On 05 October, 2017 – Positive economic data lift investor morale as they wait for third quarter earnings

US indices once again closed at record highs.
United States
Once again, the Dow Jones industrials, S&P and Nasdaq ended all at record highs. Investors were optimistic over a tax overhaul as Congress moved closer to agreement on a budget resolution and as economic data added to recent signs of strength. The Dow was up 0.5 percent, the S&P gained 0.6 percent and the Nasdaq advanced 0.8 percent. The S&P advanced for the eighth straight day — its longest streak of gains since 2013. Investors are looking forward to Friday’s September employment report.
The House of Representatives voted to adopt a fiscal 2018 spending blueprint containing a legislative tool that would let Republicans bypass Democrats and pass a tax bill by a simple majority vote in the Senate, where they hold 52 of 100 seats.
August international trade deficit narrowed to $42.4 billion from a revised deficit of $43.6 billion in July. Weekly jobless claims were down 12,000 to 260,000. August factory orders rebounded 1.2 percent after tumbling 3.3 percent in July. Core capital goods orders (nondefense ex-aircraft) were up a monthly 1.1 percent in August following July’s 1.3 percent gain.
Netflix jumped after the company raised the monthly subscription fees for two of its three main US plans by $1 and $2, respectively. Banks rose after Randal Quarles was confirmed as vice chair of the Federal Reserve for supervision, a post that was created after the financial crisis but had not been filled. The banking sector widely expects Quarles to play a key part in U.S. President Donald Trump’s efforts to ease regulations. Amazon was up after the company said it is testing its own delivery service, potentially encroaching on the territory of package delivery companies such as United Parcel Services and FedEx. Shares of United Parcel Service and FedEx retreated. Goldman Sachs and JP Morgan were higher. Microsoft climbed on a broker upgrade.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up 25 US cents to US$1,274.50. Copper futures were up 2.82 percent to US$3.04. WTI spot crude was up 74 US cents to US$50.72. Dated Brent spot crude was up US$1.15 to US$56.95. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.5 percent. The yield on the US Treasury 30 year bond was up 2 basis points to 2.89 percent and the 10 year note was up 3 basis points to 2.35 percent.
European markets
Most stock indices advanced Thursday. Traders were cautious as they continued to monitor the developments in Spain following Catalonia’s independence vote. Investors were also waiting for the release of the September U.S. employment report on Friday. The FTSE was up 0.5 percent and the CAC added 0.3 percent. The DAX slipped 2.47 points while the SMI was 0.2 percent lower. The IBEX added 2.5 percent after posting its biggest loss in 15 months on Wednesday.
The European Central Bank published minutes of its September 6 and 7 governing council meeting. At that meeting, the council debated the possibility of scaling back its massive stimulus, given the stronger economy along with the trade-offs between various scenarios about the pace and duration of asset purchases. While there was broad agreement that there was still the need for substantial monetary policy support to return inflation to its target of below, but close to 2 percent, the council was more confident that the price growth target would be achieved given the dissipation of deflationary risks and a stronger economy. According to the minutes, “a view was put forward that conditions were increasingly falling into place that would allow the intensity of monetary policy accommodation to be adapted and would provide an opportunity to scale back the Eurosystem’s net asset purchases.”
Siemens retreated after it concluded the sale of its remaining 17 percent stake in Osram Licht. Osram shares declined. Accor Hotels edged up after it agreed to acquire a 50 percent stake in Orient Express owned by the SNCF Group. In London, theme park operator Merlin Entertainments jumped on a Bloomberg report that it approached SeaWorld about a possible acquisition. DFS declined after it reported a 22.3 percent fall in pre-tax profits in the year to July 29. Miners Antofagasta, Anglo American and Glencore advanced. In Zurich, Roche, Novartis and Nestlé retreated along with Swatch. Sika was down on a broker downgrade.
Asia Pacific
Shares were mixed Thursday in holiday thinned trade. Markets in China, Hong Kong and South Korea were closed for public holidays. Falling oil prices coupled with worries about Catalonia’s independence vote from Spain kept investor risk appetite in check. Market participants also were waiting for Friday’s US September employment report as they try to gauge when the next Federal Reserve rate increase will occur.
The Nikkei was up 1.90 points while the Topix slipped 0.1 percent as the yen strengthened slightly against the US currency. Financial and technology stocks including Dai-ichi Life Holdings and Advantest declined.
The S&P/ASX was down 0.29 point while the All Ordinaries added 0.66 point. Australia’s trade surplus widened from A$808 million in July to A$989 million in August. Retail sales declined a monthly 0.6 percent after retreating a revised 0.2 percent in July. Miners BHP Billiton and Rio Tinto advanced along with Newcrest and Regis Resources. But banks and energy stocks ended broadly lower.
The Sensex lost 0.3 percent after rising for four days.
Looking Forward
Germany posts August manufacturers’ orders. France releases August merchandise trade data. Canada releases September housing starts and labour force survey. In the U.S., the September employment report will be released.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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