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Asian Markets at Close Report

European Markets at Close Report

Jul 19, 2017

Asia, Europe and U.S. Stock Markets' Closing Reports on July 18, 2017:


ASIA
 
Kenan Machado

Asian shares were broadly weaker Tuesday, with Chinese stocks stabilizing after Monday’s slump and Japanese stocks falling in reaction to the dollar’s weakness.
Tokyo investors returned from their Monday holiday and sold shares in reaction to the slide in the dollar on Friday after disappointing U.S. economic data added to skepticism about more Federal Reserve interest-rate increases this year.
The dollar has continued to weaken with the euro getting above $1.15 for the first time in 14 months in Asian trading.
The Nikkei NIK, +0.10%   fell 0.6% to below the psychologically-important 20,000 level as the dollar JPYUSD, +0.003570%   slid to ¥112.20 Tuesday from ¥112.63 in late New York trading on Monday. Exporters were among the biggest decliners in Japan because their offshore earnings are eroded by the yen’s strength.
The Wall Street Journal Dollar Index fell 0.3%.
Stocks of Japanese insurers also lagged as bond yields fell, as has been the case in recent days. Dai-ichi Life 8750, -0.95%   and Mitsubishi UFJ 8306, -0.50%   slid at least 2% at one point Tuesday.
Market participants are looking to policy statements on Thursday from both the Bank of Japan and the European Central Bank.
Investors are expecting hawkish comments from the ECB, says Hisao Matsuura, chief strategist at Nomura Japan. A hawkish ECB could hurt Tokyo stocks as it could keep the dollar weak and lift the yen, as well as widen the gap between the European and Japanese bond yields, making it more difficult for the BOJ to keep rates low. “I don’t see any upside [for stocks] for now,” he added.
Meanwhile, Chinese stocks tried to recover after sharp declines on Monday, which saw the Shenzhen Composite Index closing down 4.3% and Shanghai Composite Index down 1.4% then. Leading indexes ultimately closed mixed Tuesday after early gains. The Shanghai Composite SHCOMP, +1.36%   closed down 0.3% while the Shenzhen Composite 399106, +1.53%   was up 0.6%.
Australian stocks, which lagged the stock gains seen in much of Asia Pacific on Monday, were the worst performing in the region Tuesday morning. The S&P/ASX 200 index XJO, +0.79%   was down 1.2%, as the country’s big banks, which are heavily weighted on the index, weakened over 2%.
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 EUROPE
 
Carla Mozee

Stocks across Europe dropped on Tuesday, with the exporter-heavy DAX 30 index DAX, +0.02%  ending 1.3% lower at 12,430.39—its worst session since June 29.
More broadly, European benchmarks finished the session under pressure as the euro stepped up to a 14-month high against the U.S. dollar and as disappointing corporate earnings reports rolled in. The euro EURUSD, -0.2337% climbed to $1.1574 from $1.1479 late Monday, notching an intraday high of $1.1585. A stronger euro can hurt European exporters as it makes products more expensive for overseas customers.
The Stoxx Europe 600 SXXP, +0.28% slumped 1.1% to end at 382.58, the largest percentage decline since June 29, FactSet data showed. All sectors closed in the red, led by tech and basic material shares.
Investors began dumping equities when the session started, after Republican leaders in the U.S. Senate late Monday ditched their bill to repeal and simultaneously replace much of the Affordable Care Act, or “Obamacare.”
That seemed to rattle investors’ faith that President Donald Trump would be able to push through his pro-growth agenda, and the ICE Dollar Index DXY, +0.13%  was pushed back to levels not seen since September 2016.
“Without a successful repeal of the Obamacare legislation, [U.S. President Donald] Trump will have trouble financing his own plans making it very difficult to see how the dollar can remain bullish,” said ADS Securities researcher Konstantinos Anthis in a note.
European equities were among those that had rallied after Trump’s election in November on the prospect that plans for higher fiscal spending and lower corporate taxes would benefit European companies.
Earnings season: Ericsson shares ERICB, -1.36%  tumbled nearly 15.6%. The sharpest slide since October 2016 was prompted by the Swedish telecom-equipment maker swinging to a bigger-than-expected net loss of 1.01 billion Swedish kronor ($122.3 million) in the second quarter. The company warned that earnings could weaken further as the market continues to struggle.
Zalando SE ZAL, -0.77%  shares sank 8.3%, the deepest decline since June 2016. The German online retailer’s sales growth slowed in the second quarter, according to a preliminary earnings report.
But shares in Novartis AG NOVN, +0.75%  moved up 0.4% after the Swiss drug maker reported a slight gain in second quarter net income.
IG Group Holdings PLC IGG, -1.55%  rallied 16.4% after the spreadbetting company said full-year pretax profit has increased and that there has been no adverse impact from a U.K. regulator’s recent proposals to reform the asset management market.
The Stoxx 600 Bank Index FX7, -0.19%  sank 1.6%, falling along with U.S. lenders after investment bank Goldman Sachs Group Inc. GS, -2.60%  posted a 40% fall in its key trading business.
Individual indexes: France’s CAC 40 index PX1, +0.09%  gave up 1.1% to close at 5,173.27, and Spain’s IBEX 35 IBEX, -0.41%  was pushed lower by 1.2% to 10,524.50.
Italy’s FTSE MIB I945, -0.07%  shed 0.6% at 21,358.20. The U.K.’s FTSE 100 UKX, +0.09%  closed 0.2% lower at 7,390.22.
Greece’s Athex Composite GD, +0.31%  fell 1.2% to 848.07. The Greek government postponed plans to issue new debt in the global bond market as it waits for a debt sustainability analysis from the International Monetary Fund, according to Greek daily Kathimerini. The mid-yield on Greece’s current 10-year bond fell 4 basis points to 5.21% as prices rose, but the yield earlier climbed to 5.52%, according to Tradeweb data.
ECB and euro: “With the euro having broken above multi-months highs it will be key to see whether the single currency holds on to its gains ahead of the European Central Bank meeting on Thursday,” Anthis said.
ECB President Mario Draghi is expected to be pleased with the progress of the euro area and attempt to prepare the markets for reduced stimulus from the ECB in the months to come, so the shared currency could trade with a positive bias going into the central bank’s meeting, he added.
Data: German economic sentiment dropped in July, according to the ZEW think tank, but the outlook for Europe’s largest economy continues to be favorable.
The pace of U.K. inflation eased unexpectedly in June, to 2.6%, the Office of National Statistics said.
_______________________________________________________________________________

U.S.
Carla Mozee

Stocks across Europe dropped on Tuesday, with the exporter-heavy DAX 30 index DAX, +0.02%  ending 1.3% lower at 12,430.39—its worst session since June 29.
More broadly, European benchmarks finished the session under pressure as the euro stepped up to a 14-month high against the U.S. dollar and as disappointing corporate earnings reports rolled in. The euro EURUSD, -0.2337% climbed to $1.1574 from $1.1479 late Monday, notching an intraday high of $1.1585. A stronger euro can hurt European exporters as it makes products more expensive for overseas customers.
The Stoxx Europe 600 SXXP, +0.28% slumped 1.1% to end at 382.58, the largest percentage decline since June 29, FactSet data showed. All sectors closed in the red, led by tech and basic material shares.
Investors began dumping equities when the session started, after Republican leaders in the U.S. Senate late Monday ditched their bill to repeal and simultaneously replace much of the Affordable Care Act, or “Obamacare.”
That seemed to rattle investors’ faith that President Donald Trump would be able to push through his pro-growth agenda, and the ICE Dollar Index DXY, +0.13%  was pushed back to levels not seen since September 2016.
“Without a successful repeal of the Obamacare legislation, [U.S. President Donald] Trump will have trouble financing his own plans making it very difficult to see how the dollar can remain bullish,” said ADS Securities researcher Konstantinos Anthis in a note.
European equities were among those that had rallied after Trump’s election in November on the prospect that plans for higher fiscal spending and lower corporate taxes would benefit European companies.
Earnings season: Ericsson shares ERICB, -1.36%  tumbled nearly 15.6%. The sharpest slide since October 2016 was prompted by the Swedish telecom-equipment maker swinging to a bigger-than-expected net loss of 1.01 billion Swedish kronor ($122.3 million) in the second quarter. The company warned that earnings could weaken further as the market continues to struggle.
Zalando SE ZAL, -0.77%  shares sank 8.3%, the deepest decline since June 2016. The German online retailer’s sales growth slowed in the second quarter, according to a preliminary earnings report.
But shares in Novartis AG NOVN, +0.75%  moved up 0.4% after the Swiss drug maker reported a slight gain in second quarter net income.
IG Group Holdings PLC IGG, -1.55%  rallied 16.4% after the spreadbetting company said full-year pretax profit has increased and that there has been no adverse impact from a U.K. regulator’s recent proposals to reform the asset management market.
The Stoxx 600 Bank Index FX7, -0.19%  sank 1.6%, falling along with U.S. lenders after investment bank Goldman Sachs Group Inc. GS, -2.60%  posted a 40% fall in its key trading business.
Individual indexes: France’s CAC 40 index PX1, +0.09%  gave up 1.1% to close at 5,173.27, and Spain’s IBEX 35 IBEX, -0.41%  was pushed lower by 1.2% to 10,524.50.
Italy’s FTSE MIB I945, -0.07%  shed 0.6% at 21,358.20. The U.K.’s FTSE 100 UKX, +0.09%  closed 0.2% lower at 7,390.22.
Greece’s Athex Composite GD, +0.31%  fell 1.2% to 848.07. The Greek government postponed plans to issue new debt in the global bond market as it waits for a debt sustainability analysis from the International Monetary Fund, according to Greek daily Kathimerini. The mid-yield on Greece’s current 10-year bond fell 4 basis points to 5.21% as prices rose, but the yield earlier climbed to 5.52%, according to Tradeweb data.
ECB and euro: “With the euro having broken above multi-months highs it will be key to see whether the single currency holds on to its gains ahead of the European Central Bank meeting on Thursday,” Anthis said.
ECB President Mario Draghi is expected to be pleased with the progress of the euro area and attempt to prepare the markets for reduced stimulus from the ECB in the months to come, so the shared currency could trade with a positive bias going into the central bank’s meeting, he added.
Data: German economic sentiment dropped in July, according to the ZEW think tank, but the outlook for Europe’s largest economy continues to be favorable.
The pace of U.K. inflation eased unexpectedly in June, to 2.6%, the Office of National Statistics said.