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Jul 13, 2017

Asia, Europe and U.S. Stock Markets' Closing Reports on July 13, 2017:


Kenan Machado

Global equities extended their rally in Asia on Thursday, as dovish comments from Federal Reserve Chairwoman Janet Yellen improved risk-taking appetite.
In her testimony on Capitol Hill, Yellen signaled that the Fed would take a cautious approach to tightening policy in the face of an uncertain inflation outlook.
She said the Fed would continue to raise interest rates gradually, though it would change plans if inflation weakness persisted.
Yellen’s congressional testimony likely indicates the Fed won’t raise rates in September, said Kathy Lien, managing director for forex strategy at BK Asset Management.
“Everything hinges on inflation, which is the key uncertainty and right now it is running below their goal, having declined recently,” Lien said. “These are not the words of a hawkish central banker who wants to pound the table for additional tightening this year.”
Yellen’s comments offered some relief to equity investors, as stocks are at historical highs--helped in part by the availability of cheap money. The Bank of Korea left rates unchanged Thursday, though the Bank of Canada raised rates overnight.
Hong Kong’s Hang Seng Index HSI, +1.16%   was up 1.6%, leading gains in the region to hit a fresh two-year intraday high. Korea’s Kospi SEU, +0.74%   was up 1% after the rate decision, which wasn’t a surprise, but it indicated that the bank was in no rush to change its stance in spite of an improved growth outlook. The Kospi closed up 0.7%. Samsung Electronics 005930, +1.36%   was 1.3% higher.
Meanwhile, shares of blue-chip Chinese banks were higher in Hong Kong, with Bank of China 3988, +1.33%   up 1.3%, Industrial and Commercial Bank 1398, +1.35%   higher by 1.3% and Agricultural Bank of China 1288, +1.11%   gaining 1.1%. They have been gaining since Beijing injected liquidity into the interbank market on Wednesday for the first time since June 19, easing concerns about a liquidity squeeze.
Finance stocks also drove gains in Australia’s S&P/ASX 200 XJO, +1.11%  , which added 1.1% to almost make up for losses in the previous session. Among key bank stocks, Westpac WBC, +1.85%   rose 1.8%, Commonwealth Bank of Australia CBA, +0.54%   rose 0.5% and Australia and New Zealand Banking Group ANZ, +0.60%   gained 0.6%.
In Japan, a slightly weaker yen helped support the Nikkei Stock Average NIK, +0.01%   — which was up 0.1% — as a cheaper currency makes the country’s exports more competitive. Stocks of construction machinery and car makers rose, with Hitachi 6501, +0.60%   advancing 0.6% and Mitsubishi Motors 7211, +0.81%   up 0.8%. The U.S. dollar-yen pair JPYUSD, -0.070641%   was last at 113.18, up from 113.04 late Wednesday in New York.
Still, the market rally on Thursday may prove to be short-lived, as investors take stock of the sharp year-to-date gains in many key markets.
Even though Yellen played down the Fed’s balance sheet wind-down, central banks world-wide may be getting more concerned about asset prices, said Sean Darby, chief global equity strategist at Jefferies.
“Clearly they are uncomfortable with the pricing regime that has occurred,” he said.

Victor Reklaitis, Sara Sjolin

European stocks largely stepped higher Thursday, building on the prior day’s sizable jump that was sparked by dovish comments from U.S. Federal Reserve chief Janet Yellen.
The Stoxx Europe 600 SXXP, +0.32%  rose 0.3% to close at 386.14, after the index on Wednesday notched its biggest one-day percentage advance since April 24, tacking on 1.5%. Global equity benchmarks have been given a midweek shot in the arm by Yellen saying interest rates don’t have to rise all that much further.
But the region’s main equity benchmark was kept in check by a sharp drop for AstraZeneca PLC’s shares AZN, -3.45% AZN, -1.61%  . The drugmaker fell 3.5% for the Stoxx 600’s biggest drop in the wake of reports that CEO Pascal Soriot is expected to take the top job at Israel-based Teva Pharmaceuticals Industries Ltd. TEVA, +3.43%  .
Also on the downside, Daimler AG DAI, +0.46%  gave up 0.5% following reports the German auto maker might face an emissions scandal. A German media research consortium has said the maker of Mercedes-Benz cars had for almost a decade cheated on emissions tests on two of its lines of engines, a Deutsche Welle report said.
On the upside, Telecom Italia SpA TIT, +2.67%  rose 2.7%. S&P raised its outlook on the telecom’s credit rating to positive Wednesday, citing the successful execution of an efficiencies plan, a Dow Jones Newswires report said. But UniCredit analyst Stephan Haber is unconvinced, saying it “does not make sense” to assign a positive outlook before additional details are known about French telecom Iliad SA’s ILD, +0.33%  entry to the Italian telecom market, the report added.
National indexes: Germany’s DAX 30 index DAX, +0.12%  closed up 0.1% at 12,641.33, while France’s CAC 40 index PX1, +0.25%  climbed 0.3% to 5,235.40. But the U.K.’s FTSE 100 index UKX, -0.05%  slipped 0.1% to 7,413.44.
“While a less hawkish testimony from Fed Chair Yellen gave markets a boost yesterday, by inspiring hope of cheaper money for longer, [dollar] weakness since has offered mixed blessings,” Mike van Dulken, head of research at Accendo Markets, said in a note.
For example, the weaker dollar against the pound GBPUSD, +0.4735%  is “weighing on London-listed stocks with an international reliance. However, remember also that a weaker USD also represents a benefit for the key commodity space, namely oil and miners,” van Dulken added.
The pound also got a boost from hawkish comments from Bank of England policy maker Ian McCafferty who called for an early end to the central bank’s quantitative easing program.
Read: Yellen says not many more rate hikes needed
And see: Reacting to Yellen, traders may get to right place for wrong reason
Sterling traded at $1.2925, up from $1.2884 late Wednesday in New York.
Yellen was also testifying before the Senate Banking Committee on Thursday and was still speaking at the time of the European close.
Economic docket: German inflation for June was confirmed at 1.5%, up from 1.4% in May. However, inflation in France dipped to 0.8% last month, compared with 0.9% in May.

Wallace Witkowski

The Dow industrials closed at a second record in as many sessions Thursday as tech stocks pushed higher for a fifth day as Federal Reserve Chairwoman Janet Yellen reiterated a dovish stance in her second day of congressional testimony. The Dow Jones Industrial Average DJIA, +0.10% closed higher for a third-straight day, rising 20.95 points, or 0.1%, to finish at record 21,553.09, with shares of Wal-Mart Stores Inc. WMT, +1.50% Apple Inc. AAPL, +1.39% and Goldman Sachs Group Inc. GS, +1.32% leading blue chips higher with more than 1% gains. The S&P 500 index SPX, +0.19% rose 4.58 points, or 0.2%, to close at 2,447.83, with financials, energy and tech shares leading the benchmark higher. The Nasdaq Composite Index COMP, +0.21% closed up 13.27 points, or 0.2%, at 6,274.44, for a fifth day of gains.