Global stock indices were mixed Tuesday as investors waited for key international meetings later in the week

  • 06 Jun 2018

    Global stock indices were mixed Tuesday as investors waited for key international meetings later in the week

    US stocks edged higher Tuesday as technology shares extended recent gains while US Treasury yields fell on safe-haven buying after Italy’s new prime minister outlined new economic policies that could add to the nation’s debt. The Dow Jones industrials and S&P were up 0.1 percent each while the Nasdaq was 0.4 percent higher. Nasdaq once again closed at a record high.

    US markets

    US stocks edged higher Tuesday as technology shares extended recent gains while US Treasury yields fell on safe-haven buying after Italy’s new prime minister outlined new economic policies that could add to the nation’s debt. The Dow Jones industrials and S&P were up 0.1 percent each while the Nasdaq was 0.4 percent higher. Nasdaq once again closed at a record high.

    Earlier in the day, stocks were lower after White House economic adviser Larry Kudlow said President Donald Trump may seek separate talks with Canada and Mexico in a bid to get individual trade deals with the two countries. Mexico said it will impose tariffs of 15 percent to 25 percent on US steel products and on some agricultural goods from pork to potatoes, in retaliation against Trump’s own metals tariffs.

    The “FAANG” stocks — Facebook, Amazon, Apple, Netflix and Alphabet — advanced. Twitter advanced after an announcement that the company would join the benchmark S&P. Netflix rose after entering the S&P 100 index. Shares of US packaged food companies fell on Mexico's tariffs with Kellogg and General Mills retreating. AK Steel and US Steel were down. Bank of America and Citibank declined. Amgen slid.

    The ISM said its non-manufacturing index climbed to 58.6 in May from 56.8 in April.

    These data reflect observations at 4:00 PM US ET. Gold was up US$3.70 to US$1,301.00. Copper futures were up 2.49 percent to US$3.21. WTI spot crude was up 58 US cents to US$65.33. Dated Brent spot crude was down 26 US cents to US$75.03. The US dollar was up against the Canadian and Australian dollars. It retreated against the yen, euro, pound and Swiss franc. The Dollar Index was down 0.1 percent. The yield on the US Treasury 30 year bond was down 2 basis points to 3.07 percent while the 10 year note was down 3 basis points to 2.91 percent.

    European markets

    European indices tumbled Tuesday. The FTSE lost 0.7 percent, the CAC was down 0.2 percent and the SMI retreated 1.1 percent. Only the DAX managed to gain 0.1 percent. Traders were cautious ahead of the G-7 summit in Canada on June 8 and 9 along with the June 12 summit in Singapore between US President Donald Trump and North Korean leader Kim Jong Un.

    Vonovia rose after the residential property firm has again offered to its shareholders a scrip dividend as an alternative option to the standard cash dividend. Société Générale declined after announcing sale of its entire stake in Self Trade Bank. Sky gained prior to the government's verdict on the proposed takeover of the company by 21st Century Fox. Royal Bank of Scotland Group dropped after the UK government said it would cut its holding in the bank to 62.4 percent from 70.1 percent.

    WPP was lower after a broker downgrade. Philips Electronics was lower after it announced that it has signed an agreement to acquire EPD Solutions for an upfront cash consideration of €250 million and deferred milestone dependent payments. Saipem rose on a broker upgrade. In Zurich, Roche, Novartis, Nestlé and Bank UBS, Credit Suisse and Julius Baer lost 1.6 percent all retreated. SAP and Infineon advanced.

    Eurozone private sector expanded at the slowest pace in one-and-a-half years. The composite PMI dropped to 54.1 from 55.1 in April — the lowest reading since November 2016. Eurozone April retail sales inched up a monthly 0.1 percent after increasing 0.4 percent in March. UK May services PMI climbed to 54.0, up from 52.8 in April.

    Asia Pacific Markets

    Asian stock indices were mixed Tuesday as weak commodity prices pulled down resource stocks. Investors were waiting for the G-7 summit in Canada later this week along with the June 12 summit in Singapore between the US and North Korea.

    The Shanghai Composite was up 0.7 percent while the Hang Seng was 0.3 percent higher. May Caixin Services PMI reading was 52.9, unchanged from the previous month.

    The Nikkei was up 0.3 percent while the Topix inched 0.27 point higher. The yen edged lower against the US dollar and data on services sector activity and household spending painted a mixed picture of the economy. April household spending was down 1.3 percent on the year while May services PMI declined to 51.0 from 52.5 in April. Tokyo Electron and Advantest gained while Japan Communications soared after Japan's financial watchdog said it would support a fintech experiment project by a consortium including the company. Sharp retreated on reports that it is in talks to finalize a deal to buy Toshiba's personal computer business for around ¥5 billion.

    Both the S&P/ASX and All Ordinaries were down 0.5 percent as iron ore and oil prices fell. As anticipated, the Reserve Bank of Australia left its policy interest rate unchanged at 1.5 percent where it has been since August 2016. The services sector continued to expand with the AIG reading of 59.0, up from 55.2 in April. The overnight decline in oil prices weighed on the energy sector, with Oil Search, Santos and Origin Energy declining. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group were also lower.

    The Kospi was up 0.2 percent led by construction and casinos on hopes that a US/North Korea summit may offer new opportunities. The Sensex declined 0.3 percent as investors waited for the Reserve Bank of India’s monetary policy decision.

    Looking forward

    Australia posts first quarter gross domestic product. The Reserve Bank of India announces its monetary policy decision. The US and Canada release their respective international trade data for April.

    Bond markets
    10-Yr Govt Bonds Closing Yield Change Yield (bp)
    US 2.91% -3
    UK 1.28% -1
    Germany 0.36% -5
    Japan 0.04% 0
    Australia 2.72% -1

    Source — Bloomberg

    Currencies and commodities
    Currency June 4 June 5Change (%)
    Japanese yen 109.8200 109.7100 0.1%
    Australian dollar 0.7649 0.7611 -0.5%
    Yuan 6.4080 6.4061 0.0%
    Euro 1.1696 1.1713 0.1%
    British pound 1.3314 1.3388 0.6%
    Swiss franc 0.9884 0.9846 0.4%
    Canadian dollar 0.7733 0.7705 -0.4%

    Source — Bloomberg 

    CommoditiesJune 5Change
    Brent Spot $75.03 -0.35%
    Gold $1,301.00 $3.70
    Thompson-Reuters/ Jeffreys Commodity index 203.85 0.17%

    Source — Bloomberg