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May 12, 2017

Asia, Europe and U.S Stock Markets Summary on May 12, 2017


Lucy Craymer

Stock markets across Asia closed broadly lower on Friday, tracking overnight weakness in Europe and the U.S. amid disappointing earnings reports.
Japan was falling as stocks were hit by a 0.3% gain in the yen USDJPY, -0.45%  against the U.S. dollar, making the country’s exports less competitive. The Nikkei Stock Average NIK, -0.39%   dropped 0.4%.
Among key Japanese export stocks, Toyota Motor 7203, -1.24%   fell 1.2% and Honda Motor 7267, -1.57%   lost 1.6%, while Sony 6758, -0.66%   gave up 0.7%.
Elsewhere, Korea’s Kospi SEU, -0.45%  ended 0.5% lower, while Australia’s S&P/ASX 200 XJO, -0.70%  declined 0.7%. Hong Kong’s Hang Seng Index HSI, +0.12%  ended up 0.1%. In China, the Shanghai Composite Index SHCOMP, +0.72%  rose 0.7%, led by gains in insurance, aviation and automotive shares. Investors are watching whether the index holds above the key 3,000-point level.
“At the margins it’s similar to what we saw in the U.S., there is a slightly risk-off feel to this market,” said Chris Weston, chief market strategist at IG Markets in Australia.
Weston said sentiment was favoring less discretionary stocks in the market, although commodities in Australia continue to find some support. Among those, Rio Tinto RIO, +0.37%   climbed 0.4% and BHP Billiton BHP, +0.64%  gained 0.6%, supported by a rise in copper prices.
Overnight, U.S. stock indexes pulled back slightly, with the Dow Jones Industrial Average ending down 0.1%, as individual stocks sold off following disappointing corporate earnings reports. Shares of department store leader Macy’s M, -3.04%   shed 17% after the firm reported a bigger-than-expected slide in first-quarter revenue.
Analysts, however, still see some potential for gains in Asia, which has seen India and South Korea log fresh record highs and Japan, Hong Kong, Indonesia and Taiwan post multiyear bests.
“We keep on making new records, and as long as we continue to have hot money I don’t think it’s going to be cut off any time soon,” said Stuart Ive, private client manager at OM Financial in Wellington, New Zealand.
“We might have some corrections to the downside, but any pullbacks we’ve seen so far have been very, very shallow,” Ive noted.
In the forex market, the New Zealand dollar NZDUSD, +0.1898%  was one of the biggest movers after the country’s central bank surprised the markets by retaining a neutral bias, which pushed the currency down 1.5% against the U.S. dollar over the past day.

Carla Mozee, Sara Sjolin

Europe’s benchmark stock index managed to squeeze out a small gain after a choppy session on Friday, with an advance for French media company Vivendi SA and U.K. drug giant AstraZeneca PLC helping to push the benchmark higher for the week.
The Stoxx Europe 600 index SXXP, +0.31% ended up 0.3% at 395.63, with telecom and health care doing the heavy lifting.
Investors had a fresh round of corporate updates to consider on Friday, as well as economic data. Germany’s quarterly gross domestic product revved up, but industrial production declined in the eurozone in March.
The pan-European benchmark on Thursday fell 0.6%, pulling back from a 21-month high.
The index gained 0.3% for the week, which kicked off Monday with a small decline in European bourses after centrist and independent Emmanuel Macron won France’s presidential election on Sunday. European equities had pushed higher ahead of the vote on signs Macron would defeat far-right candidate Marine Le Pen, with French shares hitting a nine-year high.
“European stocks continue to hold their ground, supported by a record $6 billion injected into European stock funds this past week,” said Jasper Lawler, senior market analyst, in a note Friday afternoon.
France’s CAC 40 PX1, +0.41% has jumped more than 11% this year, and the Stoxx Europe 600 has bulked up more than 9%.
Movers: The CAC 40 ended 0.4% higher at 5,405.42 on Friday. The best performance came from Vivendi VIV, +4.68%  as its shares popped up 4.7% after the company offered to buy a €2.36 billion stake in advertising group Havas SA HAV, +9.21% from Vivendi’s own chairman, Vincent Bolloré. Havas shares surged 9.2%.
But the CAC’s rise was limited by an 8% fall in shares of constituent ArcelorMittal SA MT, -6.44%  even as the steelmaker’s first-quarter net profit more than doubled to $1 billion.
Elsewhere, Cie. Financière Richemont SA CFR, -5.01%  slid 5% after the Swiss luxury-goods brand behind Cartier and Montblanc logged a 46% fall in 12-month profit.
Thyssenkrupp AG shares TKA, -4.51%  fell 4.1% after the German industrial conglomerate swung to a second-quarter net loss, pressured by the sale of its steel operations in Brazil.
AstraZeneca PLC AZN, +9.03% AZN, +9.22%  climbed 9% as the company posted positive, late-stage study results for cancer treatment Imfinzi. That was the biggest one-day percentage gain for the company since April 2014.
Also in the U.K., shares of Petrofac Ltd. PFC, -14.06%  tumbled 14% after U.K. authorities said they have launched an investigation into the activities of the oil services company on suspicion of “bribery, corruption and money laundering.”
Data: German economic activity accelerated in the first quarter, with GDP higher by 0.6%, or 2.4% in annualized terms.
Eurozone industrial production in March fell 0.1% from the previous month, according to Eurostat. The FactSet consensus estimate was for a rise of 0.3%.
Other indexes: Germany’s DAX 30 index DAX, +0.47%  gained 0.5% to 12,770.41. In London, the FTSE 100 UKX, +0.66%  rose 0.7% to a record close of 7,435.39 as the pound GBPUSD, +0.0000% stayed below $1.29 against the dollar.
Read: The ECB has 3 big reasons to wind up QE—here’s why it shouldn’t


Sue Chang, Ryan Vlastelica

J.C. Penney shares sink on weak same-store sales.
U.S. stocks closed slightly lower on Friday to record their first weekly retreat in nearly a month as investors weighed an uncertain political environment stemming from President Donald Trump’s firing of former Federal Bureau of Investigation Director James Comey.
The Dow Jones Industrial Average DJIA, -0.11% fell 22.81 points, or 0.1%, to finish at 20,896.61.
The S&P 500 index SPX, -0.15% slipped 3.54 points, or 0.2%, to close at 2,390.90. The S&P 500’s subdued action on Friday marks the 13th straight session that the large-cap index moved less than 0.5%, the longest streak since September 1995, according to the Dow Jones Data Group.
The Nasdaq Composite Index COMP, +0.09% edged up 5.27 points to end at 6,121.23.
For the week, the Dow is off 0.5% and the S&P 500 fell 0.4%. The Nasdaq Composite rose 0.3%, its fourth straight weekly gain, although the smallest in the streak.
Major U.S. indexes continue to trade near record levels, and the CBOE Volatility index VIX, -1.89% a proxy for investor anxiety, has been trading near multidecade lows. The VIX fell 1.7% to 10.42, roughly half its long-term average of 20.
Don’t miss: Technician sees absence of fear leading to stock market top in late May
“No one really knows what it means to have such a low VIX at a time of such high uncertainty, rising rates, high valuations, and corporate profits that aren’t particularly strong,” said Jonathan Angrist, chief investment officer of Cognios Capital. “It is very unusual.”
The dominant story over the past few days has been the recent firing of Comey. While this is seen as having little direct impact on corporate profits or stock prices, prolonged uncertainty on this front could be a catalyst for greater investor anxiety and market declines.
“The market isn’t overly concerned that Trump fired Comey or how he did it,” said Bob Pavlik, chief market strategist at Boston Private Wealth.
Still, there are concerns that the administration’s pro-business agenda could suffer if the Comey issue results in Trump losing political support from Republicans in Washington and his voter base, he added.
Read: Why investors still aren’t freaking out over the Comey firing
Friday morning, the president tweeted that Comey should hope there are no “tapes” of their conversations, a statement he didn’t elaborate on.
See also: Here’s why stocks could rally if Trump heads for the exit
Meanwhile, retail sales and consumer prices rose in April, albeit by a slower pace than had been expected, offering a mixed picture of the state of the economy.
Read: Retail stocks rocked as Macy’s casts pall on sector
“Investors, increasingly, are looking for a stronger package of economic data releases as the Federal Reserve continues to telegraph a June rate increase,” said Quincy Krosby, chief market strategist at Prudential Financial.

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Economic docket: Philadelphia Fed President Patrick Harker, speaking at Drexel University in Philadelphia, said that the U.S. economy can handle two more interest rate increases this year as “things are looking good.”
Retail sales rose 0.4% in April, according to the Commerce Department, below the 0.5% increase that had been forecast. Separately, consumer prices rose 0.2% while core CPI was up 0.1%, a smaller-than-expected increase.
The University of Michigan’s read on consumer sentiment rose to 97.7 in early May, slightly ahead of expectations.
Stock movers: General Electric Co. GE, -2.08%  fell 2.1% after Deutsche Bank downgraded the stock to sell, citing concerns over earnings quality. The industrial conglomerate was the largest decliner among Dow components.
Shares of J.C. Penney Co. Inc. JCP, -13.99%  slumped 14% after the department-store chain reported a larger-than-expected fall in same-store sales.
Read: J.C. Penney options traders prep for an unusually wild ride after earnings report
Tidewater Inc. TDW, -0.86%  pared losses but ended down 0.9% after the oil services company said it expects to file for bankruptcy by May 17.
U.S.-listed shares of AstraZeneca PLC AZN, +9.22%  jumped 9.2% as the drugmaker posted positive, late-stage study results for cancer treatment Imfinzi.
Other markets: U.S. oil prices CLM7, -0.02%  bounced back from earlier weakness to trade fractionally higher, putting it on track for a weekly gain of more than 3%. Investors remain hopeful that the Organization of the Petroleum Exporting Countries will extend a production-cut deal when it meets on May 25.
Read: Here’s one thing that could scuttle an extension of OPEC’s oil output cuts
Asian stocks ADOW, -0.08%  were mixed, as some indexes retreated in step with U.S. stock losses, but Chinese SHCOMP, +0.72%  equities gained. European stocks SXXP, +0.31%  moved modestly higher.
Gold prices GCM7, +0.29%  strengthened, while the dollar index DXY, -0.46%  was mostly flat.
—Barbara Kollmeyer contributed to this article.