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Asian Markets at Close Report

European Markets at Close Report

Mar 12, 2017

Asian, European & U.S. Stock Markets Closing on March 10, 2017


Ese Erheriene
Japan financial stocks rose Friday, boosted by a global bond selloff after European Central Bank President Mario Draghi hinted the central bank was unlikely to introduce fresh stimulus measures.
The Nikkei Stock Average NIK, +1.48%  closed up around 1.5% after opening at a five-day high. Gains were driven by the yen softening against the dollar and the prospect of higher European yields amid signs that inflation is returning to the eurozone.
Investors are awaiting bellwether jobs data from the U.S. later in the global trading day, which could reinforce expectations that the U.S. Federal Reserve will raise rates next week. Futures trading already indicates a 90.8% probability of higher rates, according to data from CME Group.
“The NFP [nonfarm payroll figures] are expected to be high given the extremely high ADP employment figures we have seen this week,” said Woon Tian Yong, an investment analyst at Phillip Futures.
“In my opinion, any number which is not extremely low will not change expectations for a rate hike.”
The yield on 10-year U.S. Treasury note TMUBMUSD10Y, +0.00%   hit its highest intraday level since mid-December, and was hovering near its steepest range in more than two years. It was last at 2.6012%, up from 2.5980% late Thursday in the U.S.
The momentum will be “contagious in Asia,” said Tim Condon, an economist at ING. Markets will be watching Japanese government bonds, as the yield on the 10-year JGB approaches the upper limit of what analysts call the BOJ’s comfort zone — plus or minus 0.1 percentage point. The yield on the 10-year JGB was last at 0.091% after trading as high as 0.099% earlier Friday, according to Thomson Reuters.
Japan financial companies, which invest heavily in global government bonds, were up sharply on the prospect of improved yields on future investments in the securities. Nomura 8604, +3.58%   rallied 3.6%, Daiwa 6459, +1.60%   gained 2.9% and Dai-ichi Life 8750, +3.51%   jumped 3.5%.
The Japanese currency was last down around 0.4% against the U.S. dollar, making it cheaper for exporters to ship their goods abroad. Among individual shares, Honda 7267, +1.50%   added 1.5%, while Sharp 6753, +2.69%   was 2.7% higher.
“The Nikkei 225 is a very export-driven index and any weakening in the yen is expected to be good news for the index,” said Mr. Woon.
Elsewhere, the S&P/ASX 200 XJO, +0.60%   rose 0.6% and the Hang Seng Index HSI, +0.29%   added 0.3%.
In South Korea, stocks finished slightly higher after earlier hitting a six-session high following the Constitutional Court’s upholding of the impeachment of President Park Geun-hye, permanently removing her from office. The Kospi SEU, +0.30%   closed up 0.3%, roughly where it was before the late-morning announcement.
Read: Fatal protests break out after South Korea’s president is ousted
In the commodities sphere, oil prices were modestly higher in early Asian trading after an overnight slide that saw U.S. crude-oil futures slip below $50 a barrel for the first time this year. Futures have fallen about 7% over the past two sessions, based on U.S. closing prices, as a re-acceleration of U.S. production stoked worries about oversupply.
“Prices will probably come under fire again if today’s U.S. oil-rig report shows [further] growth,” said a crude-oil trader for a Singapore-based company. The closely watched weekly reading from Baker Hughes has been steadily rising in recent months.
Nymex crude-oil futures for April delivery CLJ7, -1.81%  were recently up 32 cents at $49.59 a barrel and May Brent LCOK7, -1.76%  gained 28 cents to $52.47.


Carla Mozee, Sara Sjolin
European stocks pared gains in afternoon trade on Friday, closing only slightly higher after a report the European Central Bank has discussed whether it could raise interest rates before ending its program of monthly asset purchases.
The Stoxx Europe 600 SXXP, +0.09% ended 0.1% higher at 373.23, after trading as high as 374.89, earlier in the day. For the week, the pan-European gauge dropped 0.5%.
“Stock markets spent most of Friday in positive territory with investors still unwilling to bet against higher prices despite strong odds of a rate increase in the U.S. next week. Data showing solid U.S. job growth makes a rate hike at next week’s meeting of the Federal Reserve a near certainty,” said Jasper Lawler, senior market analyst, at London Capital Group, in a note.
Stocks in Europe stayed higher after data showed the U.S. economy created a more-than-expected 235,000 jobs in February. Strong U.S. data tend to provide a boost to stocks in both Europe and Asia, as the country plays a major role in global growth.
ECB rate discussion: However, European stocks scaled back their gains in the afternoon after Bloomberg news reported that ECB policy makers at their Thursday meeting discussed whether interest rates could go up before the bank wraps up its QE program.
That contradicts what ECB President Mario Draghi said in his opening statement at Thursday’s press conference, when he reiterated the bank’s forward guidance.
“We continue to expect [interest rates] to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases,” he said.
The euro EURUSD, +0.9171%  shot higher after the comments, buying $1.0671, compared with $1.0577 late Thursday in New York. A stronger euro tends to weigh on Europe’s exporters as their products become more expensive for other currency holders.
The export-dependent German DAX 30 index DAX, -0.13% closed 0.1% lower at 11,963.18.
France’s CAC 40 PX1, +0.24% rose 0.2% to 4,993.32, while the U.K.’s FTSE 100 UKX, +0.38%  picked up 0.4% at 7,343.08, breaking six straight days of losses.
Read: There’s another land of opportunity in the reflation trade — Europe
Stock movers: Grabbing attention in the oil group Friday, Repsol SA shares REP, +2.49% REP, +2.73%  bulked up 2.5% after the Spanish oil company discovered a giant oil field in Alaska. Two wells drilled this winter indicate the recent discoveries could hold as much as 1.2 billion barrels of oil.
UBS Group AG UBSG, +0.37% UBS, +0.88%  picked up 0.4%. The Swiss lender lowered the total pay for its chief executive in 2016, a year in which the bank’s net profit was cut nearly in half compared with a year earlier.
Segro PLC SGRO, -5.64%  fell 5.6%, closing at the bottom of the Stoxx 600, as the property developer launched a rights issue in which it will raise £573 million. The company also said it’s buying the remaining 50% stake in a joint venture that has the majority of its properties located at London’s Heathrow Airport.
Volkswagen AG VOW3, +0.16% VLKAY, +1.15%  rose 0.2%. The German auto maker said it’s discussing strategic cooperation with Tata Motors Ltd. 500570, +0.21%  , a move that could help Volkswagen gain a foothold in the emerging market.
BT Group PLC BT.A, +3.71% climbed 3.7% after the British telecommunications company reached an agreement with industry regulator Ofcom to make its Openreach infrastructure division a legally separate company.
Data: German exports jumped 2.7% in January from the month before, a further sign of accelerating activity in Europe’s largest economy.
French industrial production unexpectedly declined 0.3% in January, indicating the eurozone’s second-largest economy is on a weaker-than-expected footing at the start of 2017.
See: Opinion: Renzi’s fall may make Italy the biggest political risk in Europe


Wallace Witkowski, Anora Mahmudova
U.S. stocks closed higher Friday on a stronger-than-expected February jobs report, but major benchmarks snapped multiweek winning streaks as oil prices weighed on markets over the past five sessions.
The S&P 500 index SPX, +0.33%  gained 7.73 points, or 0.3%, to close at 2,372.60, as the industrials, utilities and telecom sectors led gainers, while the financials, real-estate and energy sectors weighed on the index.
The Dow Jones Industrial Average DJIA, +0.21% advanced 44.79 points, or 0.2%, to close at 20,902.98, with 23 of the 30 blue-chip companies finishing higher. General Electric Co. GE, +2.09%  and UnitedHealth Group Inc. UNH, +1.17% led gainers, while Boeing Co. BA, -1.04%  and Goldman Sachs Group Inc. GS, -0.72%  led decliners.
Meanwhile, the Nasdaq Composite Index COMP, +0.39%  rose 22.92 points, or 0.4%, to finish at 5,861.73.
For the week, the Dow finished down 0.5%, snapping a streak of four straight weekly gains. The S&P 500 declined 0.4% for the week, and the Nasdaq slipped 0.2%, as both snapped a run of six weeks of consecutive gains.
A plunge in oil prices has made for a tough week, with the price now firmly below $50 a barrel for WTI crude CLJ7, -1.81% Crude oil settled down 1.6% at $48.49 a barrel, for a 9.1% decline on the week to their lowest level since November. The decline in oil prices accelerated Friday after active rig-count data showed an increase for the eighth week in a row.
The U.S. economy added 235,000 jobs in February, while the January number was revised to show payrolls rose 238,000, pushing the unemployment rate to 4.7%. Hourly pay increased 2.8% from February 2016 to February 2017, up from 2.6% in the prior month.
Weakness in the energy sector is just an extension of oil’s rough week, said Bill Stone, chief investment strategist at PNC Asset Management Group, in an interview.
Plus, expectations for rate increases by the Federal Reserve this year may have gotten too high owing to strong jobs data earlier in the week from ADP, Stone said.
“I think the ADP report had people thinking payrolls data was going to be a blowout and it wasn’t,” Stone said. “Some people were thinking maybe even four rates this year instead of three.”
Friday’s employment report exceeded consensus forecasts of 221,000, cementing expectations for an interest-rate hike at the Fed’s two-day policy meeting March 14-15. Over the past few weeks, several key Fed members, including Chairwoman Janet Yellen, have said an increase in rates is warranted.
“Today’s jobs report is an affirmation of everything else we’ve been seeing on the data front. The fact that it’s construction and manufacturing industries that saw big job gains bodes well for the economy, as the multiplier effect there is higher,” said Karyn Cavanaugh, senior market strategist at Voya Financial. In other words, strong employment in manufacturing can spur job growth in other industries.
Read: Uber-bear Albert Edwards warns the Fed is about to sow ‘seeds of destruction’
South Korean President ejected From office
Park Geun-hye, the country's first female president, has become the first South Korean leader to be removed from office by impeachment.
Stock movers: Shares of Southwest Airlines Co. LUV, -0.85%  slumped 0.9% after the company lowered its unit revenue outlook for the first quarter.
Staples Inc. SPLS, +2.24%  shares jumped 2.2%, recouping some of the 5.2% slump on Thursday following disappointing earnings.
Ulta ULTA, +4.62%  shares closed up 4.6% after the beauty-products retailer topped Wall Street estimates for the quarter late Thursday, bouncing back from earlier losses.
MGM Holdings In c. MGM, +0.28%  shares closed slightly higher after The Wall Street Journal reported it is near a deal to buy out its partners Viacom Inc. VIA, -0.22% VIAB, -1.60%  and Lions Gate Entertainment Corp. LGF.A, -0.65% [ LGF.B, -1.10% and take sole ownership of the pay-television channel Epix.
Other markets: The yield on the 10-year Treasury note TMUBMUSD10Y, +0.00%  fell 3 basis points to 2.58%, while the ICE U.S. Dollar index DXY, -0.64%  fell 0.6% to 101.28. A surprise move lower in both the yield and the dollar was due to a disappointing increase in the wage growth, which is seen as a precursor to inflation.
Among other assets, gold prices GCJ7, +0.11%  slipped 0.2% to settle at $1,201.40 an ounce, for a 2% weekly loss.
European stocks SXXP, +0.09%  finished mostly higher. The Nikkei 225 index NIK, +1.48%  rallied 1.5%, driven by a sharp rise in the dollar against the yen. That pair USDJPY, -0.15%  held around ¥115. Meanwhile, the euro EURUSD, +0.9171%  held on to its gains against the dollar, after hawkish comments from European Central Bank President Mario Draghi on Thursday.
South Korea’s Kospi Index SEU, +0.30%  finished up 0.3% on Friday, largely where it began after President Park Geun-hye was ousted following her impeachment and suspension over accusations that she helped a friend win bribes from Samsung 005930, -0.05% and other South Korean conglomerates. At least two protesters were reported dead as the verdict triggered a mass rally by her supporters in central Seoul.
—Barbara Kollmeyer in Madrid contributed to this report.