On 06 February, 2017 – Asian stocks rallied Monday
However, shares in Europe and the US retreated on earnings and so-so economic data.
United States
Stocks retreated Monday with the Dow Jones industrials and Nasdaq slipping 0.1 percent and the S&P losing 0.2 percent in subdued trading. Energy companies declined along with crude prices. Phone company and real estate stocks also declined as investors weighed the latest batch of company earnings news.
Devon Energy, Chesapeake Energy and Marathon Oil were lower. Newell Brands slid after the maker of Rubbermaid, Sharpie, Elmer’s Glue and other products reported disappointing sales and issued a full-year sales forecast that fell far short of analysts’ estimates. The company said the strong dollar and fewer people shopping at malls hurt sales of some key products. Sysco was down after the food company reported better earnings, but its revenue was weaker than expected.
Tiffany was down a day after the jewelry company’s CEO stepped down amid concerns about the company’s financial performance. Tyson Food was down after the company disclosed in a quarterly filing that it has received a subpoena from the Securities and Exchange Commission as part of an antitrust probe. Hasbro rallied after the toymaker’s fourth-quarter profit and sales beat estimates. The company reported better sales of toys marketed to girls, including Disney Princess and Frozen products. Mattel advanced as well.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$11.55 to US$1,226.75. Copper futures were up 1.2 percent to US$2.65. WTI spot crude was down 73 US cents to US$53.10. Dated Brent spot crude was down 97 US cents to US$55.84. The US dollar was up against the euro, pound and the Canadian and Australian dollars. However, it declined against the yen, Swiss franc and yuan. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was down 3 basis points to 3.06 percent while the yield on the 10 year note declined 4 basis points to 2.42 percent.
Europe
Stocks declined in Europe Monday. Economic data were mixed with the Eurozone Sentix Investor Confidence Index declining slightly in February while German factory orders rose the most in two and a half years in December.
European Central Bank President Mario Draghi testified before the European Parliament Monday. Draghi stated that the recent resilience shown by the euro area economy in the face of several negative shocks suggests the bank is on the right track, but it still requires monetary policy stimulus to bring inflation to the target in a sustainable way.
Fish distributor Deutsche See declined after it sued Volkswagen over the automaker’s emission cheating scandal. Deutsche Bank declined. The bank apologized in full-page German newspaper ads for “serious errors” that cost the lender billions of euros. Total slipped as oil prices edged higher on a weaker dollar and amid fears of new US sanctions against Iran. Randgold Resources climbed after the gold miner increased its 2016 dividend by over 50 percent after reporting a 76 percent jump in fourth-quarter net profit.
Ryanair Holdings were lower after the airline issued a cautious outlook for the remainder of the year after reporting an 8 percent drop in third-quarter profit. Airline easyJet declined after reporting its passenger traffic and load factor figures for January. Barclays retreated after reports that it is embarking on a major back office overhaul. UniCredit dropped in Milan after it signed a deal Saturday with trade unions to cut 3,900 jobs as part of a business plan unveiled in December by its new chief executive. Housebuilders Taylor Wimpey, Barratt Developments and Persimmon were down before the launch of the government’s latest attempt to fix a chronic shortage of new homes. British Airways-owner IAG was lower.
Germany December factory orders expanded at the fastest pace in more than two years on robust domestic demand. Factory orders climbed 5.2 percent after sinking 3.6 percent in November.
Asia Pacific
Stocks in Asia were mostly higher thanks to rising banks. On Friday US President Trump directed the Treasury Secretary to look for potential changes to the Dodd-Frank law, which reshaped financial regulations after the 2008-09 financial crisis. The order does not have any immediate impact, but investors applauded its intent. Trump also signed a memorandum that delayed an Obama-era rule that requires financial professionals who charge commissions to put their clients’ interests first when giving advice on retirement investments.
The Shanghai Composite was up 0.5 percent in thin trade. The Caixin China general services PMI declined to a reading of 53.1 in January from December’s 17-month high of 53.4. The Hang Seng was up 0.9 percent.
The Nikkei was up 0.3 percent and the Topix was 0.4 percent higher as gains among banking stocks following moves by Trump to deregulate the finance industry helped offset a slightly stronger yen. Traders also looked ahead to a meeting of Prime Minister Shinzo Abe and US President Trump on February 10 and 11. Mitsubishi UFJ rallied after reporting a 17 percent increase in its third-quarter profit. Sumitomo Mitsui Trust Financial, Mizuho Financial and Resona Holdings advanced. Exporters shrugged off the yen’s strength to close mostly higher.
Both the S&P/ASX and the All Ordinaries slipped 0.1 percent. December retail sales data disappointed keeping investors cautious before Reserve Bank of Australia’s first monetary policy meeting of the year. Retail sales slipped a seasonally adjusted 0.1 percent, missing forecasts for an increase of 0.3 percent. Santos declined after it fell short of its target of raising $500 million through a share purchase plan for retail shareholders. Virgin Australia Holdings dropped after its budget unit pulled out of Bali following a spat with the Indonesian authorities. National Australia Bank advanced despite reporting a 1 percent decline in first quarter unaudited cash profit. The other three banks advanced. Gold miners Newcrest Mining, Regis Resources, Northern Star and Evolution climbed as gold extended its gains on a weaker dollar.
The Kospi was up 0.2 percent. The Sensex added 0.7 percent.
Looking Forward
The Reserve Bank of Australia publishes its monetary policy decision. Germany releases December industrial production. Canada and the US post December international trade data. The US also post JOLTS and consumer credit.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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