On 05 September, 2017 – US stocks tumbled on heightened geopolitical concerns

Stocks were mixed elsewhere.
United States
Stocks moved sharply lower Tuesday after returning from the long Labor Day holiday in the US. The Dow Jones industrials tumbled 1.1 percent, the S&P lost 0.8 percent and the Nasdaq declined 0.9 percent. The declines partly reflected geopolitical concerns following news North Korea conducted a major nuclear test on Sunday. The administration condemned the nuclear test. Congress returned from its August vacation and traders kept an eye on developments there given the heavy load of business on Congress’ agenda in September. Lawmakers are under pressure to raise the debt ceiling and pass a government spending bill before deadlines at the end of the month.
Financials tumbled along with chemical, networking, and semiconductor stocks while oil service and gold stocks advanced. Goldman Sachs, JPMorgan and Bank of America declined. Aerospace stocks were rattled by United Technologies’ $23 billion deal to buy avionics maker Rockwell Collins. United Technologies was down along with Boeing. Rockwell Collins however was higher. Insmed more than doubled after the company said its drug for a rare lung disorder met the main goal in a late-stage study. Another major hurricane may hit the US — Hurricane Irma — sending insurers down. Heritage Insurance Holdings tumbled. Universal Insurance Holdings also tumbled. Travelers and Progressive were down after falling last week.
Factory orders in July declined 3.3 percent on the month but were up 4.2 percent from a year ago. However, core capital goods orders (nondefense ex-air) were revised to a 1.0 percent gain in June and a 2 tenths upward revision to core shipments, now at 1.2 percent. These numbers point to accelerating strength for third-quarter business investment.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.45 to US$1,335.55. Copper futures were up 0.3 percent to US$3.13. WTI spot crude was up US$1.29 to US$48.58. Dated Brent spot crude was up 85 US cents to US$53.19. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 9 basis points to 2.69 percent while the yield on the 10 year note was down 10 basis points to 2.07 percent.
European markets
Most European stock indices were lower Tuesday. Investors were in a nervous mood due to the escalating tensions between the United States and North Korea. However, traders were encouraged by some activity on the M&A front. The DAX advanced 0.2 percent while the SMI edged up 0.1 percent. The FTSE and CAC were down 0.5 percent and 0.3 percent respectively.
Volkswagen rallied on reports that it has put the €1.5 billion sale of Ducati motorcycles on hold temporarily. Merck KGaA jumped after announcing that it is preparing strategic options for its consumer health business, including a potential full or partial sale of the business as well as strategic partnerships. TalkTalk Telecom rose after The Financial Times said the company is exploring an exit from its mobile operations. Fresnillo declined while Randgold Resources edged higher.
Aveva Group soared after the engineering software firm agreed to a takeover offer from France’s Schneider Electric. Shares of Schneider Electric rose in Paris. Reckitt Benckiser Group was lower after the company confirmed that four of its senior executives are leaving. Admiral Group was down on a broker downgrade. Vifor, Richemont, ABB and Sonova gained in Zurich. Nestlé and Novartis were also higher. Credit Suisse, UBS, Swiss Life, Swiss Re and Bâloise declined. HSBC, Barclays, Standard Chartered and Lloyds all ended lower.
July Eurozone retail sales declined a monthly 0.3 percent after increasing 0.6 percent in July thanks to a fall in food sales. August Eurozone composite PMI reading was 55.7, matching July’s reading. The UK service sector expanded at the slowest pace in almost a year in August as subdued client demand and heightened uncertainty about the domestic economic outlook weighed on business activity. The August services PMI reading was 53.2, down from 53.8 in July.
Asia Pacific
Stock indices were mixed Tuesday. Japanese stocks retreated to a one week low after reports that the government is drafting a plan to bring thousands of South Korea-based nationals to safety in the event of a military conflict with North Korea.
The Shanghai Composite added 0.1 percent after the Caixin services PMI rose to 52.7 from 51.5 in July as new business orders picked up. The Hang Seng was up 1.09 points.
The Nikkei was down 0.6 percent and the Topix declined 0.8 percent as the yen extended gains. Fast Retailing declined after same store sales were lower at Uniqlo Japan. Bitcoin-related stocks such as Infoteria and Remixpoint were lower after China banned and deemed illegal the practice of raising funds through launches of token-based digital currencies. Japan’s services PMI continued to expand in August, although at a slower pace with the latest reading of 51.6, down from 52.0 in July.
Both the S&P/ASX and All Ordinaries edged up 0.1 percent Tuesday. The Reserve Bank kept its official cash rate on hold at 1.5 percent for the 13th month in a row, citing signs of a housing market slowdown. Miners BHP Billiton, Fortescue Metals and Rio Tinto were higher along with energy major Santos and Beach Energy.
The Kospi slipped 0.1 percent in relatively thin trading. The Sensex advanced 0.3 percent in choppy trading.
Looking forward
Australia reports second quarter gross domestic product. Germany posts July manufacturing orders. The US and Canada release July international trade data. The Bank of Canada announces its monetary policy decision. In the US, August ISM nonmanufacturing index will be released. The Federal Reserve’s Beige Book will be published in preparation for its September 19 and 20 FOMC meeting. Global services and composite PMIs will be reported.

*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]