On 12 June, 2017 – A slow start to a busy week
Stocks tumbled globally thanks to falling technology shares.
United States
US stocks continued to decline Monday as technology companies continued to decline for a second day. The Dow Jones industrials were down 0.2 percent, the S&P slipped .01 percent and the Nasdaq lost 0.5 percent. Technology stocks have outperformed the rest of the market in 2017 and were trading close to all-time highs before Friday’s precipitous drop. Investors were also waiting for the Federal Reserve policy announcement on Wednesday when a 25 basis point increase to the fed funds rate is expected.
Apple, Alphabet, Facebook, Amazon and Microsoft sank. Other 2017 top performers such as Activision Blizzard, Netflix and Skyworks Solutions also tumbled. General Electric rallied on news Immelt will step down after 16 years running the company. John Flannery, the head of GE’s health care division, will take over the post in August. Immelt will remain GE’s chairman until the end of this year. Exxon Mobil and Chevron advanced. Both AT&T and Verizon gained.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 15 US cents to US$1,266.40. Copper futures were down 1.25 percent to US$2.62. WTI spot crude was up 25 US cents to US$46.08. Dated Brent spot crude was up 14 US cents to US$48.29. The US dollar was down against the yen, euro and the Canadian and Australian dollars. The currency declined against the pound and was virtually unchanged against the Swiss franc. The Dollar Index was virtually unchanged. The yields on both the US Treasury 30 year bond and 10 year note were up 1 basis point to 2.87 percent and 2.21 percent respectively.
Europe
Stocks retreated — continued UK political uncertainty weighed on investor sentiment. The results of the French election had little impact on trading. A weak performance by technology stocks also contributed to the negative mood. The sell-off in technology shares was caused by reports that Apple’s next iPhones won’t include support for gigabit LTE speeds. Apple also suffered a rare analyst downgrade. The FTSE was down 0.2 percent, the CAC declined 1.1 percent, the DAX slid 1.0 percent and the SMI was 0.4 percent lower.
Political uncertainty persisted as the UK election shock left Conservative party in disarray, making the Brexit negotiations more complex. Credit agency Moody’s said that the inconclusive election result “will complicate and probably delay Brexit negotiations,” which were planned to begin next Monday.
Vonovia declined after the apartment owner announced that 49.86 percent of its shareholders chose scrip dividend instead of the cash dividend. Dassault Systèmes dropped after it agreed to acquire a Dutch company that specialized in marine and offshore engineering software. Rio Tinto retreated after saying its wholly-owned Australian subsidiary, Coal & Allied Industries, has received a takeover proposal from Glencore. Both Nestlé and Novartis declined. However Roche gained as did Swiss Re. Dutch Shell and chemicals supplier Johnson Matthey advanced. Vodafone climbed on a broker upgrade. Smurfit Kappa, Antofagasta, Standard Chartered and BP all rallied.
Italy’s industrial production unexpectedly declined a monthly 0.4 percent in April, offsetting the 0.4 percent rise in March. This was the first decline in three months.
Asia Pacific
Stocks were down as investors waited for the Federal Reserve and the Banks of England and Japan policy announcements later in the week. French President Emmanuel Macron’s party won an overwhelming majority in the first round of parliamentary elections, helping limit regional losses to some extent. Markets in Australia were closed for a holiday.
The Shanghai Composite declined 0.6 percent with worries over tighter credit and slowing growth weighing on markets. The Hang Sent tumbled 1.2 percent.
The Nikkei lost 0.5 percent while the Topix slipped 0.11 point. April data for core machinery orders, a popular proxy of capital spending, dropped a much more than expected 3.1 percent amid a slowdown in construction and public sector investment. Technology stocks were among the worst hit, with Tokyo Electron, Advantest and Alps Electric dropping following reports that Apple’s next iPhones won’t include support for gigabit LTE speeds. Toshiba soared after the company sealed a deal to cap its liability for one of its troubled reactor projects.
Seoul stocks tumbled 1.0 percent as foreign investors and local institutions locked in profits following Friday’s decline in the US. The Sensex declined 0.5 percent prior to the release of April industrial output and May consumer prices to be released later in the day.
Looking forward
The UK posts May producer and consumer price indices. Germany reports ZEW survey. In the US, May producer prices along with the NFIB small business index will be released. The Federal Reserve begins its two day FOMC meeting.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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