On 06 September, 2017 – Global stocks were mixed — European and Asian stocks were mostly lower

US stocks rebounded after a debt ceiling agreement was reached.
United States
US stocks climbed Wednesday, fueled by energy and financial shares and helped by news of an agreement to extend the debt limit. US stocks gained and gold dropped following reports that US President Donald Trump reached an agreement with Democratic congressional leaders on a short-term debt limit extension. Fears that Congress would fail to raise the debt ceiling have weighed on markets in recent weeks, increasing the risk-off appetite amid a slew of other geopolitical concerns. The Dow Jones industrials were up 0.2 percent and S&P and Nasdaq increased 0.3 percent each.
Fed Vice Chair Stanley Fischer resigned as chairman of the Federal Reserve effective in mid-October, potentially accelerating Trump’s opportunity to reshape the direction of the central bank.
Financials climbed 0.6 percent a day after their largest one-day drop since mid-May. AT&T and Verizon retreated after T-Mobile US said it will offer a free subscription to video streaming service Netflix with its unlimited data family plans. Newell Brands shares fell after the Sharpie maker slashed its profit outlook for 2017. Francesca’s Holdings dropped after its profit forecast fell below estimates. Gap rallied after the retailer said it will shift focus to growth opportunities, including improved online shopping options and new stores for its fastest-growing brands while also closing underperforming Banana Republic and Gap stores. Gains for oil majors Exxon Mobil and Chevron supported the S&P and the Dow.
The Federal Reserve published its Beige Book in preparation for its FOMC meeting which will be held on September 19 and 20. The report, which is prepared by a rotation of the 12 District Banks, offers anecdotal evidence on the health of the US economy. Once again the Fed found that economic activity increased at a “modest to moderate pace” across all districts in July and August.
While the information included was primarily collected before Harvey made landfall on the Gulf Coast, the report found that many companies in the affected areas were closed due the flooding, and a fifth of the oil and natural gas production in the region was taken offline. It said that activity in the energy and natural resources sector has been “generally positive prior to shutdowns arising from Hurricane Harvey”. It noted that Harvey created “broad disruptions to economic activity along the Gulf Coast in the Dallas and Atlanta Districts, although it was too soon to gauge the full extent of the impact”.
Overall inflation was described as no better than modest as increases in input costs were only showing limited pass through to selling prices. Warnings of tight conditions in the labor market continue with worker shortages cited as well as higher wages in several of the 12 districts. Nevertheless job growth itself is described as slowing. Consumer spending gets a limited upgrade to rising. Housing was described as strengthening with home prices getting a lift from low inventories.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.30 to US$1,337.85. Copper futures were up 0.8 percent to US$3.15. WTI spot crude was up 49 US cents to US$49.15. Dated Brent spot crude was up 85 US cents to US$54.23. The US dollar was up against the yen, euro and the Swiss franc. It was virtually unchanged against the pound and the Australian dollar. The currency declined against the Canadian dollar. The Dollar Index was virtually unchanged on the day. The yield on US Treasury 30 year bond was up 3 basis points to 2.72 percent while the yield on the 10 year note was up 4 basis points to 2.10 percent.
European markets
European stocks were mixed Wednesday. Traders remained cautious given the geopolitical tensions between North Korea and the United States. Investors were also waiting for the European Central Bank’s policy announcement on Thursday. Traders are also concerned over the potential impact that Hurricane Irma could have on the US following closely on the heels of the devastating flooding caused by Hurricane Harvey in Texas. The FTSE was down 0.3 percent and the SMI slipped 0.1 percent. The CAC and DAX added 0.3 percent and 0.7 percent respectively.
Shares of insurance companies were under pressure following the devastating flooding caused by Hurricane Harvey in Texas and residents in Florida bracing for Hurricane Irma. Swiss Re and Zurich declined on US hurricane concerns. Baloise also slid. Daimler rallied on speculation of a change in its corporate structure. BMW, Volkswagen, Renault and Peugeot also advanced. Fiat was higher. In London, Barratt Developments tumbled after the homebuilder provided a cautious outlook, saying it would “carefully” monitor Brexit’s impact on the housing market.
Berkeley Group Holdings also declined after warning over the impact of Brexit uncertainty on London’s property market. Royal Mail declined after reports that the Communications Workers Union will vote on industrial action. Micro Focus jumped after posting improved third-quarter results for the newly-acquired software business of Hewlett Packard Enterprises. Richemont gained on a broker upgrade while Swatch retreated.
July German factory orders declined a monthly 0.7 percent on weak domestic demand in contrast to a revised 0.9 percent increase in June.
Asia Pacific
Most Asian stock indices declined Wednesday as the continuing tensions between the US and North Korea persisted. Investors watched Hurricane Irma which was bearing down on the Caribbean islands and Florida, just days after Harvey disrupted refineries along the Texas coast. Investors also were waiting for Thursday’s monetary policy decision from the European Central Bank.
The Nikkei slipped 0.1 percent while the Topix added 0.1 percent as the US dollar edged lower against the yen to hover near a 4-1/2-month low. Japan Post Holdings and Recruit Holdings jumped after Nikkei said it will add these stocks to the Nikkei share average. At the same time, Hokuetsu Kishu Paper and Meidensha tumbled after the index provider said it would drop them from the index. Toyota and Nissan both declined.
Both the All Ordinaries and the S&P/ASX declined on renewed geopolitical tensions after a top North Korean diplomat warned that his country is ready to send “more gift packages” to the United States. Investors ignored the gross domestic product data. Second quarter GDP was up 0.8 percent on the quarter and 1.8 percent from the same quarter a year ago. Commonwealth Bank of Australia, which is facing a class-action suit over a money-laundering scandal, was lower along with the other three big banks. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group eked out modest gains.
The Shanghai Composite was up 1.07 points while the Hang Seng retreated 0.5 percent. The Kospi was down 0.3 percent amid selling by foreign investors as concerns over North Korean provocations continued to spur demand for safe-haven assets. The Sensex dropped 0.5 percent.
Looking forward
Australia releases data for July retail sales and merchandise trade. Germany posts July industrial production. France reports July merchandise trade the Eurozone reports final second quarter gross domestic product. The European Central Bank announces its monetary policy decision. In the US, second quarter productivity and costs and the weekly EIA petroleum and natural gas reports, initial jobless claims and money supply and Fed balance sheet will be released.

*Note — all releases are listed in local time.

Source: Fidelity

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