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Asian Markets at Close Report

European Markets at Close Report

May 20, 2017

Europe & U.S. Stock Markets Closings' Reports on May 19, 201



EUROPE 
Carla Mozee

European stocks finished Friday’s session higher, modestly recovering from a selloff spurred by U.S. political drama that dragged major regional benchmarks into the red for the week.
The Stoxx Europe 600 index SXXP, +0.60% ) rose 0.6% to close at 391.51. The move followed the lead of U.S. stocks. U.S. stocks continued to gain ground Friday DJIA, +0.69% SPX, +0.68%  but those major equity indexes were facing a weekly fall.
The pan-European benchmark fell 1% for the week, the first decline in four weeks, FactSet data showed. The drop came as part of a rout in global equities that followed a report that U.S. President Donald Trump tried to stop a Federal Bureau of Investigation probe into links between his associates and Russian officials.
The report fueled questions about the Trump administration’s ability to secure tax cuts, higher fiscal spending and looser regulatory rules pushed by Trump during his election campaign. The prospect of an economic boost from these changes has helped to push stocks world-wide up to records since his election in November.
Read: Here’s how impeachment works—and why Trump is safe for now
“U.S. policy uncertainty is arguably greater than at any time since last November’s elections, but that should not entirely cloud what remains a generally supportive growth backdrop for equity markets, especially in the eurozone,” said Ian Williams, an economist and strategist at Peel Hunt, in a note.
Earnings for European companies rose by an average of 23% during the first quarter, said J.P. Morgan on Thursday. European sales growth of 10% was the strongest globally.
“[First-quarter] earnings delivery was the best in six to seven years, with above-average positive surprises and double-digit growth seen in all the main regions,” said J.P. Morgan equity strategist Emmanuel Cau in a research note. “Top line was particularly strong, helped by higher commodity prices, the pickup in inflation and the rebound in global activity.”
Individual indexes: Germany’s DAX 30 DAX, +0.39% rose 0.4% to end at 12,638.69, and France’s CAC 40 PX1, +0.66%  picked up 0.7% to end at 5,324.40. For the week, the DAX lost 1% and the CAC fell 1.5%.
In London, the FTSE 100 UKX, +0.46%  rose 0.5% to 7,470.71, and Spain’s IBEX 35 IBEX, +1.41%  climbed 1.4% to 10,835.40. The IBEX gave up 0.6% on a weekly basis, but the FTSE 100 managed to swing higher.
The euro EURUSD, +0.9367%  traded at $1.1188, up from $1.1103 late Thursday. The shared currency this week rose above $1.11 for the first time since November, as investors retreated from the U.S. dollar DXY, -0.78%
Stock movers: Banco Popular Español SA shares POP, +9.94% shot up 9.9% after Spanish newspaper El Confidencial reported Banco Santander SA SAN, +1.66%  was preparing to bid for its beleaguered rival.
Hikma Pharmaceuticals PLC HIK, +2.12%  swung higher to end up 2.1%. Shares had dropped during the session after the company lowered its 2017 revenue guidance, citing lower prices at its generics business and a delay in launching a generic version of GlaxoSmithKline’s GSK, +0.58% Advair Diskus asthma drug.
Wirecard AG WDI, +3.98%  climbed 2.9% after Exane and Goldman Sachs each raised price targets on the payment processing services company.
Data: German producer prices rose 3.4%, their strongest annual gain in over five years in April, helped by higher metals prices.
U.S. 
 
Wallace Witkowski, Anora Mahmudova

U.S. stocks finished higher Friday for a second straight session of gains, but closed in negative territory for the week, unable to fully bounce back from sharp losses in the middle of the week sparked by White House drama.
The S&P 500 index SPX, +0.68% closed up 16.01 points, or 0.7%, at 2,381.73, with all of its 11 main sectors trading higher. The industrials and energy sectors led the gains both rising more than 1%.
The Dow Jones Industrial Average DJIA, +0.69%  finished up 141.82 points, or 0.7%, at 20,804.84. Caterpillar Inc. CAT, +2.21% and General Electric Co. GE, +2.07%  led gainers, both closing up more than 2%.
Both the Dow and the S&P turned in a second week of losses as both shed 0.4% for the week.
The Nasdaq Composite Index COMP, +0.47%  gained 28.57 points, or 0.5%, to close at 6,083.70, powered by more than 2% gains in U.S. shares of Baidu Inc. BIDU, +3.47% Nvidia Corp. NVDA, +2.31% and Starbucks Corp. SBUX, +2.57% For the week, the Nasdaq closed down 0.6%.
Markets were rattled earlier this week, with investors succumbing to a drumbeat of negative news stories focused on President Donald Trump and his inner circle’s relationship with Russia.
On Wednesday, the markets reacted to a report that Trump in February asked then-Federal Bureau of Investigation Director James Comey to stop an investigation into Russian interference into the U.S. presidential election, causing some investors to question whether Trump will finish his term. pushing stocks lower and spurring a spike in Wall Street’s most popular gauge of fear.
However, the equity market has displayed an uncanny level of resilience over the past few days, with markets beginning a modest, but steady, rebound on Thursday after Deputy Attorney General Rod Rosenstein appointed former FBI Director Robert Mueller as special counsel to oversee the bureau’s investigation.
On Friday, stocks flirted with recapturing much of their losses but retreated from their best levels, following a report from the New York Times that Trump referred to Comey as a “nutjob” to Russian officials, and a Washington Post article that indicated that a current White House official was a person of interest in the Russia probe.
Read: Why the White House should worry: Special counsels usually result in criminal charges
“Clearly, appointing Mueller was brilliant,” said Diane Jaffee, senior portfolio manager at TCW. “Regardless of who is in office you want the rule of law. You want that the government will prevail in maintaining checks and balances.”
Jaffee said investors have been focusing on the fundamental strength of first-quarter earnings and reports of the economy, which have offered signs of steady, if not robust, growth.
Read: Fed minutes may quell fresh doubts about a June rate increase
Still, investors have increasingly questioned whether President Trump can deliver on his economic stimulus promises amid investigations.
Opinion: Market sentiment during Watergate shows how stocks might react to Trump
“This week political risk has caught up on the market but it’s still unclear whether it has any legs,” wrote Deutsche Bank strategist Jim Reid and research analyst Craig Nicol in a note to clients Friday.
Observers said investors will be closely watching potential developments on the controversy next week. Lawmakers have asked the FBI to turn over the notes Comey said he made from his meetings with Trump by next week, and a congressional hearing on the matter is due to take place, at which the former FBI head has been asked to testify.
Fed speakers: St. Louis Fed President James Bullard questioned the need for a June rate increase, citing a slowdown in the U.S. economy during the first half of the year. Bullard isn’t a voting member of the Fed policy committee this year.
Moving stocks: Deere shares DE, +7.30%  jumped 7.3% after earnings and sales beat Wall Street forecasts. Earnings from Campbell Soup Co. CPB, -2.04%  were below expectations, sending shares down 2%.
Shares of Autodesk Inc. ADSK, +14.69%  rallied nearly 15% as the company said its shift to a subscription-based software model was going well.
Dynegy Inc. shares DYN, +25.62%  soared nearly 26%, and finished at a three-month high after reports that the power producer received a buyout offer from Vistra Energy VST, +1.62%
Also in the retail sector, Ross Stores Inc. ROST, +1.85%  rose 1.9% after earnings and sales met forecasts.
Shares of Foot Locker Inc. FL, -16.65%  slid nearly 17% after weaker-than-expected first-quarter results.
Shares of Under Armour Inc. UAA, +1.11%  snapped a seven-session losing streak, closing up 1.1%
McKesson Corp. MCK, +8.18%  shares rallied 8.2% after the health-care supply chain management company topped earnings expectation late Thursday.
Read: Only two S&P 500 companies passed this sales-and-earnings test
Shares of Applied Materials Inc. AMAT, +0.39%  rose 0.4% after the microchip-materials maker’s results and outlook topped Wall Street estimates late Thursday.
Read: Bill Ackman has ‘something to prove’ after Valeant mistake
Other markets: European stocks SXXP, +0.60%  end higher across the board, and the FTSE 100 index UKX, +0.46% snapped a two-day losing streak. In Asia NIK, +0.19% HSI, +0.15% stocks finished mostly in the green.
The U.S. Dollar Index DXY, -0.78% was flat, and the British pound GBPUSD, +0.7263%  recaptured the $1.30 level it lost late Thursday after a mini “flash crash” that sent it to as low as $1.2888 within seconds.
Read: The pound looks set for ‘significant further upside’ now that it’s regained $1.30
Gold prices GCM7, +0.23%  settled up less than 0.1% at $1,253.60 an ounce, while oil prices added to gains, with West Texas Intermediate crude prices CLM7, +2.39%  settling above the $50-a-barrel mark for the first time in a month.
—Barbara Kollmeyer in Madrid contributed to this article.