On 22 June, 2017 – Global stocks steadied but were little changed
Crude oil edged higher taking pressure off of energy company stocks.
United States
Stocks were little changed in the US on Thursday. The Dow Jones industrials and the S&P each slipped 0.1 percent while the Nasdaq was virtually unchanged (up 2.73 points). Healthcare stocks advanced after Republicans unveiled a bill to repeal Obamacare and oil prices rose from multi-month lows and relieved some of the pressure on energy stocks. A recent surge in biotechnology shares showed no signs of slowing. With the end of the second quarter just a week away, investors are beginning to look forward to the July 4 holiday followed by the beginning of the earnings season.
Drug companies Johnson & Johnson and Gilead rallied. Envision Healthcare, which provides physician and ambulance services, jumped and HCA Healthcare, which owns hospitals around the country, advanced. Aetna and UnitedHealth Group gained. Insurers that specialize in Medicaid also gained, with Centene and Molina Healthcare rising. Barnes & Noble surged on better than expected fourth quarter results. Bed Bath & Beyond said its earnings in the first quarter were $75.28 million or $0.53 per share and down from $122.62 million or $0.80 per share, a year ago. Revenue was $2.74 billion, equal to the mark posted in the same period last year.
Oracle advanced after the company forecast an upbeat current-quarter profit. Accenture declined after the consulting and outsourcing services provider trimmed its annual revenue forecast. Tesla was up after the company said it is in exploratory talks with the Shanghai municipal government to establish an electric vehicle manufacturing plant in China.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$8.30 to US$1,250.80. Copper futures were down 0.3 percent to US$2.61. WTI spot crude was up 19 US cents to US$42.72. Dated Brent spot crude was up 38 US cents to US$45.20. The US dollar was up against the euro and the Australian dollar. The currency declined against the yen, pound, Swiss franc and the Canadian dollar. The Dollar Index was up unchanged. The yields on both the US Treasury 30 year bond and 10 year note were down 1 basis point to 2.72 percent and 2.15 percent respectively.
Europe
European shares were mixed Thursday following declines the day before. Energy stocks continued to struggle following the recent collapse in crude oil prices. Miners were also under pressure due to falling copper prices. The FTSE slipped 0.1 percent but the CAC, DAX and SMI were up 0.1 percent, 0.2 percent and 0.7 percent respectively.
According to the European Central Bank’s latest economic bulletin, the Eurozone’s growth momentum is expected to continue in the second quarter thanks to domestic demand. The ECB also said that there are signs of a build-up of pipeline inflationary pressures. The euro area expanded a quarterly 0.6 percent in the first three months of the year after 0.5 percent in the fourth quarter of 2016. It noted that the economy has now expanded for four consecutive years with growth increasingly resilient as it has broadened across sectors and countries.
Fresenius Medical Care and Fresenius advanced along with Merck KGaA. Both Commerzbank and Deutsche Bank retreated. In Paris, Vinci was down on a Bloomberg report that the construction firm is weighing an offer for a controlling stake in Paris airport operator ADP. Imagination Technologies Group soared after the company, which is in a dispute with Apple, has put itself up for sale. Shire rallied after it secured FDA approval for its new long-acting ADHD drug. GlaxoSmithKline and AstraZeneca also were higher. Novartis helped to propel the SMI higher. The company released successful study data for a product candidate for the treatment of cardiac artery disease. Roche also advanced but Nestlé, retreated. Swatch and Richemont both were higher. Royal Dutch Shell and BP ended marginally higher.
French manufacturing sentiment index fell to 108.0 in June from 109.0 in May. The reading was above its long-term average of 100. UK total order books strengthened to a near three-decade high in June. The Industrial Trends Survey from the Confederation of British Industry said that total order books rose to plus 16 percent in June, the highest since August 1988. At the same time, the export order book balance was plus 13 percent, the strongest since June 1995.
Asia Pacific
Stocks in the Asia Pacific region were mixed as oil prices steadied in Asian deals after tumbling overnight on worries over whether OPEC-led output cuts would be able to rein in the supply glut.
The Shanghai Composite gave up early gains to end 0.3 percent lower as the initial euphoria over MSCI’s decision to include China’s so-called A-shares in its emerging-markets index faded. The Hang Seng slipped 0.1 percent.
Both the Nikkei and Topix edged down 0.1 percent as the US dollar inched downward from a three-week high against the yen. Takata shares plunged after reports that the struggling airbag maker will seek bankruptcy protection from creditors on Monday. According to Bank of Japan Deputy Governor Kikuo Iwata, there is still a long way to go before achieving the inflation target of 2 percent. Further, risks have continued to be skewed to the downside, particularly those regarding developments in overseas economies and Japan’s inflation expectations, he told business leaders in Aomori.
Both the S&P/ASX and All Ordinaries rebounded 0.7 percent — iron ore futures rose and banks bounced back after two days of losses. Rio Tinto rose to snap a seven-day losing streak, while BHP Billiton and Fortescue Metals Group gained on the day. Gold miners Northern Star, Regis Resources and Evolution Mining rallied after gold prices rose for a second day, supported by an easing dollar and flattening US Treasury yield curve. The big four banks rose despite the South Australian government imposing its own bank levy, which will help it raise $370 million over the next four years.
The Kospi added 0.5 percent led by gains in large-cap stocks. The Sensex was virtually unchanged (up 7.10 points).
Looking forward
Flash June PMIs will be released for Japan, France, Germany, the Eurozone and the US. France will post final first quarter GDP. Canada reports consumer prices for May. The US releases May new home sales.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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