On 13 October, 2016 – Global stocks mostly lower
Disappointing Chinese merchandise trade data rippled through the markets sending stocks lower globally.
United States
US stocks followed global shares lower Thursday after a steep drop in China’s exports. Mining and chemicals companies along with banks took some of the largest losses. However, the indices recovered some of their early losses. The Dow Jones industrials were down 0.2 percent while the S&P and Nasdaq lost 0.3 percent and 0.5 percent respectively.
China’s exports fell 10 percent in September compared with a year ago. That was a much bigger drop than in August and also a larger decline than analysts expected. China has been crucial to global economic growth for a quarter-century. Shares of mining companies and other suppliers of basic materials retreated. Many of these companies rely heavily on exports to China. Freeport-McMoRan was lower as were Mosaic, DuPont and International Paper.
Bank of America and Citigroup declined. Wells Fargo fell after the bank said Chairman and Chief Executive John Stumpf would step down from both roles immediately. Shares of technology companies that rely heavily on sales to China such as Apple and Microsoft also declined along with Nvidia. Delta reported a strong profit partly because of cheap jet fuel and said it planned to cut capacity to combat lower airfares and rising salaries. Delta and American Airlines gained. Ulta Salon rose after the company raised its guidance and gave strong estimates for the third quarter. CSX climbed after the company reported earnings that were better than expected, even though coal volumes kept falling.
Initial jobless claims for the week ended October 8 were unchanged from the previous week’s 246,000. With the downward revision to the figure for the previous week, jobless claims held at their lowest levels since November of 1973.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$4.55 to US$1,261.05. Copper futures were down 2.5 percent to US$2.12. WTI spot crude was up 26 US cents to US$50.44. Dated Brent spot crude was up 23 US cents to US$52.04. The US dollar was down against its major counterparts including the yen, euro, pound, Swiss franc and the Canadian dollar. The currency was unchanged against the Australian dollar. The Dollar Index was down 0.5 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.48 percent while the yield on the 10 year note declined 3 basis points to 1.74 percent.
Europe
Stock indices retreated for a third day Thursday. Investor sentiment was hit after the release of the weaker than expected Chinese merchandise trade data. The disappointing data sparked concerns among traders over the health of the global economy. The FTSE was down 0.7 percent, the CAC retreated 1.1 percent, the DAX lost 1.0 percent and the SMI was 0.9 percent lower. Mining stocks were under pressure along with financial and automakers’ shares. Technology stocks also extended the weakness of the previous session after Wednesday’s warning from Ericsson.
China’s exports declined more than expected in September reflecting subdued global demand. Exports dropped 10 percent from prior year while imports slid 1.9 percent. The trade surplus narrowed to $42 billion. Miners Anglo American, Rio Tinto, BHP Billiton and Antofagasta were down on the day.
Merck KgaA slipped after it said it firmly believes it will meet the objectives set for 2018. Deutsche Bank was down after the US SEC announced that the lender has agreed to pay a $9.5 million penalty for failing to properly safeguard material nonpublic information generated by its research analysts. Commerzbank also was lower. Volkswagen, Daimler and BMW declined. Peugeot and Renault retreated. BNP Paribas, Crédit Agricole and Société Générale were lower.
Unilever declined after it said its third-quarter total turnover was €13.4 billion, down 0.1 percent due to a negative currency impact. Sales increased by 3.4 percent at constant exchange rates, while underlying sales growth was 3.2 percent. Tesco declined after it announced that it has pulled dozens of household products supplied by Unilever from its online shopping site over pricing and a weaker pound. Standard Life declined on a broker downgrade.
Asia Pacific
Asian stock markets were mostly lower Thursday thanks to soft merchandise trade data that raised concerns about the economic health of China’s economy. Investors had the first chance to evaluate the Federal Reserve FOMC minutes which were released after markets here were closed for the day. The minutes reinforced expectations of a Federal Reserve interest rate increase in December.
The Shanghai Composite inched up 0.1 percent despite disappointing merchandise trade data that showed exports dropping 10.0 percent on the year in September while imports retreated 1.9 percent. The Hang Seng dropped 1.6 percent.
Both the S&P/ASX and All Ordinaries were 0.7 percent lower as shares tracked the decline in crude oil prices and disappointment with the Chinese trade data. BHP Billiton, Rio Tinto and Fortescue Metals declined. Iluka Resources tumbled after the mineral sands miner reported a 28 percent decline in revenue for the quarter ended September while production decreased almost 10 percent. In the oil sector, Woodside Petroleum, Oil Search and Santos retreated. Banks ANZ, National Australia Bank, Commonwealth Bank of Australia and Westpac all ended lower. However, gold miners Newcrest Mining and Evolution Mining rallied. Qantas advanced after the airline said it will fly direct to Beijing from Sydney for the first time since 2009 when it relaunches its daily service in January 2017.
The Nikkei was down 0.4 percent while the Topix was virtually unchanged thanks to a stronger yen and weak Chinese merchandise trade data. Among the major exporters, Toshiba and Sony were higher while Canon and Panasonic were lower. Toyota and Suzuki gained after the two automakers said they are in talks about their collaboration on environment, safety and information technology.
The Kospi was down 0.9 percent. The Bank of Korea’s monetary policy board voted to keep the nation’s benchmark interest rate unchanged at the record low 1.25 percent for the fourth straight month. The Sensex declined 1.6 percent as it resumed trading on Thursday after a two day holiday.
Looking Forward
China releases September consumer and producer price indices. Japan posts September producer price index. The Eurozone posts August merchandise trade data. In the US, September retail sales and producer price index, August business inventories and October preliminary consumer sentiment will be reported.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
Fidelity disclaimer:
The objective of this page is to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by any Fidelity entity or any third-party.
Jesmond Mizzi Financial Advisors Disclaimer:
This article, does not intend to give investment advice and the contents therein should not be construed as such. Jesmond Mizzi Financial Advisors Limited is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Jesmond Mizzi Financial Advisors Limited at 67, Level 3, South Street, Valletta, or on Tel: 21224410, or email [email protected]