On 06 October, 2016 – Global stocks mixed
Investors were waiting for tomorrow’s US employment report.
United States
Stocks hovered around the unchanged line plus or minus as investors waited for the September employment report. The report is crucial to the Federal Reserve’s interest rate decision making process. A growing number of Federal Reserve officials have argued for higher rates as the labor market remains solid and inflation inches towards the Fed’s 2 percent target. Government bonds rose again and crude vaulted the $50 a barrel level. The Dow Jones industrials were down 0.1 percent and the Nasdaq lost 0.2 percent. The S&P was virtually unchanged.
Apple rose after German supplier Dialog Semiconductor said its quarterly revenues were higher than expected, adding to recent enthusiasm about demand for the newest iPhone. Shares in Florida insurance companies came under heavy selling pressure as the industry braced for multi-billion dollar losses from Hurricane Matthew. Heritage Insurance and Universal Insurance tumbled. Both companies provide property and casualty cover in the state,
Walmart was down after the company issued a disappointing earnings outlook for fiscal 2018. Mylan slumped after reports that the company overcharged Medicaid over five years for its EpiPen allergy treatment. Twitter sank on reports that some companies that had been thought to be interested in buying it would not. Yum Brands retreated after the company, the parent of KFC, Taco Bell and Pizza Hut, reported a quarterly profit and sales that missed expectations.
Jobless claims declined last week to the lowest level since mid-April, spurring expectations that the economy is strong enough for the Federal Reserve to increase interest rates soon.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$14.90 to US$1,254.50. Copper futures were down 0.4 percent to US$2.16. WTI spot crude was up 69 US cents to US$50.52. Dated Brent spot crude was up 71 US cents to US$52.57. 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 0.7 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 3 basis points to 2.46 percent and 1.74 percent respectively.
Europe
Stocks were mostly lower Thursday as investors waited for Friday’s US employment report. The FTSE was down 0.5 percent, the SMI declined 0.3 percent and both the CAC and DAX were 0.2 percent lower.
Deutsche Bank was unchanged after reports emerged that the German government is pursuing discreet talks to help reach a solution with US claims against the German bank over the sale of toxic mortgage bonds. Osram jumped on a report that Chinese chipmaker Sanan Optoelectronics wants to buy the German lighting company. Siemens, which holds a 17 percent stake in Osram, also advanced. In Paris, Air France KLM was lower after raising €400 million through issue of bonds. In London, easyJet sank after the airline revised down its annual profit forecast, citing adverse exchange rate movements and a testing trading environment. Smith & Nephew tumbled on a brokers downgrade.
Dialog Semiconductor advanced after the Apple supplier reported higher preliminary sales than forecast. BTG climbed after the company said revenue will top expectations, based on current foreign-currency rates. Tullow Oil jumped on a broker upgrade. Marks and Spencer retreated on a broker downgrade.
German August factory orders grew at a faster pace thanks to robust domestic demand. Factory orders climbed 1 percent on the month after increasing a revised 0.3 percent in July.
Minutes of the ECB’s September meeting show that Governing Council members widely agreed that no new policy action was needed at that time. However, they also acknowledged that continued downside risks to the latest official economic projections means that price trends in particular would need especially close monitoring over coming months. The minutes similarly confirm that members see as vital the retention of a very substantial degree of monetary support and the need to reiterate again the willingness and preparedness of the central bank to act again if inflation objectives seem unlikely to be met. There are no surprises here.
Asia Pacific
Asian stocks mostly advanced Thursday – an overnight rally in oil prices and positive US economic data underpinned investor sentiment. However, investors were cautious prior to Friday’s US employment report. Mainland China markets remained closed.
Both the Nikkei and Topix were 0.5 percent higher thanks to the rally in oil prices and the decline in the value of the yen. Exporters Toyota Motor, Mazda and Hitachi gained after the US dollar rallied against the yen. Banks Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial advanced. Fujitsu jumped on a Nikkei report that Lenovo Group is in talks with the company to merge their personal computer businesses.
The S&P/ASX was up 0.6 percent and the All Ordinaries added 0.5 percent. Energy stocks led shares higher after crude oil prices climbed overnight after US oil stockpiles declined. Energy majors Oil Search, Origin Energy, Santos and Woodside Petroleum climbed along with BHP Billiton and Fortescue Metals Group. The big four banks rose after reports emerged that the German government is pursuing discreet talks to help reach a solution with US claims against the German bank over the sale of toxic mortgage bonds. Bank of Queensland tumbled on reporting muted growth in full-year cash profit.
The Kospi was up 0.6 percent. The Sensex retreated 0.4 percent after oil prices rallied overnight and the rupee weakened amid US dollar strength in reaction to solid US economic data. The Hang Seng added 0.7 percent as energy producers rallied amid optimism that higher oil prices will boost earnings.
Looking Forward
Germany will post August industrial output. France will release August industrial production and merchandise trade balance. The UK will report August industrial production and merchandise trade data along with September Halifax house price index. Canada will release its September labour force survey and the Bank of Canada will publish its Business Outlook Survey. In the US, August consumer credit and September employment will be reported.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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