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Asian Markets at Close Report

European Markets at Close Report

May 31, 2017

Summary of Asia, Europe,and U.S. Stock Markets Closings' Reports on May 31, 2017

 
ASIA
 
Cheang Ming

Kazuhiro Nogi | AFP | Getty Images
Stocks in Asia closed the session mixed after cautious trade on Wednesday as the British pound fell on new poll results ahead of the U.K. election and on better than expected official PMI figures out of China.
Ahead of an election next week, U.K. Prime Minister Theresa May's Conservative Party could lose 20 of the seats it currently holds while the Labour Party could gain 30 additional seats, according to the poll by YouGov. This would result in a loss of the Tories' overall majority at parliament, The Times newspaper reported.
The British pound slipped to as low as $1.2788, close to a one-month low reached last Friday, following the news compared to a high of $1.2867 in the overnight session. The pound recovered slightly to trade at $1.2806 at 2:50 p.m. HK/SIN.
In Asia, the Nikkei 225 edged down by 0.14 percent or 27.28 points to close at 19,650.57 while the Kospi reversed earlier losses to finish 0.16 percent or 3.7 points higher at 2,347.38.
The S&P/ASX 200 ended the session 0.12 percent or 6.714 points higher at 5,724.6.
Chinese markets were mixed after the long weekend. The Hang Seng Index traded flat at 3:00 p.m. HK/SIN. Meanwhile, the Shanghai Composite edged higher by 0.24 percent or 7.4218 points to close at 3,117.4805 and the Shenzhen Composite dipped 0.1 percent or 1.8089 points to close at 1,808.3019.
This was just after the release of official Purchasing Managers' Index (PMI) for the month of May, which came in at 51.2 compared to the 51.0 estimated.
The Australian dollar, which tends to be sensitive to resource demand from China, trended higher after the news to trade around $0.7474. The Aussie later declined to trade at $0.7449 against the dollar at 2:52 p.m. HK/SIN.
"It's a tiny ... beat, but to be honest, not too much to be read into these numbers. It's business as usual. I think at the moment, the market is perhaps taking a slightly ... less serious view of the Chinese output numbers," Bank of Singapore CIO Johan Jooste told CNBC.
Political developments at the end of the year and China's attempt to contain leverage are bigger market drivers than PMIs at the moment, Jooste added.
Meanwhile, the overnight yuan borrowing rate in Hong Kong rose to its highest level in five months, Reuters said.
Japan industrial production for April rose 4 percent from last month, compared to the 4.3 percent estimated by a Reuters poll. The yen was slightly stronger, with the greenback fetching as little as 110.78 yen after the news compared to around 110.84 earlier. Dollar/yen traded at 110.97 at 2:55 p.m. HK/SIN.
South Korea's LG Display reversed losses in early trade to gain 1.72 percent. Shares of the LG Display had jumped in the last session on news the company was "reviewing" an increase in its investments in flexible organic light-emitting diode (OLED) screen production, the Financial Times reported.
Shares of Mitsubishi Motor were higher by 0.84 percent to close at 718 yen a stock. In a note, Citi said it was upgrading its call on Mitsubishi Motor shares to "Neutral," following Nissan outlining its medium-term plans. Nissan has a controlling stake in Mitsubishi.
Citi analysts Arifumi Yoshida, Yingqiu Zhang and Manabu Hagiwara said there was an increased possibility of a "specific roadmap for long-term synergies with Mitsubishi Motor being delineated."
The dollar index traded at 97.439 at 2:52 p.m. HK/SIN.
"The dollar index remains under pressure despite drifting to a seven-night high overnight. The shallow retracement can be partly explained by lower liquidity due to (the) three-day weekend in the U.S. and weakness in the euro, neither of which are compelling reasons to buy the dollar," ThinkMarkets Senior Market Analyst Matt Simpson said in a Wednesday morning note.
Brent crude futures tumbled 0.93 percent to trade at $51.37 a barrel while U.S. crude fell 1.07 percent at $49.13. Prices of Brent crude had fallen almost 1 percent in the overnight session on worries about an oversupply in the oil markets.
After the long weekend, Wall Street closed lower on the release of key economic data stateside.

EUROPE 
Silvia Amaro, Sam Meredith

European markets closed lower on Wednesday amid political uncertainty and a sharper than expected fall in euro zone inflation data.



 


FTSE FTSE 7519.95
-6.56 -0.09% 1922417999
DAX DAX 12615.06
16.38 0.13% 140248165
CAC CAC 5283.63
-22.31 -0.42% 148119949
IBEX 35 IBEX 35 Idx 10880.00
3.10 0.03% 740246355 

The pan-European Stoxx 600 ended down 0.1 percent with sectors and major bourses pointing in opposite directions.
Basic resources stocks were the worst performing amid a significant decline in oil prices. Reports surfaced on Wednesday suggesting Libyan output was recovering from oilfield technical issues and subsequently fueled concerns among traders that OPEC-led production cuts would reduce a global supply overhang.
Brent crude was trading at around $49.22 a barrel as European markets closed on Wednesday, down 3.7 percent, while U.S. crude was around $47.80 a barrel, down 3.75 percent.
Elsewhere, Europe's telecoms sector was among the best performing on Wednesday on reports of mergers and acquisitions. Cellnex Telecom had hit the top of Europe's benchmark, jumping by over 4 percent following media reports that American Tower Corp was considering buying the Spanish operator. Ericsson ended 4.5 percent higher on Wednesday after Cevian Capital decided to buy more than 5 percent of the Swedish telecom gear maker.
The FTSE 100 closed slightly lower on Wednesday, as sterling pared losses on political concerns. A YouGov poll published late Tuesday projected U.K. Prime Minister Theresa May could fall short of winning an overall majority at next week's general election.Meanwhile, in the U.S, the Dow Jones industrial average and broader S&P 500 index both continued slightly lower on Wednesday but remained on course for monthly gains.

Banks in focus

In Italy, the banking sector continued to see pressure as reports indicated that Banca Popolare di Vicenza and Veneto Banca might be wound down. Furthermore, the uncertainty surrounding the upcoming election to choose a new government is also sending the sector into negative territory. Ubi Banca closed 3.2 percent lower and Banco Bpm dropped 2.6 percent.

What would you buy for $1,000?

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Inflation drops

Flash euro zone inflation data indicated a small drop from April due to a reduction in energy prices. Inflation slipped to 1.4 percent in May, down from 1.9 percent in April and consequently boosted investor expectations that the European Central Bank (ECB) would remain fairly dovish at its meeting next week.
The euro inched up against the dollar on Wednesday and was trading at $1.1235 shortly after the European close.
Meanwhile, France and Germany want to agree on a new common corporation tax system before elections for the French National Assembly next month, the German Finance Minister Wolfgang Schaeuble said on Tuesday, according to Reuters.

U.S. 
 
Fred Imbert

U.S. equities fell on Wednesday, the last trading day of May, as a drop in the financials sector pressured stocks.
The Dow Jones industrial average fell about 20 points, with Goldman Sachs contributing the most losses. The S&P 500 fell 0.05 percent, with financials falling 0.8 percent to lead decliners.
The Nasdaq composite dropped 0.1 percent.
Crit Thomas, global market strategist at Touchstone Investments, said there are concerns the Federal Reserve may not be able to raise interest rates twice more, as it had previously forecast.
"A lot of people assumed they'd raise in June and September, but now I'm hearing it may be June and December. A lot of things are getting pushed back," Thomas said. Also, "Treasurys are suggesting a much different environment" than stocks.
Treasury yields have fallen sharply from where they began trading in 2017. On Wednesday, the benchmark 10-year yield hovered near 2.19 percent; it began the year near 2.5 percent.
Komal Sri-Kumar, president of Sri-Kumar Global Strategies, said the pullback in equities on Wednesday and Tuesday is reflective of "a confluence of unfavorable factors."
"There is little indication that the US economy will reach its 3% growth this year, reform of health care and taxes remains a dream, and there are no projects as destinations to accept a surge in infrastructure spending," he said. "Inflation figures continue to run well below the Fed's targets as we found out earlier this week."
Also raising concerns about inflation was the Fed's Beige Book — a summary of economic conditions in the U.S. by Federal Reserve district — which revealed "some districts noted falling prices for certain final goods, including groceries, apparel and autos." The Beige Book was released Wednesday afternoon.
A trader works on the floor of the New York Stock Exchange (NYSE).
Lucas Jackson | Reuters
A trader works on the floor of the New York Stock Exchange (NYSE).
Nevertheless, the Dow, S&P and Nasdaq were all on track to post monthly gains. The tech-heavy Nasdaq gained 2.5 in May and notched a seven-month winning streak, its longest since 2013. The index also hit a record high shortly after the open.
"We're getting to the point where money keeps chasing money," said Quincy Krosby, chief market strategist at Prudential Financial. "You have technology doing well, but you also have utilities doing well."
Companies in the utility sector sell essentials such as electricity and water, and are typically seen as safer investments. At the close on Wednesday, utilities had risen 10.1 percent year to date. Those gains, however, pale in comparison to tech's performance in 2017, rising 19.6 percent.
"What's interesting about this market is this is all happening amid a backdrop of uncertainty around the Trump agenda," said Prudential's Krosby.
The prospects for the Trump administration implementing pro-growth policies —such as tax reform, deregulation and infrastructure spending — have come into question recently as President Donald Trump's White House tries to put out several fires.
Dow, S&P and Nasdaq in May

Source: FactSet
Trump returned from his first trip overseas to deal with the fallout from reports that Jared Kushner, his son-in-law and a top adviser, discussed the potential to set up a "secret and secure communications channel" between the Trump transition team and the Kremlin.
Multiple news organizations also reported Wednesday Trump was expected to pull out of the Paris climate agreement. In a tweet, Trump said he would announce his decision on the accord "over the next few days."
"The longer the [Trump] agenda drags out, the more it will have a negative impact on the market," said Jeff Carbone, managing partner of Cornerstone Financial Partners.
The Dow Jones industrial average declined 42 points, or 0.2 percent, to 20,986, with Goldman Sachs leading decliners and Pfizer outperfoming.
The S&P 500 dipped 5 points, or 0.2 percent, to trade at 2,407, with financials leading seven sectors lower and utilities the best performer.
The Nasdaq pulled back 17 points, or 0.29 percent, to 6,185.
About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 410 million and a composite volume of 1.969 billion in afternoon trade.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.8.
On tap this week:
Wednesday
2:00 p.m. Beige book
7:30 p.m. San Francisco Fed President John Williams
Thursday
May vehicle sales
Earnings: Dollar General, Lululemon Athletica, VMWare, Broadcom, Workday, Five Below, Yext, Cooper Cos, Express, Ciena, Mobileye
8:15 a.m. ADP employment
8:30 a.m. Initial claims
8:30 a.m. Productivity and costs
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
Friday
Earnings: Hovnanian
8:30 a.m. Employment
8:30 a.m. International trade