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Asian Markets at Close Report

European Markets at Close Report

Jul 12, 2017

Asia , Europe and U.S. Stock Markets' Closing Reports on July 12, 2017:


 ASIA
marketwatch.com
 
Kenan Machado

Technology shares across the Asia-Pacific rose, tracking overnight strength in U.S. tech companies and boosting the region’s equities markets early Tuesday.
Taiwan’s Taiex index Y9999, +0.05% closed up 1.2%, with iPhone lens maker Largan Precision 3008, +2.74%  surging 3.8% and fellow Apple suppliers Hon Hai Precision 2317, +0.00%   and Taiwan Semiconductor 2330, -0.71%   gaining 2.6% and 2.9%, respectively. The three stocks make up 26.5% of the benchmark’s weighting, and the gains come as U.S. tech stocks sent the Nasdaq Composite higher for a second straight session on Monday.
In Japan, index heavyweight and tech investor SoftBank 9984, +1.27% gained 2%, while messaging giant Line 3938, -0.38%   rose 1.4%. The benchmark Nikkei Stock Average NIK, +0.35%  finished up 0.6%, building on Monday’s move past the 20,000-point mark.
A weaker yen against the U.S. dollar also supported the Nikkei, benefiting export-oriented stocks. Hitachi 6501, +1.12% rose 1.6%, and construction-equipment maker Komatsu 6301, -0.09%   gained 1.2%. The dollar-yen pair USDJPY, +0.17%  was last at 114.35, up from 114.06 late Monday.
After recent pullbacks, investors are adding tech stocks to their portfolios at the cost of old-economy stocks, said William Cheung, regional strategy analyst at Kim Eng Securities. However, “they must exercise caution and be selective in picking these stocks,” he said.
In Hong Kong, the Hang Seng Index HSI, +0.64%   gained 1.5% with tech heavyweight Tencent 0700, +1.01% adding 2.5%. However, the Shanghai Composite Index SHCOMP, -0.17%   was down 0.3%, despite a recovery in Chinese metals and coal futures prices.
Weakness began in mainland Chinese markets on Monday after state media reports that the stock market regulator was clamping down on stock buying by fund managers ahead of purchases by their funds.
Outside the tech space, there was caution among traders in Asia ahead of scheduled appearances by U.S. Federal Reserve officials this week. Investors are watching for more cues from the Fed on the pace of interest-rate increases.
“There are no major macro moves, and most of the trading is people moving in and out of sectors,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Fed Gov. Lael Brainard was due to speak in New York on Tuesday, ahead of Chairwoman Janet Yellen’s testimony to congressional committees on Wednesday and Thursday.
Brainard’s speech “is worth mulling over as one of the first Fed views after the data surprise,” said Mizuho Bank analyst Vishnu Varathan, referring to nonfarm-payroll data.
In Asia, analysts say soft inflation data may stay regional central banks’ hands in normalizing interest rates. If the Fed raises rates with Asian central banks unable to do so, regional currencies would move down against the dollar, hurting efforts in the region to move inflation higher, they say.
Elsewhere in the region, Australia’s S&P/ASX 200 XJO, +0.95%   pared early declines to gain 0.1% after ending a three-session losing streak on Monday.
______________________________________________________________________________

EUROPE 
 
Sara Sjolin

European stocks rallied the most since April in Wednesday’s trade after U.S. Federal Reserve Chairwoman Janet Yellen said interest rates don’t have to rise all that much further.
A rally in oil stocks and a well-received trading update from Burberry also helped drive markets higher.
The Stoxx Europe 600 index SXXP, +1.52%  jumped 1.5% to close at 384.90, marking its highest close in two weeks and its biggest one-day percentage gain since April 24, according to FactSet data.
See: Republicans to press Yellen on Fed plans to reduce outsize role in economy
The pan-European benchmark was sent to intraday highs after the release of prepared congressional testimony by the Fed’s Yellen. She said interest rate increases will be gradual, but that “the federal-funds rate would not have to rise all that much further to get to a neutral policy stance.”
See: Live blog and video of Yellen’s testimony before House panel
Markets latched onto the latter part of that statement, seen as alleviating fears the chairwoman would strike a more hawkish tone. Yellen was still testifying before the House Financial Services panel at the time of the European market close.
U.S. stocks also rose after the comments, with the Dow Jones Industrial Average DJIA, +0.57%   hitting a record intraday high.
Yellen will testify before the Senate Banking Committee on Thursday.
Read: Is Janet Yellen still calling the tune in financial markets?
Comments from the Fed tend to be watched closely by investors in Europe, as any hints of the future of growth and interest rates in the world’s largest economy can impact their portfolios.
Stock movers: In Europe, shares of Burberry Group PLC BRBY, +3.16% BURBY, +3.43%  climbed 3.2% after the luxury retailer reported higher first-quarter comparable sales and underlying revenue.
Shares of other luxury goods companies rose, with LVMH Moët Hennessy Louis Vuitton SE MC, +0.86%  up 0.9% and Gucci-owner Kering SA KER, +2.37%  gaining 2.4%.
DNB ASA DNB, +5.70%  put on 5.7% after the Norwegian bank posted second-quarter earnings that easily beat forecasts.
Oil companies were also up, rising alongside higher oil prices CLQ7, -0.40%  after the U.S. Energy Information Administration said domestic stockpiles fell 7.6 million barrels last week. Shares of BP PLC BP., +1.85% BP, +1.48%  rose 1.9%, Repsol REP, +1.00%  added 1% and Eni SpA ENI, +1.70%  picked up 1.7%.
On a downbeat note, shares of Amec Foster Wheeler PLC AMFW, -5.49%  tanked 5.5% after the U.K. Serious Fraud Office said it opened an investigation into the project management and services firm.
Pearson PLC PSON, -4.73%  slid 4.7%. Shares fell 5.1% Tuesday after the education and publishing company said it would sell its 22% stake in Penguin Random House for $1 billion to German media company Bertelsmann SE, its joint-venture partner.
Micro Focus International PLC MCRO, -8.10%  fell 8.1% after reporting lower revenue and net profit.
Indexes: The U.K.’s FTSE 100 index UKX, +1.19%  jumped 1.2% to 7,416.93.
Germany’s DAX 30 index DAX, +1.52%  rose 1.5% to 12,626.58, while France’s CAC 40 PX1, +1.59%  climbed 1.6% to 5,222.13.
The euro EURUSD, +0.2103%  was down at $1.1410 compared with $1.1468 on Tuesday. The shared currency rose against the dollar on Tuesday after Donald Trump Jr. released a series of email exchanges about a June 2016 meeting to discuss potential incriminating information against Hillary Clinton.
Read: Trump impeachment likelier than ever after Junior’s emails, bookie says
Economic news: Unemployment in the U.K. fell to the lowest level since 1975, coming in at 4.5% in the March-May period.
Real wages however, dropped by 0.5% in the three months to May, as consumer prices grew faster than salaries.
The pound GBPUSD, +0.1552%  erased an earlier loss and swung higher to buy $1.2887 compared with $1.2845 late Tuesday in New York.
Among eurozone data, industrial output for the area rose 1.3% in May, the fastest annual pace in more than five years.
___________________________________________________________________________

U.S. 
 
Wallace Witkowski, Anora Mahmudova

U.S. stocks closed higher on Wednesday with the Dow industrials setting its first closing record in nearly a month as Federal Reserve Chairwoman Janet Yellen emphasized the central bank’s gradual approach to normalizing monetary policy and expressed optimism about the economy in congressional testimony.
The Dow Jones Industrial Average DJIA, +0.57%  closed up 123.07 points, or 0.6%, at 21,532.14, its first new closing high since June 19. The blue-chip average also touched an intraday record of 21,580.79 earlier in the session. DuPont DD, +2.75%  Microsoft Corp. MSFT, +1.66% , Home Depot Inc. HD, +1.32% and McDonald’s Corp. MCD, +1.08% were the best performers among blue-chip companies, with gains of more than 1%.
The S&P 500 SPX, +0.73%  advanced by 17.72 points, or 0.7%, to finish at 2,443.25 with all 11 main sectors trading higher. Technology, real estate and materials shares all finished up 1% or more.
Meanwhile, the Nasdaq Composite Index COMP, +1.10%  rose 67.87 points, or 1.1%, to 6,261.17, for a fourth straight day of gains.
Stocks saw little movement after the Fed released its regional survey of economic conditions known as the Beige Book.
Normalizing monetary policy means that investors need to dispense with the idea that the Fed was ever responsible for propping up the stock market or the economy, where a rate increase is not a huge market-moving event but part of the normal rate-hike cycle, said Aaron Anderson at Fisher Investments in emailed comments.
“Yellen is dovish by nature,” said Anderson. “If she weren’t trying to get monetary policy somewhere closer to normal before her term ends in February 2018, she would probably move even more slowly.”
“This is what a dovish rate hike cycle looks like and the stock market is liking it,” said Michael Antonelli, equity sales trader at Robert W. Baird & Co., referring to the Fed’s plans to lift interest rates and reduce its $4.5 trillion asset portfolio without disrupting stock and bond markets that have been supported by crisis-era quantitative-easing programs.
“It was all about whether we will have two more rate hikes this year and it seems like the Fed instead will be using the balance sheet rather than Fed-funds rates to normalize monetary policy,” he said.
Yellen’s remarks come as other central bankers have been expressing a desire to taper easy-money policies that have been in place in the aftermath of the 2008-’09 financial crisis. A so-called more hawkish tilt by global central bankers also had led some to believe that the Fed might be encouraged to ramp up its pace of rate increases despite sluggish inflation.
“It seems like [Yellen’s] dialing back a little bit of the hawkish sentiment from last time,” said Karyn Cavanaugh, senior market strategist at Voya Financial. “She’s back to looking at inflation a little bit more. The market was a little worried but she’s back to the same dovish Yellen.”
The Fed said a shortage of qualified workers has limited hiring and characterized U.S. economic growth as “slight to moderate,” according to the central bank’s Beige Book.
The yield on the 10-year Treasury note TMUBMUSD10Y, -0.30%  fell 4 basis points to 2.319% as bond prices, which move inversely to yields, rose.
Yellen said “the evolution of the economy will warrant gradual increases in the federal-funds rate over time to achieve and maintain maximum employment and stable prices.”
See: Live blog and video of Yellen’s testimony before House panel
Beyond monetary policy, political tensions, which pressured the U.S. dollar lower on Tuesday, continued to weigh on greenback Wednesday. The dollar bought ¥113.19 Japanese yen USDJPY, +0.03% down from ¥113.94 in late Tuesday trade.
See: Is Janet Yellen still calling the tune in financial markets?
Stock movers: Shares in NRG Energy Inc. NRG, +29.39%  soared more than 29% after the company launched transformation plan to cut costs, slash debt and divest assets.
Snap Inc. SNAP, -1.49%  shares closed down 1.5%, adding to a 9% fall on Tuesday, when it fell further below its initial-public-offering price.
Shares of PayPal Holdings Inc. PYPL, +3.27%  and Square Inc. SQ, +3.03%  finished higher after one analyst suggested PayPal should acquire Square. PayPal shares rose 3.3%, while Square shares advanced 3%.
United Continental Holdings Inc. UAL, +4.69%  shares rose 4.7% after investment firms raised their price targets on the airline operator.
Energy companies advanced, tracking a rise in oil prices, which settled up 1% at $45.49 a barrel CLQ7, -0.37% Shares of Exxon Mobil Corp. XOM, +0.45%  added 0.5% and Chevron Corp. CVX, +0.75%  gained 0.8%.
Shares of Fastenal Co. FAST, -2.00%  finished down 2%, after trading higher earlier in the session following a well-received earnings report.
Other markets: Asian stocks closed mixed, while Europe SXXP, +1.52% staged solid gains across the board.
Gold GCQ7, +0.09%  rose 0.4% to settle at $1,219.10 an ounce and all other key metals were also on the rise.
—Sara Sjolin in London contributed to this article.