Stocks ended lower on Friday but advanced for the week US markets

Transcription

1 26 September, 2016 Stocks ended lower on Friday but advanced for the week Trading was subdued as investors waited for the FOMC and Bank of Japan monetary policy decisions. US markets After rallying the previous two days, stocks retreated Friday. The Dow Jones industrials were down 0.7 percent while the Nasdaq and S&P both lost 0.6 percent. However, on the week, the Dow added 0.8 percent while the Nasdaq and S&P were both 1.2 percent higher. Profit taking contributed to some of the weakness after mid-week gains. A sharp pullback by the price of crude oil also weighed on the markets. The price of crude oil was under pressure after Bloomberg reported Saudi Arabia does not expect an output agreement to stabilize the market in talks in Algiers this week. Houghton Mifflin Harcourt was lower after the publishing company announced the resignation of its President and Chief Executive Officer. Finish Line dropped even though the athletic footwear and apparel retailer reported second quarter earnings that met expectations on better than expected sales. Twitter jumped after reports said the firm moved closer to being sold. Facebook shares fell after The Wall Street Journal reported that the company was overstating the length of time its users were watching its video ads, raising concerns that a portion of Facebook s ad revenue may be at risk. Yahoo stock declined after the company said that the data of 500 million users had been stolen by a foreign agent, much more than the company previously acknowledged. While Yahoo has agreed to sell most of its assets to Verizon Communications, there were concerns that the revelation might cause Verizon to go back to the negotiation table. Endo International jumped after the drug maker announced a new chief executive. Apple retreated on speculation of lower iphone 7 sales outside the US. Dallas Fed President Robert Kaplan said the monetary authority can afford to be patient in removing accommodation, while his counterpart in Boston, Eric Rosengren, said the failure to get back to a strategy of gradual rate increases may threaten the economic rebound. These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 45 US cents to US$1, Copper futures were up 0.3 percent to US$2.20. WTI spot crude was down US$1.84 to US$ Dated Brent spot crude was down US$1.76 to US$ The US dollar was up against the yen, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the euro. The Dollar Index was up 0.2 percent. The yield on US Treasury 30 year bond edged up 1 basis point to 2.35 percent while the yield on the 10 year note was unchanged at 1.62 percent.

2 European markets European stocks were modestly lower Friday on profit taking after Thursday s rally. Weak economic data also put downward pressure on the stock indices. The CAC declined 0.5 percent while both the DAX and SMI were 0.4 percent lower. The FTSE was virtually unchanged (down 1.97 points). For the week, the FTSE added 3.0 percent, the CAC jumped 2.6 percent, the DAX increased 3.4 percent and the SMI was 1.8 percent higher. RWE dropped after the utility set the price range for an initial public offering of its Innogy SE green energy unit at 32 to 36 per share. E.ON also was lower on news that it is paying a total of 3.1 million after it missed appointments and then failed to compensate customers. Deutsche Bank and Commerzbank declined along with SociétéGénérale, BNP Paribas, Crédit Agricole, Royal Bank of Scotland, Standard Chartered and Lloyds Banking Group. Total dropped but Technip gained. Polymetal International sank after two private equity investors announced they would sell an aggregate of up to 26 million existing ordinary shares in the miner. Indivior plunged after thirty-five US states and the District of Columbia filed a civil complaint against the British drug firm alleging violations of state and federal antitrust and consumer protection laws. Novartis slid in Zurich despite its cancer drug Zykadia showing positive trial results in a Phase III clinical study. Persimmon was up on a broker upgrade. Shares in Bellway, Barratt Developments and Berkeley advanced. Eurozone flash composite output index slipped to 52.6 in September from 52.9 in August. Germany s composite output index dropped to a 16-month low of 52.7 in September from 53.3 in August. The French economy contracted in the second quarter on weak household spending and investment. Gross domestic product declined 0.1 percent from the first quarter, when it advanced 0.7 percent. Asia Pacific Markets Stocks were mixed Friday despite encouraging data from China and Japan. The yen fluctuated even though there were repeated warnings of intervention by Japanese officials. Crude oil prices slid in Asian deals after two days of strong gains amid skepticism over this week s meeting of the Organization of the Petroleum Exporting Countries. The Shanghai Composite retreated 0.3 percent as property stocks declined after recent sharp gains. The Hang Seng index lost 0.3 percent. On the week, the Shanghai Composite was up 1.0 percent and the Hang Seng was 1.5 percent higher. Japanese shares fell modestly thanks to a firmer yen and profit taking. Investors paid little attention the September flash manufacturing PMI that indicated the manufacturing sector expanded for the first time in seven months. The Nikkei and Topix slipped 0.3 percent and 0.2 percent respectively. On the week, the indices were up 1.4 percent and 2.9 percent respectively. Japanese markets were closed two days during the week. Financials led declines after sharp gains on Wednesday. Banks including Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Financial along with Dai-ichi Live Insurance and Nomura Holdings retreated. Automakers Honda, Mazda and Toyota also declined reflecting the yen's gains in late-day trading.

3 The S&P/ASX was up 1.1 percent while the All Ordinaries added 1.0 percent. On the week, the former was up 2.5 percent while the latter added 2.3 percent. Financials advanced once again, as investors continued to respond positively to the monetary policy decisions from the Bank of Japan and the U.S. Federal Reserve. The big four banks were higher. Rio Tinto, BHP Billiton and Iluka Resources rallied. Goldminers Evolution and Newcrest retreated as gold prices slipped in early Asian deals on a firmer dollar. The Kospi added 0.2 percent and was up 2.7 percent on the week. The Sensex lost 0.4 percent Friday but added 0.2 percent on the week. Looking forward The following indicators will be released this week... Europe Sep 26 Germany Ifo Survey (September) Sep 27 Eurozone M3 Money Supply (August) Sep 29 Germany Unemployment Rate (September) Eurozone EC Business & Consumer Sentiment (September final) Sep 30 Eurozone Harmonized Index of Consumer Prices (September flash) Eurozone Unemployment Rate (August) Germany Retail Sales (August) France Consumption of Manufactured Goods (July, August) UK Gross Domestic Product (Q final) Asia/Pacific Sep 29 Japan Retail Sales (August) Sep 30 Japan Consumer Price Index (August) Unemployment (August) Household Spending (August) Industrial Production (August) Americas Sep 26 United States New Home Sales (August) Sep 27 United States Consumer Confidence (September) Sep 28 United States Durable Goods Orders (August) Sep 29 United States Initial Unemployment Claims (week ending prior Saturday) Gross Domestic Product (Q final) Pending Home Sales (August) Sep 30 Canada Monthly Gross Domestic Product (July) Industrial Product Price Index (August) United States Personal Income and Spending (August) Chicago PMI (September) Consumer Sentiment (September)

4 Global Stock Markets North America End Daily Percent Change Index 2015 Sep 22 Sep 23 Change Daily 2016 Yr/Yr United States Dow NASDAQ S&P Canada S&P/TSX Comp Europe UK FTSE France CAC Germany XETRA DAX Italy MIB Spain Ibex Sweden OMX Stockholm Switzerland SMI Asia/Pacific Australia All Ordinaries Japan Nikkei * Topix * Hong Kong Hang Seng S. Korea Kospi Singapore STI China Shanghai Comp Taiwan TAIEX India Sensex n.a. *Market closed Data Source Haver Analytics Bond markets 10-Yr Govt Bonds Closing Yield Change Yield (bp) US 1.62% 0 UK 0.73% 2 Germany -0.08% 1 Japan -0.05% -2 Australia 1.99% -4

5 Currencies and commodities Currency Sep 22 Sep 23 Change (%) Japanese yen % Australian dollar % Yuan % Euro % British pound % Swiss franc % Canadian dollar % Commodities Sep 23 Change Brent Spot $ % Gold (PM fixing) $ 1, $ (0.45) Thompson-Reuters/ Jeffreys Commodity index %