Global stocks mixed Friday as focus shifts to shutdown and trade negotiations

  • 11 Feb 2019

    Global stocks mixed Friday as focus shifts to shutdown and trade negotiations

    US stocks were mixed Friday and closed moderately higher on the week ahead of key negotiations this week aimed at preventing another government shutdown and averting a planned increase in tariffs. The Dow finished down 0.3 percent on the day and up 0.2 percent on the week, the S&P rose 0.1 percent on the day and was flat on the week and the Nasdaq advanced 0.1 percent on the day and 0.5 percent on the week.

    US markets

    US stocks were mixed Friday and closed moderately higher on the week ahead of key negotiations this week aimed at preventing another government shutdown and averting a planned increase in tariffs. The Dow finished down 0.3 percent on the day and up 0.2 percent on the week, the S&P rose 0.1 percent on the day and was flat on the week and the Nasdaq advanced 0.1 percent on the day and 0.5 percent on the week.

    Reports suggest that negotiations between the Administration and Congress have stalled over the weekend ahead of this Friday’s deadline for extending government funding. Border security issues remain the primary obstacle to agreement. President Trump’s interim chief of staff, Mick Mulvaney, told reporters that he could not rule out the possibility for another government shutdown and that it remains possible that the President could declare a national emergency to authorise funding for border security measures.

    Canadian labour market data showed very strong jobs growth in January, with employment increasing by 66,800 after a revised increase of 7,800 in December. These gains were concentrated in the service sector, offset by declines in manufacturing, agricultural and construction payrolls. Despite the increase in employment, the unemployment rate rose from 5.6 percent to 5.8 percent in response to a similar increase in the participation rate to 65.6 percent. Wage growth also accelerated from 1.5 percent on the year in December to 1.8 percent in January. Although the Bank of Canada appears to be in no hurry to tighten policy, these data suggest that such a move remains a possibility later in the year if a tight labour market produces sustained upward pressure on inflation.

    These data reflect observations at the close of trading Friday. Gold gained US$4.30 to US$1,318.50 and dated Brent spot crude was up US$0.47 to US$62.10. Currency moves were muted Friday, with the US dollar up moderately against the euro and the Australian dollar, flat against the pound and yuan, and down moderately against the yen, the Swiss franc, and the Canadian dollar. The yield on the US Treasury 30 year bond fell a basis point to 2.98 percent while the 10 year note fell 2 basis points to 2.63 percent.

    European markets

    Major European markets lost ground Friday but were mixed on the week. The FTSE fell 0.3 percent on the day but outperformed other regional indices with an increase of 0.7 percent on the week. The CAC fell 0.5 percent on the day and 1.1 percent on the week, while German shares underperformed, with the DAX dropping 1.0 percent on the day and closing down 2.4 percent on the week.

    Leaders of Italy’s coalition government spoke on the weekend criticizing Italy’s central bank for failing to prevent the collapse of domestic banks and its stock-market regulator for failing to protect small investors. Although the Bank of Italy is independent, the government can veto senior appointments, with the term for one of the bank’s deputy governors scheduled to expire Monday.

    French industrial production data showed a modest rebound in December, with output up 0.8 percent on the month and year-on-year growth improving from a decline of 2.2 percent to a decline of 1.4 percent. Industrial production fell 0.5 percent on the quarter in the three months to December, with PMI survey data suggesting weakness has extended into the new year. Equivalent data for Italy showed industrial production in December fell 0.8 percent on the month, the fourth consecutive decline, and 5.5 percent on the year, the biggest drop since 2012, with output down 1.1 percent on the quarter in the three months to December.

    German trade data were more positive, with the trade surplus widening from €18.8 in November to a six-month high of €19.4 billion in December with an increase in exports of 1.5 percent and an increase in imports of 1.2 percent. In annual terms, Germany’s trade surplus was €227.8 billion in 2018, down 8.1 percent from 2017. Switzerland’s unemployment rate increased from 2.7 percent in December to 2.8 percent in January.

    Asia Pacific Markets

    Markets remained closed in China and Taiwan on Friday for lunar new year holidays, with trading resuming on Monday. Japanese markets sold off sharply Friday and finished the week well down, with the Nikkei losing 2.0 percent on the day and 2.2 percent on the week and the Topix dropping 1.9 percent on the day and 1.6 percent on the week. Australia’s All Ordinaries index fell 0.4 percent on the day but outperformed on the week with a 3.4 percent gain. Trading resumed in Hong Kong on Friday, with the Hang Seng index closing up 0.1 percent on the week.

    US-China trade talks resume in Beijing on Monday and are expected to last until Friday. Chinese trade data for January are also scheduled for release later in the week. The US is set to increase tariffs on Chinese imports from 10 percent to 25 percent at the start of March if no deal is reached.

    Japanese data published Friday showed a modest rebound in year-on-year growth in household spending in December but a solid year-on-year increase in household income. Hong Kong’s PMI survey showed another month of very weak activity in January, with weak orders from mainland China largely attributed to the impact of trade tensions between China and the Untied States.

    Looking forward
    Central Bank activities    
    Feb 12 New Zealand Reserve Bank of New Zealand Monetary Policy Announcement
         
    The following indicators will be released this week...    
    Europe    
    Feb 11 Switzerland Consumer Price Index (January)
      UK Industrial Production (December)
      UK Monthly GDP (December)
    Feb 13 Eurozone Industrial Production (December)
      UK Consumer Price Index (January)
    Feb 14 Eurozone GDP Flash (Fourth Quarter)
      Germany GDP Flash (Fourth Quarter)
    Feb 15 Eurozone Merchandise Trade (December)
      Italy Merchandise Trade (December)
      UK Retail Sales (January)
    Asia Pacific    
    Feb 12 India Industrial Production (December)
    Feb 13 Japan GDP (Fourth Quarter Preliminary)
      Singapore GDP (Fourth Quarter Final)
      New Zealand Retail Trade (Fourth Quarter)
    Feb 14 China Consumer Price Index (January)
    Americas    
    Feb 13 US Consumer Price Index (January)
    Feb 14 Canada Manufacturing Sales (December)
      US Producer Prices (January)
      US Retail Sales (December)
    Feb-15 US Industrial Production (January)
         
    Global Stock Markets
      End2019 DailyPercent Change
     Index2018Feb 7Feb 8ChangeDaily2019Yr/Yr
    North America                
    United States Dow 23327.46 25169.53 25106.33 -63.20 -0.3 7.6 3.8
      NASDAQ 6635.28 7288.35 7298.20 9.85 0.1 10.0 6.2
      S&P 500 2506.85 2706.05 2707.88 1.83 0.1 8.0 3.4
    Canada S&P/TSX Comp 14322.86 15703.36 15633.33 -70.03 -0.4 9.1 4.0
                     
    Europe                
    UK FTSE 100 6728.13 7093.58 7071.18 -22.40 -0.3 5.1 -0.3
    France CAC 4730.69 4985.56 4961.64 -23.92 -0.5 4.9 -2.3
    Germany XETRA DAX 10558.96 11022.02 10906.78 -115.24 -1.0 3.3 -9.9
    Italy MIB 18324.03 19478.32 19351.90 -126.42 -0.6 5.6 -12.7
    Spain Ibex 35 8539.90 8938.30 8856.80 -81.50 -0.9 3.7 -8.1
    Sweden OMX Stockholm 30 1408.74 1529.28 1527.17 -2.11 -0.1 8.4 1.8
    Switzerland SMI 8429.30 9035.90 9003.41 -32.49 -0.4 6.8 3.7
                     
    Asia/Pacific                
    Australia All Ordinaries 5709.44 6159.08 6136.15 -22.93 -0.4 7.5 3.4
    Japan Nikkei 225 20014.77 20751.28 20333.17 -418.11 -2.0 1.6 -4.9
      Topix 1494.09 1569.03 1539.40 -29.63 -1.9 3.0 -11.1
    Hong Kong Hang Seng 25845.70 * 27946.32 * * * -5.3
    S. Korea Kospi 2041.04 2203.42 2177.05 -26.37 -1.2 6.7 -7.9
    Singapore STI 3068.76 3200.64 3202.04 1.40 0.0 4.3 -5.2
    China Shanghai Comp 2493.90 * * * * * *
    Taiwan TAIEX 9727.41 * * * * * *
    India Sensex 30 36068.33 36971.09 36546.48 -424.61 -1.1 1.3 7.5

    Data Source — Haver Analytics

    Bond markets
    10-Yr Govt BondsClosing YieldChange Yield (bp)
    US 2.63% -2
    UK 1.15% -3
    Germany 0.08% -3
    Japan -0.04% -2
    Australia 2.10% -5

    Source — Bloomberg

    Currencies and commodities
    CurrencyFeb 7Feb 8Change (%)
    Japanese yen 109.8500 109.7300 0.1%
    Australian dollar 0.7104 0.7088 -0.2%
    Yuan 6.7451 6.7451 0.0%
    Euro 1.1345 1.1323 -0.2%
    British pound 1.2951 1.2945 0.0%
    Swiss franc 1.0022 1.0005 0.2%
    Canadian dollar 0.7519 0.7531 0.2%

    Source — Bloomberg 

    CommoditiesFeb 8Change
    Brent Spot $62.10 0.76%
    Gold $1,318.50 $4.30
    Thompson-Reuters/ Jeffreys Commodity index 184.98 -0.03%

    Source — Bloomberg