On 17 October, 2017 – Investors traded within narrow ranges as they waited for a series of key meetings beginning on Wednesday
Meetings include the 19th party congress in China and an EU summit.
United States
Stocks were mixed during the trading day as the Dow Jones industrials briefly surpassed 23,000 points for the first time in the morning and then retreated. The Dow was up 0.2 percent and the S&P added 0.1 percent to close at new record highs in choppy trading. The Nasdaq was virtually unchanged (down 0.35 point).
Morgan Stanley’s third-quarter profit rose to $1.78 billion as the firm’s wealth-management business continues to produce reliable profits. The firm reported revenue of $9.2 billion, up from $8.91 billion a year ago. Goldman Sachs said its third-quarter profit rose to $2.13 billion despite a slowdown in its core business of trading. Revenue of $8.33 billion was up from $8.17 billion a year ago.
UnitedHealth Group jumped after reporting strong third quarter earnings despite a decision to exit from most Obamacare markets and issuing upbeat comments for the year ahead. Revenues climbed 9 percent from a year ago to $50 billion in the third quarter as it boosted enrollment in employer-sponsored plans as well as through Medicare and Medicaid. The company said it expects 2018 earnings growth of between 13 to 16 percent. Johnson & Johnson was higher after reporting a strong quarter of its own.
Boeing declined after rival aircraft maker Airbus took a majority stake in Bombardier’s C-series passenger jets. Netflix slipped after touching a record high as more subscribers signed up for its popular original content in the latest quarter.
September import prices jumped a monthly 0.7 percent and were up 2.7 percent from a year ago while export prices added 0.8 percent and 2.9 percent. September industrial output was up a monthly 0.3 percent while manufacturing edged up only 0.1 percent. The Federal Reserve said the continued effects of Hurricane Harvey and, to a lesser degree, the effects of Hurricane Irma held down production growth by a quarter of a percentage point in September.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$18.55 to US$1,284.75. Copper futures were down 1.1 percent to US$3.20. WTI spot crude was up 13 US cents to US$52.00. Dated Brent spot crude was up 35 US cents to US$58.17. The US dollar was virtually unchanged against the yen and the Canadian and Australian dollars. It advanced against the euro, pound and Swiss franc. The Dollar Index was up 0.25 percent. The yield on the US Treasury 30 year bond was down 1 basis point to 2.81 percent while the 10 year note was unchanged at 2.30 percent.
European markets
European shares retreated Tuesday with only the IBEX adding 0.3 percent. Investors continue to monitor the situation in Spain, where Prime Minister Mariano Rajoy has given the leader of Catalonia until Thursday to clarify whether he was withdrawing his plan to declare independence from Spain. The FTSE, DAX and SMI slipped 0.1 percent each while the CAC was 1.51 points lower.
Europe’s new car registrations declined in September, data from European Automobile Manufacturers’ Association showed Tuesday. Passenger car sales fell 2 percent on the year to 1.43 million in September. The decline partially reversed a 5.6 percent rise in August. Daimler, BMW and Renault climbed while Volkswagen and Peugeot declined. Infineon Technologies was higher after it said it has corrected a flaw in the encryption used for secure products. Sartorius declined after cutting its full-year revenue and profit guidance. Airbus rallied after it agreed to acquire a majority stake in Bombardier Inc.’s C Series jet program. Rémy Cointreau was lower even though the firm reported higher sales in the first half of its 2017/18 financial year.
Danone advanced after the company backed its FY17 view after reporting a 16.6 percent increase in consolidated sales for the third quarter. Pearson jumped after the publishing and education company raised its profit forecast. Merlin Entertainments tumbled after like for like revenue performance for the 40 weeks ended 7 October was flat on 2016 due to difficult summer trading in Midway London and European theme parks as a result of the series of terror attacks and unfavourable weather. Credit Suisse was up in Zurich amid reports that activist investor RBR Capital has launched a campaign to break up the investment bank. Roche advanced while Novartis retreated. Nestlé declined on the day.
September final harmonized index of consumer prices was up 1.5 percent on the year for a second month. Germany’s ZEW reading climbed to 17.6 in October from 17.0 in the previous month. Nonetheless, the indicator still remained below the long-term average of 23.8. UK September consumer prices was up an annual 3.0 percent after increasing 2.9 percent in August.
Asia Pacific
Stocks in Asia were mixed Tuesday after major US indices hit fresh record highs overnight buoyed by rising oil prices and optimism about the economic outlook and the possibility of major tax reform.
The Shanghai Composite slipped 0.2 percent prior to the National Congress of the Communist Party beginning Wednesday. The Hang Seng added 4.69 points.
The Nikkei and Topix were up 0.4 percent and 0.2 percent respectively. Investors remained hopeful that Prime Minister Shinzo Abe will win Sunday’s Lower House election. Kobe Steel advanced as worries receded about costs stemming from a data falsification scandal. Kobe Steel’s shares have plunged to near five-year lows in the wake of the scandal. Other steelmakers including Nippon Steel & Sumitomo Metal and JFE Holdings were also higher. Toyota Motor and Honda Motor both increased supported by a stable yen rate.
Both the S&P/ASX and All Ordinaries were up 0.7 percent to close at a five-month high after copper and oil prices jumped and minutes from the Reserve Bank of Australia’s October 3 meeting indicated that the Bank is not in any rush to lift interest rates. Rio Tinto rallied after reporting a 6 percent increase in third quarter iron ore shipments. BHP Billiton also advanced. The big four banks were higher. Oil Search advanced after posting record production volumes in the last quarter.
The Kospi added 0.2 percent as investors bet on improved corporate earnings. The Sensex edged down 0.1 percent as investors paused for breath after recent sharp gains.
Looking forward
The UK releases its September labour market report. In the US, housing starts for September and the Federal Reserve’s Beige Book will be published.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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