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May 2, 2018

Asia, Europe and U.S. Stock Markets Report - May 2, 2018.


Stocks, dollar, oil prices and earnings in focus

Cheang Ming

Asian stocks closed slightly lower on Wednesday following the mixed session on Wall Street as several markets in the region resumed trade after a holiday.
Japan's Nikkei 225 edged down by 0.16 percent, or 35.25 points, to close at 22,472.78. The broader Topix also recorded slight weakness and finished lower by 0.15 percent as its mining and oil subindexes led losses for the day. Automakers were also broadly traded lower.
Elsewhere, the Kospi shed 0.39 percent to close at 2,505.61 as most steelmakers slipped and automakers declined.

-35.25 -0.16%
HSI HSI 30723.88 --- UNCH 0%
ASX 200 S&P/ASX 200 6050.20 --- UNCH 0%
SHANGHAI Shanghai 3082.10
-0.13 0%
KOSPI KOSPI Index 2505.61 --- UNCH 0%
CNBC 100 CNBC 100 ASIA IDX 8609.51
-27.81 -0.32%
Hong Kong's Hang Seng Index edged down by 0.49 percent by 3:45 p.m. HK/SIN, with declines in large cap financials before the market close. Casino stocks, however, gained on the back of revenues topping expectations last month, with SJM Holdings up 5.18 percent ahead of the end of the trading session.
Mainland markets gave up early gains to close little changed, with the Shanghai composite ending flat at 3,082.10 and the Shenzhen composite inching lower by 0.07 percent to 1,774.90.
Down Under, the S&P/ASX 200 bucked the downward trend in the region to close 0.58 percent higher at 6,050.20, with broad-based gains seen in all sectors except telecommunications.
MSCI's broad index of shares in Asia Pacific excluding Japan last traded lower by 0.14 percent.
The tepid moves in early trade came on the back of a mixed session on Wall Street, with the Nasdaq composite advancing as Apple stock jumped ahead of expectation-topping results released after the market close.
Almost 80 percent of S&P 500 companies that had reported first-quarter results as of Monday had topped expectations, according to Thomson Reuters I/B/E/S.

Dollar gives up some gains 

In currencies, the dollar held onto most of its overnight gains ahead of the end of the Federal Reserve's May meeting. The dollar index, which tracks the greenback against a basket of six currencies, was slightly softer at 92.330 at 3:32 p.m. HK/SIN, but remained near a four-month high.
Most analysts expect the Fed to hold interest rates steady this month, but will be on the lookout for signals on the central bank's views on inflation and the economy.
Against the yen, the dollar was mostly steady at 109.76. Meanwhile, the Australian dollar edged higher after slipping below the $0.75 handle in the last session. The Aussie dollar last traded at $0.7526.
"What's happened most recently has been a growing divergence in the growth and the inflation data in the U.S. versus Europe and Japan, in particular. And we think that persists for a little while longer, but as you start to go into the second half of this year, euro zone inflation ... starts to tick up, as does Japanese inflation," Marc Franklin, senior portfolio manager at Conning Asia Pacific, told CNBC's "Capital Connection."
"So cyclically, on a shorter term basis, we think this rebound in the dollar is [for] a fairly finite period of time."
Oil prices edged higher after sliding in the last session amid strength in the dollar. Brent crude futures for July delivery gained 0.49 percent to trade at at $73.49 per barrel and U.S. West Texas Intermediate futures for June delivery tacked on 0.7 percent to trade at $67.72.
Recent concerns over the possibility of the U.S. re-imposing sanctions on Iran have supported oil prices.
On the economic front, China's Caixin manufacturing PMI rose to 51.1 last month, compared to a forecast of 50.9.
In individual movers, SK Innovation advanced 6.11 percent following news earlier this week that it would buy back around 1 trillion won (932.6 million) of its shares.
Meanwhile, shares of Standard Chartered were down 1.75 percent in Hong Kong as of 3:37 p.m. HK/SIN. The bank reported earlier in the day that first-quarter pretax profit topped expectations.
Elsewhere, Qantas stock jumped 8.1 percent after the airline announced it was expecting record full-year pre-tax profit of between 1.55 billion and 1.6 billion Australian dollars ($1.17 billion to $1.2 billion).


focus on earnings, Fed meeting

Silvia Amaro, Ryan Browne

European stocks closed higher on Wednesday as investors kept their focus on earnings and monitored an upcoming Federal Reserve meeting.

FTSE FTSE 7543.20
22.84 0.30% 855360116
DAX DAX 12802.25
190.14 1.51% 114342146
CAC CAC 5529.22
8.72 0.16% 96885746
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed provisionally more than 0.6 percent higher with most sectors trading in positive territory. Basic resources were the top-performing sector, up by almost 2.8 percent, on earnings.
Tech stocks were among the top performers. Shares of chipmakers Austria Microsystems and STMicroelectronics rallied after Apple reported strong second-quarter earnings.
Looking across the benchmark, Inmarsat rose more than 8 percent as demand for Wi-Fi on flights aided its first-quarter results. Novo Nordisk saw its shares up by more than 4 percent on earnings. The drugmaker beat expectations in its first quarter.
Paddy Power Betfair sank to the bottom of the index, down by almost 5.6 percent. The company reported a 6 percent drop in earnings for the first quarter on higher taxes in the U.S.
On Wall Street, the tech-heavy Nasdaq index opened higher, boosted by Apple's strong quarterly results.
The Federal Reserve is due to conclude a two-day monetary policy meeting on Wednesday. Market expectations suggest that there will be no new rate hikes in the U.S., but analysts will be looking for indications as to whether that will happen shortly.

Is the greenback back?

Not a Scientific Survey. Results may not total 100% due to rounding.
In Brussels, the European Commission proposed a bigger budget for the soon-to-be 27 member bloc. The proposal, which will apply from 2021 to 2027, aims to cut farm subsidies and increase spending on research and technology.
In terms of data, euro zone manufacturing PMIs showed a slight slow down in activity. The final March reading came in at 56.2, which represented a 13-month low. The data comes a time when many analysts have started wondering about a potential economic slowdown in the euro area.


Dow closes more than 150 points lower, but Apple rises 4%

Fred Imbert, Alexandra Gibbs

Stocks closed lower on Wednesday after Federal Reserve's latest monetary policy announcement hinted at higher inflation ahead.
The Dow Jones industrial average declined 174.07 points to 23,924.98, while the S&P 500 fell 0.7 percent to 2,635.67. The Nasdaq composite also dropped 0.4 percent to close at 7,100.90. The major indexes initially popped after the the central bank made its announcement, but sold off sharply in the last hour of trading.
The Fed kept interest rates unchanged, as was largely expected. The central bank's policymaking committee also noted that "overall inflation and inflation for items other than food and energy have moved close to 2 percent." That was an upgrade from the March meeting in which the FOMC said the indicators "have continued to run below 2 percent."
The change is key as Fed officials consider 2 percent to be a healthy level of inflation and a key for continuing to push rates higher.
Michael Nagle | Bloomberg | Getty Images
Michael Shaoul, chairman and CEO of Marketfield Asset Management, also pointed out the central bank used the word "symmetric" to describe its inflation target. "We imagine that its use indicates a willingness to allow inflation to track higher than 2 percent for a period to compensate for the long time that it stayed below this level," he said.
Treasury yields initially rose before falling, with the 10-year note yield trading at 2.974 percent and the two-year yield below a near 10-year high.
"There's not that much to read into this," said Crit Thomas, global market strategist at Touchstone Investments. "The market continues to struggle with conflicting forces, including awesome earnings, higher rates and fears of a trade war."
In corporate news, Apple rose 4.4 percent after reporting better-than-expected quarterly earnings and revenue that surpassed market expectations.
Wall Street was eagerly awaiting for Apple's quarterly figures as the company is seen as a bellwether for the technology sector.
Earnings season continued Wednesday with CVS Health and Estee Lauder among the companies that reported earnings that beat analyst expectations. Garmin and Clorox also posted stronger-than-forecast results.
Overall, most major companies have reported quarterly earnings that outperform analyst estimates. According to FactSet, 79.1 percent of S&P 500 companies that have reported thus far have surpassed earnings expectations.
However, reactions to the earnings have been mixed, with some companies seeing their stock drop despite beating the Street.
"It seems a lot of good news has already been priced in," said Willie Delwiche, investment strategist at Baird. "We are now asking if we can continue to surpass that high bar that has been set."
In economic news, mortgage applications dropped 2.5 percent as rates reached their highest levels in nearly five years. ADP and Moody's Analytics also found that private payrolls grew by 204,000 in April, more than the expected 200,000.
—CNBC's Anita Balakrishnan and Jeff Cox contributed to this report.

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