On 31 May, 2017 – Most stock indices advanced in May
Markets remained jittery owing to falling crude prices and geopolitical tensions.
United States
US indices declined Wednesday led by banks and energy companies. Big technology companies and small-company stocks declined and cancelled out gains for drug companies and household products makers. The Dow Jones industrials and Nasdaq slipped 0.1 percent while the S&P was virtually unchanged (down 1.11 points). The three indices advanced for the month of May. The Dow managed to edge up 0.3 percent, the S&P gained 1.2 percent and the Nasdaq advanced 2.5 percent. The Nasdaq has advanced in all five months of 2017 while the Dow and S&P gained in four of five, declining in March.
Banks declined as investors worried that their revenue from trading stocks, bonds and currencies is going to weaken in the second quarter. JPMorgan Chase, Capital One and Goldman Sachs were lower. Pfizer was higher as was Irish drug maker Perrigo after its first-quarter report was better than expected. Johnson & Johnson advanced. Clorox and Kimberly-Clark were higher. Procter & Gamble also advanced. Michael Kors Holdings tumbled and hit a five-year low after it said it will close up to 125 stores as its sales have remained weak. First Solar, the largest US solar company, declined along with SunPower. Apple, Facebook and Alphabet retreated.
The Federal Reserve published its Beige Book in preparation for its June 13 and 14 FOMC meeting. The report, which was prepared by the Federal Reserve Bank of Philadelphia, said that the US economy continued to expand at a “modest or moderate” pace between April and May. The report noted that over the period the labor market “continued to tighten, with most districts citing shortages across a broadening range of occupations and regions”. Most Districts reported that employment continued to grow at a modest to moderate pace. Pricing pressure remained “modest” in most districts.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.50 to US$1,266.20. Copper futures were up 0.8 percent to US$2.58. WTI spot crude was down US$1.35. Dated Brent spot crude declined US$1.53 to US$50.31. The US dollar was down against the euro, pound, Swiss franc and the yuan. The currency advanced against the Canadian and Australian dollars but was unchanged against the yen. The Dollar Index was down 0.4 percent. The yield on US Treasury 30 year bond was down 1 basis point to 2.87 percent while the yield on the 10 year note was unchanged at 2.21 percent.
Europe
Stock indices were mixed Wednesday. They were relatively flat in early trading, climbed around midday but pared gains following the weak open of US markets. Although investors were concerned over the upcoming June 8 British election, they also monitored events in Italy and Greece. The FTSE slipped 0.1 percent and the CAC declined 0.4 percent while the DAX and SMI each added 0.1 percent. For the month of May, the FTSE outgained all other European indices, increasing 4.4 percent. The SMI was 2.3 percent higher and the CAC and DAX added 0.3 percent and 1.4 percent respectively.
Metro was down after posting muted first-half like-for-like sales at its Cash & Carry operations. Online trading company IG Group rallied after the company said it expects to report full year revenue around 7 percent higher than in the prior year. Syngenta slipped in Zurich — ChemChina announced the definitive end results for its offer to acquire the Swiss agribusiness that produces agrochemicals and seeds.
Novartis advanced after saying it has a strong foundation for its next growth phase expected to start in 2018. Ericsson jumped in Stockholm after an activist investor bought a stake of more than 5 percent in the telecom equipment maker. Glencore, Rio Tinto and BHP Billiton retreated thanks to weak commodity prices.
Eurozone May flash harmonized index of consumer prices was up 1.4 percent on the year, down from 1.9 percent in April. Eurozone April unemployment rate was the lowest in more than eight years — the seasonally adjusted jobless rate dropped to 9.3 percent from 9.4 percent in March. This was the lowest rate since March 2009. Germany’s April retail sales declined 0.9 percent on the year.
Asia Pacific
Asian stocks were mixed performance Wednesday as a stronger yen and a fall in oil prices ahead of weekly U.S. industry inventory estimates offset better-than-expected manufacturing data from China.
The Shanghai Composite was up 0.2 percent after China’s CFLP manufacturing PMI reading was unchanged at 51.2 in May. The Hang Seng was down 0.2 percent. For the month of May, the Shanghai Composite was down 1.2 percent while the Hang Seng was 4.2 percent higher.
The Nikkei and Topix were down 0.1 percent and 0.3 percent respectively as the US dollar declined against the yen after a combination of mixed US data and a new poll indicated that UK Conservatives could fall short of an overall Parliamentary majority in June 8’s national election. April industrial production rebounded 4.0 percent on the month after declining 1.9 percent in March. Energy major Japan Petroleum retreated after a slide in oil prices. Banks Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial Group were lower after US Treasury yields fell to their lowest levels in more than a week. Panasonic advanced after the company briefed analysts about its growth prospects. For the month of May, both the Nikkei and Topix were 2.4 percent higher.
Both the S&P/ASX and All Ordinaries edged 0.1 percent higher Wednesday. In May however, the two indices declined 3.4 percent and 3.1 percent respectively. Banks gained offsetting declines in the materials energy sectors. The big four banks rose after the government delayed the date of the first payment of its A$6.2 billion ($4.60 billion) bank tax by three months. Investment bank Macquarie Group advanced as well. Miners including BHP Billiton, Rio Tinto, Santos and Origin Energy retreated. Aristocrat Leisure, which reported solid half-year earnings last week, climbed.
The Kospi was up 0.2 percent Wednesday and 6.4 percent in May. The Sensex was virtually unchanged (down 13.60 points). After markets closed for the day, first quarter gross domestic product data were released. GDP was up 6.1 percent on the year, down from 7.0 percent in the fourth quarter of 2016.
Looking forward
April retail sales will be released in Australia. China and India post May manufacturing PMI. Final manufacturing PMIs will be reported for the eurozone, France, Germany, UK and US. The US will release May ADP private employment, ISM manufacturing index and April construction spending along with the weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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