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Asian Markets at Close Report

European Markets at Close Report

May 17, 2017

Asia, Europe and U.S. Stock Markets closings' Summaries on May 17, 2017

ASIA

Kenan Machado

A falling U.S. dollar pressured stocks in Japan and cast broader concern over equity markets in the region Wednesday, as turmoil in Washington continued to raise doubts about the Trump administration’s ability to make progress on policy.
“There is a bit of nervousness about the political situation in the U.S. and whether that represents a greater instability and concern for markets,” said Ric Spooner, chief market analyst at CMC Markets.
The New York Times reported that Trump in February had asked James Comey, then the director of the Federal Bureau of Investigation, to stop his investigation into links between Trump’s associates and Russian officials.
S&P 500 futures ESM7, -1.39%  were down 0.6%. That is notable as the index on a closing basis hasn’t logged a daily move of at least 0.5% in three weeks, the longest-such streak since 1969. The WSJ Dollar Index BUXX, -0.67% meanwhile, fell to its lowest level since November.
The New York Times report comes after the Washington Post’s report Monday that U.S. President Donald Trump shared sensitive intelligence obtained from a close ally with Russian officials at the White House last week. That has proved to be a major distraction for his legislative agenda, which includes plans to overhaul the health-care system and tax code.
In addition, Trump faces questions about why he fired Comey as the head of the FBI.
With that as a backdrop, the Japanese yen USDJPY, -1.91%   has been the biggest mover of the past 24 hours, rising a full yen against the dollar after pulling back for much of the past month.
As the dollar slid below ¥112.50 and 10-year Treasury yields fell to 2.3%, the Nikkei NIK, -0.53% fell 0.5%. Life insurers, who are large investors in bonds, need higher yields to help cover claims. Life insurance stocks often fall when yields drop. Dai-ichi Life 8750, -3.95%  slumped 4% and T&D Holdings 8795, -3.59%   dropped 3.6%.
Australia’s S&P/ASX 200 XJO, -1.10%  slid 1.1% as the country’s largest banks, which collectively make up about a quarter of the index by weighting, dropped about 1.5%. Prime Minister Malcolm Turnbull said a proposed levy on the country’s five biggest banks is “a reasonable requirement” and they can easily afford it.
The tax proposal, released last week as part of the government’s budget plan, has pressured the sector’s shares. On Wednesday, Turnbull said if the banks “seek to jack up or increase interest rates or charges,” the country’s competition regulator “will be watching very carefully.”


Oil futures CLM7, +0.74%  had declined as well on Wednesday, despite the dollar’s weakness, and that weighed on Asian equities. Oil prices fell after an industry-group reading showed U.S. crude inventories rose last week, instead of falling as anticipated. U.S. government data due later Wednesday was projected to show a decline.
Taiwan’s benchmark Taiex Y9999, -0.18%  moved down 0.2%. Korea’s Kospi SEU, -0.10%  shed 0.1% and Hong Kong’s Hang Seng HSI, -0.17%  lost 0.2%. All three indexes have been among the region’s best performers this year.
“There is a little bit of profit-taking,” said Frank Benzimra, head of Asia equity strategy at Société Générale. But he expects recent strength seen in companies’ latest financial reports, coupled with continued inflows into regional equities, to sustain gains.

EUROPE


Carla Mozee, Sara Sjolin

European stocks moved sharply lower on Wednesday, with investors rattled by the latest political turmoil in the U.S. that is feared to put President Donald Trump’s pro-growth agenda at risk.
Concerns grew after the New York Times reported that Trump in February asked then-director the Federal Bureau of Investigation, James Comey to stop his investigation into links between Trump’s associates and Russian officials.
The Stoxx Europe 600 index SXXP, -1.20% ) ended Wednesday 1.2% lower at 391.14, marking the biggest one-day percentage loss since Sept. 26, according to FactSet data.


In the U.S., stocks were also a sharply lower, with the Dow Jones Industrial Average DJIA, -1.78% on track for the worst day since September last year.
“Given that the ‘Trump trade’ is one of the main reasons the market has been able to break records of late, it is understandable that the scandal engulfing the U.S. government would be of some concern to investors,” said Spreadex financial analyst Connor Campbell, in a note.
“That’s because this crisis will likely prevent Trump from pushing through the very policies—like his huge infrastructure plans and generous tax cuts—that fueled much of the recent rally any time soon, undermining the basis for the current highs.”
The euro EURUSD, +0.7219%  rose to $1.1138, as the U.S. dollar DXY, -0.75%  lost ground against major rivals. The euro hasn’t traded above $1.11 since around the time of the November U.S. presidential election.
Individual indexes: Germany’s DAX 30 DAX, -1.35% which has notched record closing highs in recent sessions, ended down 1.4% at 12,631.61 for its biggest loss since early November last year.
France’s CAC 40 PX1, -1.63%  declined 1.6% to 5,317.89.
In London, the FTSE 100 UKX, -0.25%  darted between small gains and losses for most of the session, but ended down 0.3% at 7,503.47. Italy’s FTSE MIB I945, -2.31%  dropped 2.3% to 21,283.72, and Spain’s IBEX 35 IBEX, -1.79%  moved down 1.8% to 10,786.10.
Stock movers: Banks posted some of the biggest losses in Wednesday’s selloff. Shares of Deutsche Bank AG DBK, -3.27% DB, -3.27%  fell 3.5%, Banco Popular Español SA POP, -4.16%  gave up 4.2% and BNP Paribas SA BNP, -3.12%  lost 3.1%.
Tullow Oil PLC TLW, +0.89%  shares climbed 0.9% after the oil producer said it struck oil at a well in Kenya’s South Lockihar Basin.
Thyssenkrupp AG shares TKA, +2.75%  jumped 3.1% after Tata Steel Ltd. 500470, +7.67%  moved closer to reaching a final agreement over changes to its U.K. pension liabilities. “As we view a solution on Tata’s pensions as a key step in the process towards a possible deal with Thyssen, we believe this has been good news,” wrote Deutsche Bank analyst Bastian Synagowitz.
British Land shares BLND, -3.34%  were pulled down 3.3% after the U.K. property developer posted a decline in the net value a share of its assets, pressured by falling residential, retail and office real-estate prices.
Ubisoft Entertainment SA UBI, -3.62%  shares fell 3.6% although the maker of the coming “Far Cry 5” videogame posted a rise in full-year profit.

U.S

Dow, S&P 500 notch worst daily tumble in 8 months, as Trump worries rattle Wall Street

The U.S. stock market Wednesday booked its worst daily decline in months, as concerns about President Donald Trump's FBI controversy weighed on investor sentiment. The Dow Jones Industrial Average shed 1.8% at 20,606, its sharpest decline since Sept. 9, according to FactSet data. The S&P 500 index ended off 1.8% at 2,357, also marking its worst daily drop since Sept. 9. Meanwhile, the technology-laden Nasdaq Composite Index coughed up 2.6% at 6,011, its steepest one-day fall since June 24, the day after U.K. citizens voted to exit from the European Union. The downdraft came on a so-called risk-off day for Wall Street, in which haven assets like the 10-year Treasury note [BX: TMUBMUSD10Y] drew bidders and pushed yields, which move inversely to prices, firmly lower. The 10-year Treasury note was off 10 basis points at 2.22%, and gold futures , another flight-to-safety security, settled sharply higher at $1,258.70 an ounce, representing its highest level in May. Weakness came after the New York Times late Tuesday reported that Trump in February asked the then–director of the Federal Bureau of Investigation, James Comey, to stop his investigation into former national-security adviser Michael Flynn. The report cited a memo from Comey. That has raised questions about the president's ability to pursue the pro-market policies whose prospects for implementation have driven stocks to record levels.