On 04 July, 2017 – Most markets were subdued in thin trading
US markets were closed for the Fourth of July holiday. North Korea’s missile test weighed on European and Asian markets.
Europe
European stocks edged lower on Tuesday, with the region’s benchmark pulling back from its biggest rally in two months, as North Korea’s latest missile launch weighed on investors’ risk appetite. The Stoxx Europe 600 index and Germany’s DAX 30 index fell 0.3% each. The UK’s FTSE 100 index also slid 0.3%, largely due to pressure from oil companies and banks, while France’s CAC 40 lost 0.4%.
Traditional safe-haven assets such as gold, which gained 0.3%, benefited from the geopolitical uncertainty. Meanwhile, shares in payments processor Worldpay Group surged as the company confirmed that it has been approached by Vantiv and J.P. Morgan Chase about possible takeovers. German payments-processing company Wirecard and French payments-services provider Worldline also advanced strongly. Meanwhile, shares in oil producer BP slid, while Royal Dutch Shell was roughly flat.
In economic news, producer prices in the eurozone fell more than expected in May, down 0.4% on a month-on-month basis, as against analyst expectations of a 0.2% decline. Growth in the UK construction sector slowed in June, with the construction Purchasing Managers’ Index falling to 54.8 from 56 in May. In Sweden, the Riksbank said it’s now “less likely” to lower interest rates as inflation has been higher than expected. That means that the central bank, which has long maintained its cautious stance, has now joined the European Central Bank and Bank of England in signalling an end to accommodative monetary policies.
Asia Pacific
Asian share markets were subdued on Wednesday morning due to geopolitical tensions stemming from Korea’s missile test.
North Korean state media reported that the country had successfully test-launched an intercontinental ballistic missile, an advance in its attempt to threaten the US and regional rivals with a nuclear weapon. In retaliation, South Korean and US troops fired missiles into the waters off South Korea to show their deep strike precision capability.
Asian markets remained muted given the Independence Day holiday in the US, though minutes of the US Federal Reserve’s last meeting, due later in the day, could provide some impetus. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.1%, Japan’s Nikkei eased 0.5%, but South Korea’s main index managed to hold steady.
In economic news, China’s services sector grew at a slower pace in June as new orders slumped, signalling renewed pressure on businesses following a pickup in May and pointing to a weakening outlook for the economy. The Caixin/Markit services Purchasing Managers’ Index (PMI) for China dropped to 51.6 in June, from 52.8 in May. The June figure marks the second-lowest business activity level for service providers in over a year. Caixin’s composite manufacturing and services PMI, also released on Wednesday, fell to 51.1 in June from 51.5 in May, signalling the lowest overall growth momentum since June 2016.
Looking forward
Central Bank activities
July 5
United States
FOMC Minutes Published
The following indicators will be released this week…
Europe
July 5
Eurozone
Composite & Services PMI (June)
Germany
Composite & Services PMI (June)
France
Composite & Services PMI (June)
UK
Services PMI (June)
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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