Investors were waiting for the FOMC announcement during the coming week.
United States
All three major US equities indices ended the week with new record highs and weekly gains. They discounted lukewarm data and geopolitical tremors to end the week on an upbeat note. The Dow Jones industrials and Nasdaq added 0.3 percent on the day while the S&P was 0.2 percent higher. The S&P crossed the 2,500 for the first time ever. That brought its weekly gain to 1.6 percent — its best five-day run since January. The Dow and Nasdaq added a weekly 2.2 percent and 1.4 percent respectively. Telecoms, industrials and financials led the way, while the healthcare sector ended in the red.
Shares advanced despite weaker-than-expected economic data released Friday morning, a terrorist attack in London and the latest North Korea missile launch Thursday evening. Rather, investors looked ahead to Wednesday’s FOMC meeting and Fed Chair Janet Yellen’s press conference.
August retail sales slipped a monthly 0.2 percent after increasing a downwardly revised 0.3 percent in July. The decline was attributed to hurricane Harvey at the end of the month. The unexpected decline largely reflected a sharp drop in motor vehicle and parts sales. Excluding auto sales, retail sales rose by 0.2 percent in August after climbing by 0.4 percent in July. August industrial production unexpectedly dropped 0.9 percent after climbing an upwardly revised 0.3 percent in July. The Fed said hurricane Harvey is estimated to have reduced the rate of change in total output by roughly three-quarters of a percentage point. September preliminary consumer sentiment indicated concerns about the impact of both Harvey and Irma.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$1.70 to US$1,322.85. Copper futures were down 0.3 percent to US$2.95. WTI spot crude was unchanged at US$49.89. Dated Brent spot crude was up 15 US cents to US$55.62. The US dollar was down against most of its major counterparts including the euro, pound, Swiss franc and the Canadian and Australian dollars. The currency was up against the yen. The Dollar Index was down 0.2 percent. The yield on the US Treasury 30 year bond was unchanged at 2.77 percent and 10 year note was up 1 basis point basis point to 2.20 percent.
European markets
European stocks retreated Friday thanks to geopolitical concerns and a disappointing US economic data. The FTSE tumbled 1.1 percent as the pound hit a two-month high against the euro and a one-year high against the US dollar following hawkish comments from Bank of England’s monetary policy committee member Gertjan Vlieghe, who had been its strongest advocate of ultra-low borrowing costs. He said rates might need to rise in the coming months. Weakness in the UK also occurred after an explosion aboard a subway train during rush hour Friday morning in an apparent terrorist attack.
Ongoing geopolitical tensions also weighed on the markets amid news North Korea launched an unidentified missile over Japan and into the Pacific Ocean. The CAC and DAX both slipped 0.2 percent and the SMI was 0.5 percent lower. However, for the week, only the FTSE declined (down 2.2 percent) while the CAC, DAX and SMI added 2.0 percent, 1.7 percent and 1.3 percent respectively.
AXA was lower after a media report that the French insurer is reviewing options for its European asset management unit. Carnival declined on a broker downgrade. H&M rallied after reporting a 5 percent increase in third-quarter sales. Financials including HSBC, Lloyds, Barclays, Prudential and Standard Chartered tumbled. Miners and energy stocks also came under pressure after the price of copper edged lower and oil prices slid. Miners Glencore, Rio Tinto and BHP Billiton declined along with BP and Royal Dutch Shell. Moeller-Maersk declined on a broker downgrade.
Asia Pacific
Shares were mixed in the Asia Pacific region on Friday. Market reaction to the latest North Korean missile test was muted, with investors largely shrugging off news that a missile launched by Pyongyang had once again overflown Japan.
The Nikkei and Topix added 0.5 percent and 0.4 percent respectively. The yen was slightly firmer in Asia trading. On the week, the indices were up 3.3 percent and 2.8 percent respectively. Most exporters gained. Showa Denko KK, Tokai Carbon, Mitsubishi Motors, Astellas Pharma, Nikon and Tokyo Electron gained. Hitachi and Honda also were higher. Astellas Pharma advanced after the company and Pfizer said on Thursday their blockbuster prostate cancer drug met the main goal of a key study that tested it for treating the disease in its early stages. Shares related to bitcoin fell. The cryptocurrency remained volatile after it was reported that China plans to close all bitcoin exchanges by the end of September.
China’s Shanghai Composite declined 0.5 percent on worries the economy is losing some momentum. The Hang Seng edged up 0.1 percent. For the week, the Shanghai Composite was down 0.3 percent and the Hang Seng was 0.5 percent higher. Fixed-asset investment, a key growth driver for China, grew 7.8 percent in the January to August period from a year earlier — the weakest pace in nearly 18 years.
The S&P/ASX was down 0.8 percent while the All Ordinaries lost 0.7 percent. On the week, the S&P/ASX was up 0.4 percent and the All Ordinaries was 0.3 percent higher. Shares were lower Friday as the base metals selloff continued following the release of disappointing Chinese economic data. Banks also succumbed to selling pressure on renewed geopolitical tensions after North Korea launched another missile over Japan. Miners BHP Billiton, Fortescue Metals Group and Rio Tinto declined. Banks ANZ, Westpac, Commonwealth and NAB retreated.
The Kospi added 0.4 percent, shrugging off North Korea’s latest missile launch. For the week, the index was 1.8 percent higher. The Sensex edged up 0.1 percent Friday and was 1.8 percent higher on the week.
Looking forward

Central Bank activities

Sep 20

United States

FOMC Monetary Policy Announcement

 
 

Fed Chair Janet Yellen Press Conference

Sep 20, 21
Japan

Bank of Japan Monetary Policy Meeting & Announcement

The following indicators will be released this week…

Europe

Sep 18

Eurozone

Harmonized Index of Consumer Prices (August final)

Sep 19

Germany

ZEW Survey (September)

Sep 20

Germany

Producer Price Index (August)

Sep 21

Eurozone

EC Consumer Confidence (September flash)

Sep 22
Eurozone

Manufacturing, Services & Composite PMIs (September flash)

Germany

Manufacturing, Services & Composite PMIs (September flash)

France

Manufacturing, Services & Composite PMIs (September flash)

France

Gross Domestic Product (Q2. 2017 final)

Asia Pacific

Sep 20
Japan

Merchandise Trade Balance (August)

Sep 21

New Zealand

Gross Domestic Product (Q2.2017)

Americas

Sep 19

Canada

Manufacturing Sales (July)

 

United States

Housing Starts (August)

Import/Export Prices (August)

Sep 20

United States

Existing Home Sales (August)

Sep 21
United States

Initial Unemployment Claims (week ending prior Saturday)

Philadelphia Fed Survey (September)

Sep 22
Canada

Consumer Price Index (August)

 

Retail Sales (July)

United States

Manufacturing, Services & Composite PMIs (September flash)

*Note — all releases are listed in local time.

Source: Fidelity

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