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Asian Markets at Close Report

European Markets at Close Report

Sep 5, 2017

Asia, Europe and U.S. Stock Markets' Closing Reports on September 5, 2017:



ASIA

Indexes in Asia closed mixed after cautious trade on Tuesday after stocks stumbled and investors turned to safe haven assets on the back of North Korea's recent nuclear test.
The Nikkei 225 declined 0.63 percent, or 122.44 points, to close at 19,385.81.
South Korea's benchmark Kospi index reversed slight gains made earlier, slipping 0.13 percent to finish the session at 2,326.62, after closing lower by more than 1 percent in the previous session.
Down Under, the S&P/ASX 200 closed moderately higher, edging up 0.07 percent to end at 5,706, with falls in the utilities sub-index offset by gains in gold stocks.
Hong Kong's Hang Seng Index slid 0.05 percent by 3:11 p.m. HK/SIN after trading higher for most of the session. Mainland stocks were resilient: The Shanghai Composite gained 0.16 percent, or 5.5463 points, to close at 3,385.1293 and the Shenzhen Composite inched higher by 0.204 percent, or 4.0163 points, to end at 1,972.1382.
 
NIKKEI NIKKEI 19385.81 -122.44 -0.63%
HSI HSI 27741.35 1.09 0%
ASX 200 S&P/ASX 200 5706.23
---
UNCH 0%
SHANGHAI Shanghai 3385.13 5.55 0.16%
KOSPI KOSPI Index 2326.62
---
UNCH 0%
CNBC 100 CNBC 100 ASIA IDX 7966.98 11.00 0.14%
Tensions on the Korean Peninsula remained in focus after South Korean media reported on Tuesday that North Korea was transporting what could be an intercontinental ballistic missile (ICBM).
The U.S. on Monday called for the "strongest possible" sanctions to be imposed on North Korea a day after the North said it had tested a hydrogen bomb. President Donald Trump also spoke to South Korean President Moon Jae-in on the phone, during which he gave "conceptual approval" for South Korea to purchase billions of dollars in weapons from the U.S., Reuters said.
Meanwhile, South Korea would proceed with the rolling out an anti-missile system that had drawn China's ire, according to Reuters.
Gold prices were near their strongest levels in around 11 months, remaining supported by safe haven demand. Spot gold stood at $1,335.21 an ounce at 3:03 p.m. HK/SIN after touching as high as $1,337.98 earlier in the session.
Meanwhile, the yen — often regarded as a safe haven currency — firmed during the session, trading at 109.28 yen to the dollar compared to Monday's close of 109.70 yen.
The Korean won clawed back some losses to trade at 1,129.46 won to the dollar after going as low as 1,132.61 won to the dollar overnight. The won had traded around the 1,120 handle at the end of last week.
Stocks in Europe and Asia had closed lower on Monday, with the Nikkei 225 falling 0.93 percent. The pan-European Stoxx 600 experienced more moderate losses, erasing 0.52 percent by the market close.
Despite the move to safety, analysts said market reaction had been relatively muted.
"Risk off sentiment has hardly become evident. Moves back to safe haven or risk-off currencies, [such as] the Japanese yen and the Swiss franc, have been very much at the margin," National Australia Bank Director of Economics David de Garis said in a Tuesday morning note.
Positive economic data out of China failed to significantly lift sentiment in the region, although Chinese markets mostly traded higher.
China's Caixin/Markit August services purchasing managers' index (PMI) on Tuesday showed an increase to 52.7 from 51.5 in the previous month, Reuters reported. The August reading also showed the services sector in the country grew the fastest in three months. The official services reading came in at 53.4 in August — its lowest level since May 2016 — compared to the 54.5 seen in July.
Both Caixin and official manufacturing PMI for August released last week beat expectations, reflecting resilience in China's manufacturing sector despite concerns of an economic slowdown.
Still, optimism over China's economic outlook gave copper prices a boost on Tuesday, Reuters reported. Copper prices rose to a new three-year high after climbing as high as $6,946.50 a tonne earlier in the session.
On the energy front, U.S. crude added 0.55 percent to trade at $47.55 a barrel as demand picked up and U.S. refineries started to resume operations. Brent crude slid 0.11 percent to trade at $52.28 a barrel.
Gasoline futures fell 4.13 percent to $1.6757 a gallon, close to levels seen before Hurricane Harvey hit.
In individual stocks, Japanese automakers were mixed despite posting solid August sales figures in China. Toyota sales in the country rose 13.2 percent in August compared to a year ago, according to Nikkei Asian Review. Honda sales picked up 20.6 percent while Mazda sales climbed 8.4 percent, Nikkei said. In reaction, Toyota shares closed up 0.81 percent, Honda edged up 0.23 percent and Mazda fell 0.95 percent by the end of the session.
Meanwhile, South Korean retail names closed mostly lower. Shares of Lotte Shopping and Lotte Himart were down 1.24 percent and 4.53 percent, respectively. The moves came following news that Lotte Duty Free was weighing a decision to withdraw from Incheon International Airport in South Korea. South Korean retailers have had a difficult year owing in part to China's opposition to the deployment of an anti-missile system in South Korea.
In economic news, the Reserve Bank of Australia left the cash rate unchanged at 1.5 percent on Tuesday, as was widely expected.
The Australian dollar edged up to trade at $0.7972 at 3:08 p.m. HK/SIN, retracing losses made after the RBA's announcement.
U.S. markets will re-open on Tuesday for trade after taking a break on Monday for Labor Day.
________________________________________________________________________________

Europe
cnbc.com

Europe ends under pressure as N. Korea tensions weigh; Aveva shares, oil soars

Sam Meredith, Alexandra Gibbs


European markets came under pressure by the end of Tuesday's trade, as a weak performance from Wall Street and geopolitical concerns weighed on investor sentiment.
The pan-European Stoxx 600 came off its highs, to end down 0.13 percent, with sectors pointing in different directions by the close. Autos outperformed other sectors, closing up 0.89 percent overall.
Looking to major bourses, Germany's DAX finished in positive territory, up 0.18 percent, while the U.K.'s FTSE 100 fell 0.52 percent and France's CAC ended 0.34 percent down.
 
FTSE FTSE 7372.92 -38.55 -0.52% 558079539
DAX DAX 12123.71 21.50 0.18% 67683709
CAC CAC 5086.56 -17.41 -0.34% 74381683
IBEX 35 IBEX 35 Idx 10179.80 -63.40 -0.62% 136704578
In Europe, banks posted the biggest sector loss on Tuesday, with several Spanish and Italian banks sitting near the bottom of the sector's benchmark. This comes despite UBS strategists upgrading European banks to "overweight", as strategists believe that tapering and a return to EPS growth could act as catalysts to unlocking the group's recovery potential; Reuters reported. Banks closed 1.25 percent down overall.
Looking at individual stocks, Aveva agreed to combine with Schneider Electric's software business on Tuesday, creating a London-listed firm worth more than £3 billion ($3.88 billion). Aveva's shares initially rocketed up almost 30 percent on the news, before finishing trade up 25.7 percent, while shares in Schneider Electric were relatively muted, finishing up 0.26 percent.

Germany's Merck KGaA said it would consider selling its consumer health business. Its shares came off its highs yet finished trade up 2.37 percent.
Meanwhile, French telecom firm Orange and U.K. consumer goods firm Reckitt Benckiser closed near the bottom of the STOXX 600, off 2 percent and 2.7 percent respectively. This comes after Exane BNP Paribas cut its target price on Reckitt Benckiser and cuts its rating on Orange to "underperform".
Oil and gas was the second best performing sector on Tuesday, closing up 0.69 percent. This comes as oil prices posted sharp gains during trade on the back of news that refineries in the Gulf of Mexico - that were shut by Hurricane Harvey - were starting to reopen.
At the market close, Brent was up over 2 percent at $53.64 per barrel, and U.S. crude was at $48.97, up over 3 percent.

Geopolitical tensions

In the aftermath of North Korea's largest-ever nuclear test on Sunday, the U.S. told the United Nations on Monday that Pyongyang was "begging for war," before urging the 15-member Security Council to respond with the "strongest possible measures" against the isolated regime.
Ahead of the emergency UN meeting overnight, South Korea had reported that it had seen signs the North was preparing to launch more missiles in the near future. Consequently jitters in markets worldwide continue to rumble on, with some investors looking to safe-haven assets like the Japanese Yen.
Stateside, Wall Street stocks traded in the red on the country's first trading day of the week, as tension between North Korea and the West sent jitters down Wall Street. The Dow Jones industrial average dropped as much as 170 points before paring some losses by Europe's close.

What do investors need to study up on this autumn?

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ECB on the horizon

On the macroeconomic front, a survey released Tuesday showed that euro zone business activity remained robust in August. This was the latest evidence that appeared to show the bloc's recovery is sustaining its upbeat momentum.
Investors were also looking ahead to a meeting of the European Central Bank on Thursday, where policymakers are poised to decide whether to take action over interest rates as well as its asset purchase program.
________________________________________________________________________________

U.S. 
cnbc.com

Markets tumble as Dow closes more than 200 points lower

Fred Imbert


U.S. equities fell on Tuesday, the first trading day of the week, as tension between North Korea and the West sent jitters down Wall Street.
The Dow Jones industrial average recorded its biggest one-day drop since Aug. 17, falling 234.2 points to close at 21,753.31, with United Technologies and Goldman Sachs contributing the most to the losses. United Technologies' stock dropped after announcing a $30 billion mega-deal to buy Rockwell Collins. Boeing was also a large contributor of losses.
The S&P 500 pulled back 0.8 percent —its worst day since Aug. 17 — to 2,457.07, with financials posting their worst day since May 17. Insurers XL Group and Everest Re Group were among the biggest decliners in the index as the threat of Hurricane Irma hitting Florida increased. The S&P also snapped a six-day winning streak.
The Nasdaq composite declined 0.9 percent to close at 6,375.57 as shares of Apple, Amazon, Facebook and Alphabet all dropped.
 
DJIA Dow Industrials 21753.31 -234.25 -1.07%
S&P 500 S&P 500 Index 2457.85 -18.70 -0.75%
NASDAQ NASDAQ Composite 6375.57 -59.76 -0.93%
"Clearly, the geopolitical tensions with North Korea are the most important issue for the market in today's session," said Rui De Figueiredo, CIO and co-head of the Solutions/Multi-Asset Group at Morgan Stanley Investment Management. "When you have events like the one in North Korea, they bring about the opportunity for volatility to come back and for the market to pull back."
North Korea successfully tested a hydrogen bomb that can be mounted onto an intercontinental ballistic missile. This was North Korea's sixth nuclear test since 2006 and its most powerful to date.
Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.
"North Korea's successful hydrogen bomb explosion over the weekend" is "adding to the uncertainty," said Jeff Saut, chief investment strategist at Raymond James. "Our sense is that if there is going to be a downside feint it should begin this week."
The U.S. stock market was closed on Monday because of the Labor Day holiday, but futures fell along with global equities. The Stoxx 600 index, which tracks a broad swath of European equities, fell 0.52 percent on Monday, while the Japanese Nikkei 225 declined 0.9 percent. On Tuesday, the Stoxx 600 index slipped 0.1 percent while the Nikkei pulled back another 0.6 percent.
South Korean stocks also fell, with the iShares MSCI South Korea Capped exchange-traded fund (EWY) sliding 2.8 percent. The ETF was also on track for its worst session since Aug. 10.
Investors around the world also increased their exposure to traditional safe-haven assets like gold and the Japanese yen. Gold futures for December delivery rose 1.1 percent to settle at $1,344.50 per ounce, around a one-year high. The yen gained 0.9 percent against the dollar to 108.82.
Tension between the U.S. and North Korea has been escalating recently. Last month, Trump said threats out of North Korea "will be met with fire and fury." Last week, North Korea launched a missile that flew over Japan before falling into the sea. That said, stocks posted solid gains last week.
"It wasn't an 'all's well that ends well' or an 'all clear signal' that empowered stocks last week as much as a sense that even as some things and situations have worsened others have actually improved," said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, in a note, pointing to strong unemployment data released last week.
Wall Street also looked ahead to debt ceiling and budget negotiations this month. If a deal is not reached, it could lead to a government shutdown, which would be catastrophic, Standard & Poor's said last week.
If the U.S. fails to raise its borrowing limit, it risks defaulting on its debt. House Speaker Paul Ryan told CNBC on Aug. 24 that the U.S. will raise the debt ceiling before it's too late.
"September has the earmarks of a crazy month thanks to Washington, the ECB, and the fact that company management gets back from vacation and thinks about Q3 and Q4 estimates," according to Steven DeSanctis, equity strategist at Jefferies. The European Central Bank (ECB) is set to meet later this week.
Investors also set their sights on U.S. tax reform. The group of six officials working on tax reform was scheduled to meet with President Donald Trump on Tuesday. This comes after Treasury Secretary Steven Mnuchin told CNBC on Thursday that the administration had a "very detailed" tax plan ready.
September has historically been one of the most volatile months for stocks. Raymond James' Saut pointed out that the Dow falls on average about 1.09 percent in September. He also said that the August-November period has historically been a difficult time for stocks in years that end in "7."