On 11 July, 2017 – Stocks were mixed as investors waited to hear what Fed Chair Yellen has to say
Investors were also shy about taking positions with earnings season looming
United States
US stocks began the day little changed, with investors waiting for Fed Chair remarks later this week in addition to a heavy load of economic data. However, shares tumbled after emails referred to a top Russian government prosecutor offering the Republican Trump campaign damaging information about Democratic rival Hillary Clinton. However, stocks recovered in afternoon trading. The Dow Jones industrials were virtually unchanged (up 0.62 point), the S&P slipped 0.1 percent and the Nasdaq added 0.3 percent.
U.S. Senate Republican leader Mitch McConnell announced a two-week delay in the Senate’s August recess to provide more time to work on legislation and approve nominees. Uncertainty over whether the Trump administration would be able to push through its agenda this year have weighed on the market, especially after repeated delays in getting a new health care bill passed.
Snap declined after the lead underwriter downgraded the stock and raised concerns about the social media company’s ability to compete against rival Instagram. Energy stocks advanced along with crude prices. Western Digital advanced after the disk drive maker said it has matched outstanding bids for Toshiba’s semiconductor unit.
On Tuesday, Federal Reserve Governor Lael Brainard hinted she is unconvinced that another rate increase is currently warranted. She said that she will want to monitor inflation developments carefully. She added, “If the data continue to confirm a strong labor market and firming economic activity, I believe it would be appropriate soon to commence the gradual and predictable process of allowing the balance sheet to run off.” Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday he finds it hard to believe that the US economy is in danger of overheating when wage growth is so low.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 85 US cents to US$1,211.05. Copper futures were up 1.0 percent to US$2.67. WTI spot crude was up 68 US cents to US$45.08. Dated Brent spot crude was up 65 US cents to US$47.53. The US dollar was up against the pound and the Canadian dollar. The currency declined against the euro, yen, Swiss franc and the Australian dollar. The Dollar Index was down 0.3 percent. The yields on both the US Treasury 30 year bond and on the 10 year note were down 1 basis point to 2.92 percent and 2.36 percent respectively.
Europe
European stocks were lower across the board. The markets got off to a positive start but pared early gains before settling into negative territory. Traders were cautious before Federal Reserve Chair Janet Yellen’s semiannual testimony before Congress which begins on Wednesday before the House Financial Services Committee and before the Senate Banking Committee on Thursday. Her comments could have a significant impact on the outlook for interest rates going forward. The FTSE and CAC lost 0.5 percent, the DAX slipped 0.1 percent and the SMI was 0.8 percent lower.
JCDecaux advanced after the outdoor advertising firm received a 10-year exclusive advertising concession for the Sao Paulo Guarulhos international airport. Air Liquide slid after acquiring an equity stake in start-up firm Diabeloop. In London, Pearson tumbled after the company announced an agreement to sell a 22 percent stake in the Penguin Random House Venture. Vodafone, British American Tobacco, AstraZeneca and Diageo as well as financials Prudential and Lloyds Bank retreated. However, mining firms Glencore, Anglo American and Rio Tinto gained.
Retailer Marks & Spencer Group dropped after reporting a decline in quarterly sales on a like-for-like basis, weighed down by its troubled clothing business. Carillion plunged to extend Monday’s sell-off after a warning on revenues and debts. TUI advanced after selling its remaining 8.5 million shares in Hapag-Lloyd for €244.4 million. Adecco declined on a broker downgrade. Sanofi was lower after it said it would buy vaccines biotechnology firm Protein Sciences for an upfront payment of $650 million.
Italy’s industrial production rebounded in May and climbed a monthly 0.7 percent after dropped 0.5 percent in April. According to data published by the British Retail Consortium and KPMG, UK retail sales increased in June as consumers spent more on summer clothing and beauty products. Retail sales grew 1.2 percent on a like-for-like basis in June from the previous year.
Asia Pacific
Most Asian stock indices advanced following Monday’s gains in the US and Europe. Investors are waiting for the onset of corporate earnings season as well as Federal Reserve Chair Janet Yellen’s semi-annual testimony before Congress on Wednesday and Thursday.
The Shanghai Composite was down 0.3 percent as small-cap stocks were sold on concerns over tight liquidity conditions. The Hang Seng however, added 1.5 percent.
The Nikkei was up 0.6 percent and the Topix added 0.7 percent to finish near two-week highs as the US dollar hit a four-month high against the yen, helping bolster exporters’ shares. Tech shares also advanced following the Nasdaq’s gain on Monday in the US. Toyota, Panasonic and Sony rallied. Suzuki Motor dropped after Reuters reported that Dutch prosecutors will investigate possible misuse of vehicle emissions software by the automaker. SoftBank advanced along with Hitachi and Komatsu.
Both the S&P/ASX and All Ordinaries edged up 0.1 percent in thin trading. BHP Billiton, Rio Tinto and Fortescue Metals Group were higher after iron ore futures on the Dalian Commodity Exchange rose for a third straight day. The big four banks gained. Energy stocks were mixed even though oil held gains above $44 a barrel.
May home loans advanced for the first time in four months in May and National Australia Bank’s monthly business survey showed a marginal improvement in June. But the ANZ- Roy Morgan consumer confidence index weakened during the week ended July 9.
The Kospi added 0.6 percent thanks to higher technology shares on expectations of better earnings. The Sensex edged up 0.1 percent.
Looking forward
Japan posts June producer price index and May tertiary index. The UK releases June labour market report. The eurozone releases May industrial production. India releases June consumer prices and May industrial production. The Bank of Canada announces its monetary policy decision and publishes its Monetary Policy Report. In the US, Fed Chair Janet Yellen gives the first half of her semi-annual Congressional testimony to the House of Representatives Financial Services Committee. The Federal Reserve publishes its Beige Book in preparation for its meeting on July 25 and 26.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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