On 18 August, 2017 – Shares retreated globally Friday as they continued Thursday’s selloff
Investors sought safe havens thanks to US political concerns and the terrorist attack in Spain.
United States
Stocks declined Friday as the rally triggered by the firing of Donald Trump’s chief strategist Stephen Bannon proved short-lived. Trading was choppy with the averages bouncing above and below the unchanged mark. The Dow Jones industrials were down 0.4 percent to a two and a half week low. The S&P lost 0.2 percent to end the day at its lowest closing level in six weeks. The Nasdaq slipped 0.1 percent to its weakest close since July 11.
On the week, the three indices declined, primarily thanks to Thursday’s selloff. The Dow was down 0.8 percent while both the S&P and Nasdaq were 0.6 percent lower. Concerns about the administration’s ability to implement the President’s agenda continued to weigh on traders along with Thursday’s terrorist attack in Barcelona.
The preliminary August consumer sentiment report was largely ignored. The preliminary reading jumped to 97.6 from the July final of 93.4. According to the University of Michigan, consumer confidence rose in the first half of August to its highest level since January due to a more positive outlook for the overall economy as well as more favorable personal financial prospects. However, the University said the fallout from last weekend’s violent events in Charlottesville, Virginia, is likely to reverse the improvement in economic expectations recorded across all political affiliations.
Foot Locker tumbled after its earnings failed to meet expectations on profit and sales. The drop, its largest decline since 2008, also weighed on competitor Finish Line. Utility companies, viewed as bond proxies for stock investors, were among the best performers.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$10.65 to US$1,295.80. Copper futures were virtually unchanged at US$2.96. WTI spot crude was up US$1.42 to US$48.51. Dated Brent spot crude was up US$1.69 to US$52.72. The US dollar was down against the yen, euro, and the Canadian and Australian dollars. The currency was unchanged against the pound and up against the Swiss franc. The Dollar Index was down 0.3 percent. The yields on the US Treasury 30 year bond and the 10 year note were unchanged at 2.78 percent and 2.19 percent respectively.
Europe
Shares retreated Friday, extending Thursday’s losses. Investors fled to safe havens after sentiment was negatively affected by a deadly terror attack in Spain. Travel and leisure stocks were under heavy pressure following the attack. Investors also remained concerned that US President Trump will be unable to implement the tax reforms and infrastructure programs that were promised during the election. The FTSE was down 0.9 percent, the CAC declined 0.6 percent, the DAX lost 0.3 percent and the SMI was 0.8 percent lower. However, The FTSE, CAC and DAX still managed to gain on the week. The FTSE added 0.2 percent, the CAC was 1.1 percent higher and the DAX was up 1.3 percent. The SMI retreated 0.1 percent.
Deutsche Lufthansa advanced — it is in talks to buy a majority of insolvent airline Air Berlin’s assets. Air France-KLM and British Airways owner International Consolidated Airlines declined along with easyJet and Ryanair Holdings. InterContinental Hotels Group and Carnival were lower. Roche and Novartis declined. Nestlé also retreated.
Randgold Resources was up as investors sought safety in assets such as precious metals miners and the price of gold rose for the third straight day thanks to the political turmoil in the United States. British American Tobacco and Diageo declined and financials also added pressure with HSBC, Lloyds and Barclays edging lower. BP declined with the price of crude. Spanish airport company declined after Thursday’s attack. Melia Hotels and IAG’s Madrid-listed shares were down.
Asia Pacific
Stocks retreated Friday as the ongoing political turmoil in Washington and a deadly attack in Spain made investors risk averse.
The Shanghai Composite was up 0.29 point while the Hang Seng was down 1.1 percent. On the week, the former was up 1.9 percent and the latter added 0.6 percent.
Japanese shares hit three and a half month lows as the yen strengthened amid US political worries, the deadly terror attack in Spain and renewed concerns about US-North Korea tensions. Investors were cautious ahead of the South Korean and US joint military exercises scheduled to start next week. Domestic concerns weighed as well. While Prime Minister Shinzo Abe’s support rose this month after he reshuffled his cabinet, investors continued to gauge the impact of his support levels on the yen. The Nikkei was down 1.2 percent and the Topix was 1.1 percent lower. On the week, the Nikkei and Topix lost 1.3 percent and 1.2 percent respectively. Exporters and financials underperformed, with Sony, Panasonic, Mitsubishi UFJ Financial Group and T&D Holdings declining.
The S&P/ASX declined 0.6 percent and the All Ordinaries was down 0.5 percent led down by banks on concerns over Trump’s stalled legislative agenda and a move by the government to strengthen its money laundering laws. On the week, both were down 1.0 percent. The four big banks were down along with miners Fortescue Metals Group and BHP as base metal prices edged down from multi-year highs.
The Kospi edged down 0.1 percent Friday paring early losses as foreign investors turned buyers towards the end of the session. However the index was 1.7 percent higher on the week. The Sensex was down 0.9 percent but up 1.0 percent for the week.
Looking forward
Central Bank activities
Aug 24 to 26
United States
Federal Reserve Jackson Hole Economic Policy Symposium
The following indicators will be released this week…
Europe
Aug 22
Germany
ZEW Survey (August)
Aug 23
Eurozone
Manufacturing, Services & Composite PMI (August flash)
Germany
Manufacturing, Services & Composite PMI (August flash)
France
Manufacturing, Services & Composite PMI (August flash)
Aug 24
UK
Gross Domestic Product (Q2.2017 second estimate)
Aug 25
Germany
Gross Domestic Product (Q2.2017 revised)
Ifo Survey (August)
Asia Pacific
Aug 24
Japan
Manufacturing PMI (August flash)
Aug 25
Japan
Consumer Price Index (July)
Americas
Aug 22
Canada
Retail Sales (June)
Aug 23
United States
New Home Sales (July)
Aug 24
United States
Initial Unemployment Claims (week ending prior Saturday)
Manufacturing, Services & Composite PMI (August flash)
Existing Home Sales (July)
Aug 25
United States
Durable Goods Orders (July)
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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