Most indices advanced despite the surprising UK election result.
United States
US stocks, after reaching record intraday highs, retreated to give back some ground on Friday. The Nasdaq dropped to close 1.8 percent lower while the S&P slipped 0.1 percent. The Dow Jones industrials however were 0.4 percent higher. On the week, the Dow was up 0.3 percent while the Nasdaq lost 1.6 percent and the S&P was 0.3 percent lower. The Nasdaq’s sharp pullback Friday afternoon occurred when traders took profits after the recent technology stock rally. Traders were also digesting the unexpected outcome of the UK elections in which no party gained a clear majority, resulting in a hung parliament.
Internet, software and computer hardware stocks moved significantly lower, reflecting weakness throughout the tech sector. Apple tumbled as did Nvidia, Advanced Micro Devices and Micron Technology. However, energy stocks moved higher on the day, regaining some of the ground lost in recent sessions. Chesapeake Energy, Helmerich & Payne and Transocean advanced. Financial stocks also saw considerable strength. The financial stock rally came after House Republicans voted Thursday to pass a bill rolling back many of the banking regulations put in place in response to the 2008 financial crisis.
Pandora Media was up on news that Sirius will invest $480 million in cash in the online radio company. Sirius, which is buying preferred stock and taking a 19 percent stake in Pandora, will also select three people to be named to Pandora’s board. DuPont Fabros Technology advanced after the data real estate investment trust and owner of wholesale data centers was acquired by another REIT, Digital Realty Trust. The deal is an all-stock transaction valued at about $7.6 billion. DuPont Fabros Technology shares jumped while Digital Realty slipped. VeriFone Systems retreated after the maker of terminals for electronic payments cut its forecasts and said it will sell or restructure several businesses.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$6.55 to US$1,266.55. Copper futures were up 1.5 percent to US$2.65. WTI spot crude was up 19 US cents to US$45.83. Dated Brent spot crude was up 29 US cents to US$48.15. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. The currency declined against the Canadian dollar. The Dollar Index was up 0.1 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 1 basis point to 2.84 percent and 2.20 percent respectively.
Europe
Investors were largely able to shrug off the inconclusive results of the UK’s parliamentary election and advance at the end of the week. The FTSE was up 1.0 percent thanks to a drop in the value of the British pound that provided a boost to the index. The CAC was up 0.7 percent, the DAX gained 0.8 percent and the SMI was 0.4 percent higher. For the week though the four indices were lower. The FTSE was down 0.3 percent, the CAC declined 0.8 percent, the DAX retreated 0.1 percent and the SMI dropped 2.2 percent.
The snap general election called by British Prime Minister Theresa May turned out to be a setback for the Conservative party, which lost their majority in the Parliament. The ruling party was 10 seats short of the 326 seats required for a majority in the 650-member House of Commons. The Prime Minister later struck a deal with DUP, a minority party, and visited Buckingham Palace to stake claim to form a government.
The Bundesbank upgraded its growth projections for Germany citing a strong labor market, consumption and government spending and investment. The Bank forecast the economy to grow 1.9 percent in 2017, 1.7 percent next year and 1.6 percent in 2019. The Bank of France said the French economy is expected to grow faster as export growth picked up thanks to the global economic recovery. The bank raised the growth forecast for this year to 1.4 percent. The projection for 2018 was also raised to 1.6 percent from 1.5 percent. The Italian economy is expected to sustain its growth momentum that is forecast to improve over the next two years, helped by a moderate strengthening of foreign demand and the ultra-easy monetary conditions according to the Bank of Italy. Growth for 2017 was raised to 1 percent from 0.9 percent. The projections for both 2018 and 2019 were increased to 1.2 percent from 1.1 percent.
Deutsche Lufthansa rose after the airline said it would increase short-haul hold luggage fees starting June 13. L’Oréal gained after it said it had received a firm offer from Natura Cosméticos to acquire its Body Shop business. Air France-KLM climbed after it reported a 6.1 percent rise in passenger traffic for May. Taylor Wimpey, Persimmon and Barratt Developments tumbled on concerns that activity in the UK housing market will likely slow. Mining stocks received a boost from a rally in copper prices. Prices hit five-week highs as data pointed to robust import demand from China. Anglo American, Antofagasta, Glencore, BHP Billiton and Rio Tinto finished higher.
UK visible trade deficit narrowed in April to £10.38 billion from £12.04 billion in March. April industrial production was up 0.2 percent on the month, below expectations.
Asia Pacific
Asian stocks ended mixed for the day and week. Investors largely shrugged off political uncertainty in the UK and looked ahead to the Federal Reserve announcement on June 14. British Prime Minister Theresa May’s decision to call a snap general election backfired as the Conservatives fell short of 326 needed to command a parliamentary majority.
While the Japanese yen weakened following Bank of Japan’s Governor Haruhiko Kuroda’s comments on inflation as well as on quantitative and qualitative easing, the British pound weakened sharply following results of the UK election. Investors showed little reaction to European Central Bank President Mario Draghi’s surprisingly cautious tone in his post-meeting press conference Thursday and the public testimony of former FBI Director James Comey about his relationship with President Donald Trump and the circumstances that led to his firing also on Thursday.
The Shanghai Composite added 0.3 percent while the Hang Seng slipped 0.1 percent after the latest inflation data painted a mixed picture of the economy. Consumer prices in China rose an annual 1.5 percent in May, in line with expectations and up from 1.2 percent in April. May producer prices advanced an annual 5.5 percent, down from 6.4 percent in the previous month. For the week, the Shanghai Composite was up 1.7 percent and the Hang Seng was 0.4 percent higher.
The Nikkei and Topix were up 0.5 percent and 0.1 percent respectively. SoftBank advanced after it agreed to buy US robotics firm Boston Dynamics from Alphabet. The yen remained weak against the dollar after Bank of Japan Governor Haruhiko Kuroda said there is still a long way to go until the inflation target of 2 percent is achieved. The main reason for the delay in reaching the inflation target is subdued inflation expectations, he noted. The Nikkei and Topix lost 0.8 percent and 1.3 percent respectively for the week.
Both the S&P/ASX (up 1.20 points) and All Ordinaries (up 0.67 point) were virtually unchanged Friday. On the week, the former retreated 1.9 percent and the latter was down 1.8 percent. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group climbed while energy stocks such as Origin Energy, Santos, Oil Search and Woodside Petroleum declined. Banks were mixed.
The Kospi was up 0.8 percent Friday and 0.4 percent for the week amid active buying by foreign investors and local institutions. The Sensex edged up 0.2 percent Friday and was virtually unchanged for the week (down 11.23 points).
Looking forward

Central Bank activities

June 13, 14

United States

FOMC Meeting an Monetary Policy Announcement

June 15

UK

Bank of England Monetary Policy Announcement

June 16

Japan

Bank of Japan Monetary Policy Announcement

The following indicators will be released this week…

Europe

June 12

Italy

Industrial Production (April)

June 13

Germany

ZEW Survey (June)

UK

Consumer Price Index (May)

Producer Price Index (May)

June 14

Eurozone

Industrial Production (April)

UK

Labour Market Report (May)

June 15

Eurozone

Merchandise Trade Balance (April)

UK

Retail Sales (May)

June 16

Eurozone

Harmonized Index of Consumer Prices (May final)

Asia Pacific

June 12

Japan

Producer Price Index (May)

Machine Orders (April)

June 14

China

Industrial Production (May)

Retail Sales (May)

June 15`

Australia

Labour Force Survey (May)

New Zealand

Gross Domestic Product (Q1.2017)

Americas

June 13

United States

Producer Price Index (May)

June 14

United States

Consumer Price Index (May)

Retail Sales (May)

Business Inventories (April)

June 15

Canada

Manufacturing Sales (April)

United States

Initial Unemployment Claims (week ending prior Saturday)

Import/Export Prices (May)

Empire State Survey (June)

Philadelphia Fed Survey (June)

Industrial Production (May)

June 16

United States

Housing Starts (May)

Consumer Sentiment (June preliminary)

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]