven Mnuchin said Thursday that the administration has a detailed plan on tax reform and is on track to implement it by year-end. Gains were limited as investors awaited the monthly employment report on Friday morning to gauge the strength of the labor market. The Dow Jones industrials were up 0.3 percent, the S&P added 0.6 percent and the Nasdaq advanced 0.9 percent. In August, the Dow added 0.3 percent, the S&P edged up 0.1 percent and the Nasdaq was 1.3 percent higher.
UnitedHealth’s gain provided the biggest boost to the Dow. Nasdaq was helped by gains in Gilead, Celgene and Biogen. Dollar General fell after reporting a slide in second-quarter margins. Campbell Soup slid after the company warned that sales for fiscal 2018 could fall.
Initial jobless claims inched up to 236,000, an increase of 1,000 from the previous week’s revised level of 235,000. July personal income climbed 0.4 percent on the month while personal spending increased 0.3 percent. Chicago-area business barometer for August was 58.9, unchanged from July. July pending home sales unexpectedly dropped 0.8 percent thanks to inventory woes throughout the country continuing to stall contract activity.
The US Energy Department said it would release a second batch of oil from the Strategic Petroleum Reserve totaling 1 million barrels as Tropical Storm Harvey’s disruption of the petroleum industry has sent motor fuel prices surging. The oil will be delivered to a refinery in Lake Charles, Louisiana that has not been affected by Harvey.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.25 to US$1,311.75. Copper futures were up 0.5 percent to US$3.10. WTI spot crude was up US$1.12 to US$47.08. Dated Brent spot crude was up US$1.52 to US$52.38. 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 was down 0.2 percent. The yields on both the US Treasury 30 year bond and the 10 year note were down 2 basis points to 2.73 percent and 2.12 percent respectively.
Europe
European stock markets extended Wednesday’s gains into Thursday after investor sentiment received an early boost from positive economic data from both China and the United States. The better than expected Chinese manufacturing report drove shares of European miners higher. However, retailers struggled. The FTSE was up 0.9 percent, the CAC gained 0.6 percent, the DAX advanced 0.4 percent and the SMI was 0.8 percent higher. For the month of August, most indices retreated with the exceptions of the FTSE (up 0.8 percent) and the MIB (up 0.9 percent). The CAC declined 0.2 percent, the DAX was down 0.5 percent and the SMI lost 1.3 percent.
Metro declined after posting a muted increase in like-for-like sales in the third quarter. Bouygues rallied after it swung to profit in the first-half and confirmed its 2017 outlook. Carrefour tumbled after the retailer issued a profit warning for the second half of the year. Pernod Ricard was down after the company warned that a strong euro may weigh on its earnings from North America and Asia. Arkema dropped after two explosions occurred at its chemical plant in Crosby, Texas. Chipmakers AMS and Dialog Semiconductor advanced respectively as suppliers to Apple benefited from increased investor enthusiasm ahead of the next iPhone release.
Anglo American, Antofagasta, BHP Billiton and Glencore were higher. UBS slipped in Zurich amid reports that the bank is considering to relocate 250 investment bankers from London to Frankfurt or another major city in the European Union. Novartis surged after the US FDA approved the company’s treatment of a certain form of leukemia. Nestlé and Roche also advanced. Kühne + Nagel, ABB and Swatch were higher. Julius Baer finished higher on a broker upgrade.
August flash harmonized index of consumer prices climbed to a four-month high on energy prices. Inflation accelerated to 1.5 percent on the year from 1.3 percent in July. Euro area July unemployment rate remained unchanged at 9.1 percent — the lowest level in more than eight years. Germany’s July retail sales slumped 1.2 percent on the month but were up 2.7 percent from a year ago.
Asia Pacific
Asian stock indices were mixed as renewed tensions between Washington and North Korea along with weak commodity prices thanks to a firmer US dollar overshadowed upbeat data from the US and China.
The Shanghai Composite slipped 0.1 percent as investors paused for breath after a recent rally after robust earnings from major Chinese companies. The Hang Seng was down 0.4 percent in late trade. In August, the Shanghai Composite was up 2.7 percent while the Hang Seng added 2.4 percent. Activity in China’s manufacturing sector continued to expand in August and at a faster rate than in July. The August CFLP PMI was 51.7, up from 51.4 in July. However, the CFLP non-manufacturing PMI was 53.4, down from 54.5 in the previous month.
The Nikkei added 0.7 percent and the Topix was 0.6 percent higher as the yen weakened and US Treasury yields rose in response to upbeat US economic data, helping spur gains in exporters and financials. However, for August both indices retreated – the Nikkei lost 1.4 percent and the Topix slipped 0.1 percent. Daiichi Sankyo jumped before trading was suspended following reports that Britain’s AstraZeneca offered to buy the Japanese drug maker last year. Fujifilm Holdings rose after announcing a share buyback. Investors shrugged off weaker-than-expected Japanese industrial output data showing that production dropped a greater than expected 0.8 percent in July.
The S&P/ASX was up 0.8 percent while the All Ordinaries gained 0.7 percent. The big four banks rose as did miners BHP Billiton and Rio Tinto. Beach Energy, Oil Search and Woodside Petroleum retreated after crude futures dropped overnight to touch their lowest level since July on concerns about the fallout from Hurricane Harvey. In August, the All Ordinaries and S&P/ASX were virtually unchanged on the month.
The Kospi shed 0.4 percent after the Bank of Korea left its policy interest rate unchanged at 1.25 percent for the 12th straight month. In August, the index was down 1.6 percent. The Sensex added 0.3 percent and was down 2.4 percent in August. Second quarter gross domestic product was up a much lower than anticipated 5.7 percent from a year ago — expectations were for an annual increase of 6.6 percent.
Looking forward
Final August manufacturing PMIs will be released for Japan, China, India, France, Germany, the UK, Eurozone and US. Italy posts second quarter gross domestic product. In the US, August employment situation will be released along with the ISM manufacturing index, final consumer sentiment and July construction spending.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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