On 01 September, 2016 – Global stocks mostly lower

Energy companies were dragged down by declining oil prices.
United States
Although stocks were mostly lower during the day, they managed to close slightly higher. The Dow Jones industrials edged up 0.1 percent and the Nasdaq was 0.3 percent higher. The S&P was virtually unchanged (down 0.09 point).
Energy companies fell with the price of oil, materials companies continued recent gains, and weak reports from Costco Wholesale and Campbell Soup hurt the retail industry. Campbell Soup declined after disappointing results from the company’s fresh products unit. The company reported weaker sales of carrots and Bolthouse Farms beverages. Campbell, the maker of canned soups, Pepperidge Farm cookies and V8 juices, has been trying to capitalize on a growing desire for fresh foods. Costco declined after the company reported weak sales for the month of August. Costco, which operates wholesale clubs, said sales at older stores were unchanged compared with last year, while analysts expected some growth. Salesforce.com reported a greater profit and better sales than expected, but the stock slipped as investors focused on the company’s third-quarter guidance.
Diamond Offshore Drilling sank after the company said the Brazilian oil company Petrobras was terminating a contract with the company. Diamond said the contract was scheduled to end in October 2018 and that it did not believe that Petrobras’s actions were legal. Ollie’s Bargain Outlet Holdings advanced after it raised its forecasts for the year after a strong second-quarter report. Charter Communications, which recently bought Time Warner Cable and Bright House Networks, rose after S&P Dow Jones Indices said the company would be added to the Standard & Poor’s 500-stock index next week. Companies that are added to major indexes often trade higher as investors and funds add them to their portfolios.
Manufacturing activity in the US according to the ISM manufacturing survey unexpectedly contracted in August, falling to 49.4 from 52.6 in July. The reading below 50 indicates the first contraction in manufacturing activity since February. August total vehicle sales slowed to a 17.0 million rate from 17.9 million in July and 5.0 percent lower than July. However, it was still higher than June’s 16.7 million. Construction spending in July was unchanged but June was revised up to a gain of 0.9 percent from a decline of 0.6 percent.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up 25 US cents to US$1,309.50. Copper futures were virtually unchanged at US$2.08. WTI spot crude was down US$1.19 to US$43.51. Dated Brent spot crude was down US$1.15 to US$45.74. 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 0.4 percent. The yield on US Treasury 30 year bond was unchanged at 2.23 percent while the yield on the 10 year note slipped 2 basis points to 1.56 percent.
Europe
Stocks were mostly lower Thursday. While the markets got off to a positive start they began to pare their gains in the afternoon and firmly entered negative territory after a weak opening on US markets. Traders remain anxious before Friday’s US August jobs report. The strength of the jobs data is likely to have a significant impact on expectations regarding whether the Federal Reserve will raise interest rates at its next meeting later this month.
The FTSE was down 0.5 percent, the DAX declined 0.6 percent and the SMI lost 0.7 percent. The CAC was virtually unchanged (up 1.45 points). Spain’s IBEX was up 0.5 percent despite the country’s acting Prime Minister, Mariano Rajoy, losing a parliamentary bid for a second term in office.
Commerzbank climbed but Deutsche Bank retreated on reports they held merger talks earlier this month. Volkswagen slid after Australia sued the local arm of German automaker for allegedly misleading consumers over emissions testing. Utilities E.ON and RWE weakened. Pernod Ricard advanced after the spirits maker reiterated its medium-term sales growth target after reporting a 2 percent rise in full-year 2015/16 underlying profit.
Technicolor surged after Moody’s raised its rating on the stock to ‘Ba3’ from “B1.” In London, Inmarsat gained after the satellite telecommunications company successfully placed $650 million convertible bonds due 2023. Hays declined after the recruitment firm warned of increased uncertainty in its UK and Ireland markets following the Brexit vote. Royal Dutch Shell and BP were lower along with lower oil prices.
Eurozone August manufacturing sector expanded at the slowest pace in three months. The manufacturing PMI slid to 51.7 from 52 in July. UK manufacturing activity rebounded unexpectedly. The August manufacturing PMI jumped to a 10-month high of 53.3 from the 41-month low of 48.3 posted in July immediately following the Brexit vote.
Asia Pacific
Shares were mostly lower Thursday after US stocks slipped overnight. US crude futures dropped on data showing a much bigger than expected weekly build in US crude and distillate stocks. Oil prices rebounded in Asia on a weaker dollar and China’s August CFLP manufacturing PMI rebounded to its strongest level in nearly two years on improving production and demand.
The Shanghai Composite was down 0.7 percent, dragged down by financials and property developers as the better than anticipated manufacturing data reinforced growing views among investors that the People’s Bank of China will be in no hurry to inject further stimulus. The Hang Seng however, added 0.8 percent. The CFLP manufacturing PMI rose to 50.4, the highest reading since October 2014. However, the Markit Caixin manufacturing PMI reading was stagnant at the 50.0 mark after a short-lived uptick in July.
The Nikkei was up 0.2 percent. Takeda Pharma, Kawasaki Heavy Industries, Alps Electric, Seven & i Holdings and Pioneer rallied. Energy explorer Inpex retreated and Japan Petroleum declined. Shares hit a three-month closing high, as the US dollar/yen held above 103 and latest survey data signaled an increase in Japanese manufacturing output for the first time in six months. Capital spending by Japanese companies increased an annual 3.1 percent in the April to June period, but company profits continued to slump amid a strong yen.
Both the All Ordinaries and the S&P/ASX were 0.3 percent lower. Mining and energy stocks continued to fall and data on manufacturing and retail sales disappointed investors. Australia’s manufacturing sector contracted in August for the first time in 14 months and retail sales remained flat in July for the first time in five months, while a lift in planned investments for the year offered some signs of recovery outside the mining sector. Rival Rio Tinto was lower after iron ore prices slipped to a four-week low overnight. Energy stocks Santos and Origin Energy retreated. Banks Westpac, NAB and ANZ advanced. Woolworths gained despite a Moody’s report warning of increased competition at the top of the market.
The Kospi slipped 0.1 percent amid selling by foreign investors as they waited for Friday’s US employment report and clues to the timing of a US Federal Reserve rate increase. The Sensex also was 0.1 percent lower. Investors ignored the August manufacturing PMI data which showed that activity surged to a 13-month high led by solid rises in output and new orders.
Looking forward
Italy posts revised second quarter gross domestic product. The Eurozone reports July producer price indices. Canada and the US release July international trade data. The US releases August employment situation and July factory orders.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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