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Mar 19, 2018

Asia, Europe and U.S. Stock Markets Report on March 19 ,2018.


Stocks, data and politics in focus

Cheang Ming

Asian markets closed mixed on Monday, with Japan's benchmark index underperforming regional peers as investors also turned their attention to the Federal Reserve's two-day policy meeting later in the week.
Japan's Nikkei 225 recorded steeper losses as the session wore on, with the index declining 0.9 percent, or 195.61 points, to close at 21,480.90. The broader Topix fell 0.96 percent, with all but one of its 33 sectors closing with losses.
Investor sentiment took a hit on the back of an ongoing political scandal involving Prime Minister Shinzo Abe over the sale of state-owned land. The yen, regarded as a safe haven currency, firmed to trade at 105.73 to the dollar by 3:05 p.m. HK/SIN.
Major exporters, including technology and automaker names, as well as financials ended in negative territory, although some manufacturing names clung to gains.


-195.61 -0.90%
HSI HSI 31513.76
11.79 0.04%
ASX 200 S&P/ASX 200 5959.40
10.00 0.17%
SHANGHAI Shanghai 3279.60
9.72 0.30%
KOSPI KOSPI Index 2475.03
-18.94 -0.76%
CNBC 100 CNBC 100 ASIA IDX 8873.98
-82.68 -0.92%
Meanwhile, South Korea's benchmark Kospi index slid 0.76 percent to end at 2,475.03. Automakers were sharply lower while steelmakers logged slight gains. Hyundai Motor fell 3.81 percent and Posco rose 0.29 percent.
Market sentiment in greater China markets told a different story, with the Hang Seng Index edging up by 0.16 percent by 3:00 p.m. HK/SIN as declines in property developers were offset by gains in financials.
The Shanghai composite tacked on 0.3 percent to finish at 3,279.60 and the Shenzhen composite added 0.27 percent to close at 1,868.05. The start-up ChiNext board rose 1.2 percent, besting the 0.44 percent gain seen on the large cap CSI 300 index, with health care stocks leading the move higher.
Meanwhile, Australia's S&P/ASX 200 got off to a positive start to the week, with the index advancing 0.17 percent to close at 5,959.40. Energy stocks rose 1.65 percent, leading gains on the day after the rise in oil prices in the last session.
MSCI's broad index of shares in Asia Pacific excluding Japan traded lower by 0.36 percent by 3:00 p.m. HK/SIN.
Markets in the region had closed mixed in the last session on the back of trade concerns and White House personnel-related developments out of Washington.

Fed meeting ahead

Ahead, markets will focus on the two-day Federal Open Market Committee monetary policy meeting later in the week. The central bank is expected to raise interest rates and investors are keen on getting more clarity on the number of rate hikes expected this year.
The meeting will also mark new Fed Chair Jerome Powell's first press conference.
"It is not a bold forecast to argue that there will be a hawkish undertone from the meeting," Michelle Meyer, U.S. economist at BofA Merrill Lynch Global Research, said in a report.
"However, our more nuanced view is that while the Fed will take steps in the hawkish direction, they will be baby steps rather than moving in leaps and bounds."
Stocks stateside edged slightly higher on Friday, but still recorded a loss last week. The Dow and S&P 500 declined 1.5 percent and 1.2 percent on the week, respectively.
Of note, economist Yi Gang was nominated to take over the helm at the People's Bank of China from current governor Zhou Xiaochuan, parliament delegates told Reuters on Monday.
The move was seen as a sign of continuity with the central bank's policy.
"Yi Gang, as a key architect of financial and foreign exchange reforms, is expected to follow up on yuan internationalization, as well as further open up China's capital and financial markets in [the] coming years," Vixhnu Varathan, Mizuho Bank head of economics and strategy, wrote in a note.
Among individual movers, shares of property developer CK Asset Holdings were off by 0.64 percent by 3:00 p.m. HK/SIN after tumbling more than 3 percent earlier after Li Ka Shing said he would step down as its chairman in May. Conglomerate CK Hutchison Holdings declined 1.77 percent ahead of the market close.
Shares of several display makers in the region also fell following a Bloomberg report that Apple was producing its own screens for the first time. Samsung Electronics closed lower by 0.78 percent, while Japanese names saw sharper falls, with Japan Display down 2.42 percent.


Micro Focus tanks 42%; investors look ahead to Fed meeting

Justina Crabtree, Sam Meredith

European markets closed lower Monday afternoon as investors looked ahead to a trading week in which the Federal Reserve is likely to hike interest rates.


FTSE FTSE 7042.93
-121.21 -1.69% 750736498
DAX DAX 12217.02
-172.56 -1.39% 100319328
CAC CAC 5222.84
-59.91 -1.13% 79297912
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed down just over 1 percent Monday afternoon, with major bourses and all sectors bar travel and leisure in negative territory.
Britain's FTSE 100 was the worst performing index, tanking 1.7 percent amid a flurry of downbeat company reports. The German DAX performed similarly, closing 1.4 percent lower.
Basic resources stocks led the drop, closing 2.6 percent down after tumbling during afternoon trade amid heightened fears of a trade war. The topic is likely to be top of the agenda at a two-day G-20 meeting starting in Argentina later on Monday, with any sign of escalating tension between Washington and Beijing likely to make investors in Asia increasingly nervous. BHP Billiton, Anglo American and Glencore all closed lower by around 4 percent.
Technology also closed well into the red. Stocks closed 2.6 percent lower amid news of a trading update for British tech firm Micro Focus. The company said its CEO had quit amid ongoing problems with its recent purchase of Hewlett Packard Enterprise assets. Micro Focus also slashed its annual revenue forecast for 2018, prompting shares to plummet by 46 percent at the market close.
The oil and gas sector closed down by 2.15 percent.
Travel and leisure was the only sector to finish positively, up by 0.4 percent. It was boosted by U.K. bookmakers William Hill and Ladbrokes, which closed up 4.2 and 2.9 percent respectively. This came on the back of new regulations from the Gambling Commission that were less harsh than initially feared.
Looking at individual stocks, French shopping center operator Klepierre said Monday that it had made a proposal to buy U.K. peer Hammerson, Reuters reported. The British firm rejected the offer, meaning that shares closed 24 percent higher.
Barclays shares closed up by 3.6 percent percent after Sherborne acquired the voting rights of 5.16 percent of the British bank's issued share capital.

Federal Reserve in focus

U.S. stocks moved lower Monday as a decline in Facebook dragged the technology sector lower.
The Nasdaq composite pulled back 2.2 percent as Facebook dropped 7.3 percent, on track for its biggest one-day drop in five years. The Dow Jones industrial average fell 310 points, with Caterpillar as the worst-performing stock in the index.
On Wednesday, the U.S. central bank is widely expected to raise interest rates to 1.75 percent, up from 1.5 percent. The Fed could also signal that as many as three more rate hikes may lie in store for the rest of the year.
Back in Europe, it was announced that the U.K. will remain within the European Union until the end of 2020, but with restricted powers. Negotiators from Britain and Europe are meeting in Brussels for Brexit talks ahead of an EU summit later in the week.

With Larry Kudlow on Trump's team and Jerome Powell in control at the Fed, where will the dollar be in a month?

Total Votes:
Not a Scientific Survey. Results may not total 100% due to rounding.


Nasdaq slides 1.8% as Facebook drags tech shares lower

Fred Imbert

U.S. stocks pulled back on Monday as a decline in Facebook pressured the technology sector. Wall Street also paid attention to Washington after a Twitter meltdown from President Donald Trump.
The Nasdaq composite dropped 1.8 percent to 7,344.24 in its worst day since Feb. 8 as Facebook dropped 6.8 percent. The Dow Jones industrial average fell 335.60 points to close at 24,610.91, with Caterpillar as the worst-performing stock in the index. The S&P 500 declined 1.4 percent to 2,712.92, with tech dropping 2.1 percent. Facebook was the worst-performing stock in the S&P 500 and posted its biggest one-day decline since March 2014.
Facebook fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent. Cambridge Analytica worked on Facebook ads with President Donald Trump's campaign in 2016.
"We think this episode is another indication of systemic problems at Facebook … We see enhanced risks for the company, but no near-term tangible impact on its business," Brian Wieser, an analyst at Pivotal Research, said in a note Monday. It was "made clear in the reporting is that Facebook did not make sufficient efforts to recover users' data, which then informed ad targeting in the 2016 US election. It also did not disclose the leak to users or investors."
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.
Shares of Facebook closed more than 10 percent below their all-time high set on Feb. 1 and dropped below their 50-day and 100-day moving averages, two key technical levels. Other technology shares also saw some selling pressure. Google-parent Alphabet and Apple, closing 3 percent and 1.5 percent lower, respectively.
"Part of me worries retail investors are selling out of the ETFs they bought to get FANG exposure," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "That could bring down the entire complex."
The Cboe Volatility index (VIX) — widely considered the best gauge of fear in the market — broke above 20 for the first time since March 7.
Investors also cast a wary eye at Washington following a Twitter tirade from Trump over the weekend.
On Sunday morning, Trump accused special counsel Robert Mueller of hiring "hardened Democrats" to probe alleged ties between his 2016 presidential campaign and Russia. Mueller is a Republican who has held appointments under Democratic and GOP presidents.
The president also dismissed the idea of former Deputy FBI Director Andrew McCabe – who was fired on Friday just two days before his retirement – having incriminating documents on him. Shortly after his firing, several media reports suggested McCabe kept a file of notes on his discussions with Trump, similar to documents former FBI Director James Comey is said to have taken.
Trump called those documents "fake memos" in a tweet.
Late Sunday, White House lawyer Ty Cobb once again said the president was not considering or discussing firing special counsel Robert Mueller.
The recent turmoil in Washington has this bull market "limping," according to Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets.
"Washington has turned into more of a headwind than a tailwind recently," Calvasina told CNBC's "Futures Now" recently. She added, however, the major averages could still reach new highs despite all the news out of Washington. "It feels like the bull is limping a little in here, but generally we see more reasons to be positive than negative."
Investors have been paying close attention to Washington recently amid a shift in trade policy and two key departures from the Trump administration. Trump signed two proclamations imposing charges on steel and aluminum imports earlier this month. Gary Cohn, who disagreed with Trump on implementing the tariffs, resigned from his post as director of the National Economic Council. Trump also fired Rex Tillerson from his post as Secretary of State last week, replacing him with CIA Director Mike Pompeo.
The Federal Reserve is expected to raise interest rates on Wednesday with new Fed chief Jerome Powell giving his first press conference. Market expectations for a March rate hike were at 94.4 percent as of Monday morning, according to the CME Group's FedWatch tool.
In corporate news, Rubbermaid-parent company Newell Brands agreed to appoint four independent directors designated by activist investor Carl Icahn. Icahn owns 6.9 percent of Newell's shares.