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May 15, 2018

Asia, Europe, and U.S. Stock Markets Report -May 15, 2018. | CNBC Markets


Oil, stocks, currencies and China data in focus

Cheang Ming

Slight gains seen during the U.S. session failed to translate into an advance in Asian stocks on Tuesday, with major markets in the region finishing the day in negative territory.
The Nikkei 225 hovered around the flat line, before closing lower by 0.21 percent, or 47.84 points, at 22,818.02. Gains seen in banking stocks, with Mitsubishi UFJ Group up 1.71 percent, were offset by declines in the real estate sector, among others.
Over in Seoul, the benchmark Kospi declined 0.71 percent to 2,458.54 as technology stocks weighed. Heavyweight Samsung Electronics fell 1.8 percent while chipmaker SK Hynix gave up early gains to slide 0.94 percent. Steelmakers and automakers also came under pressure.


-47.84 -0.21%
HSI HSI 31152.03
-389.05 -1.23%
ASX 200 S&P/ASX 200 6097.80
-37.50 -0.61%
SHANGHAI Shanghai 3192.58
18.55 0.58%
KOSPI KOSPI Index 2458.54
-17.57 -0.71%
CNBC 100 CNBC 100 ASIA IDX 8674.46
-116.32 -1.32%
In Hong Kong, the Hang Seng Index lost 0.88 percent by 3:22 p.m. HK/SIN after notching its sixth straight session of gains on Monday. Heavily weighted financials and technology shares were a drag on the benchmark, with Tencent down 2.72 percent before the market close.
Mainland markets closed higher following the release of mixed China data, which showed industrial output topped expectations while retail sales missed forecasts. Also in focus was MSCI's Tuesday announcement that 234 China A shares will be added to its indexes on June 1.
The Shanghai composite advanced 0.58 percent to end at 3,192.58 and the Shenzhen composite rose 0.91 percent to 1,839.88.
In Sydney, the S&P/ASX 200 eased 0.61 percent to 6,097.80, with declines seen in all but the information technology subindex. Telecommunications stocks traded lower as Telstra fell 5.59 percent after its profit warning on Monday.
MSCI's broad index of shares in Asia Pacific excluding Japan was lower by 0.83 percent in Asia afternoon trade.
The broad move lower in major Asian markets followed a positive session on Wall Street, with U.S. stocks finishing slightly higher as investors focused on U.S.-China trade ties ahead of a second round of negotiations expected this week.
Of note, the yield on the benchmark 10-year U.S. Treasury note stood at 3.019 percent during Asian trade, after topping the 3 percent level in the last session.

Mixed signals on trade

Commerce Secretary Wilbur Ross on Monday said he hoped good relations between Trump and Xi would help to bring an agreement on trade matters, although he also acknowledged that the gap between the countries "remains wide."
That followed a tweet from President Donald Trump on Sunday about working to find a way for Chinese telecommunications equipment company ZTE "to get back into business, fast." That pledge comes after the U.S. government imposed a ban on U.S. companies on supplying ZTE with technology after the Chinese firm was found to have illegally shipped equipment to Iran.
Amid optimism that negotiations between the two countries, some analysts highlighted broader uncertainty regarding trade-related news flow.
"[I]t's all still very much a work in progress," David de Garis, director of economics at National Australia Bank, said in a note.
Declines in the region also followed the move higher seen in the last session, with Hong Kong's Hang Seng Index leading the advance. The benchmark closed up 1.35 percent on Monday.
Meanwhile, oil prices were steady after gains seen in the last session as OPEC raised its global oil demand estimate for the year. U.S. West Texas Intermediate crude futures slipped 0.07 percent to $70.91 per barrel and Brent crude futures edged lower by 0.04 percent to trade at $78.20.
Oil prices have risen generally amid production curbs, which began in 2017, led by the Organization of Petroleum Exporting Countries (OPEC).
"You have 24 countries: There's OPEC, non-OPEC, Vienna Alliance, and there's a real effort to cement that relationship. So even if the full cuts don't continue into 2019, there's a sense that this dialogue and partnership with Russia has been very productive, they don't want to let that go," Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNBC's "Capital Connection."
In individual movers, AAC Technologies fell 5.96 percent after the company on Monday announced first-quarter net profit that missed expectations.


European markets close mixed amid earnings; Iliad shares slump 19%

Sam Meredith, Justina Crabtree

European markets closed mixed Tuesday afternoon as investors monitored key political and economic risks while oil prices hovered close to multi-year highs.


FTSE FTSE 7722.98
12.00 0.16% 1059483220
DAX DAX 12970.04
-7.67 -0.06% 109889128
CAC CAC 5553.16
12.48 0.23% 91154242
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed 0.1 percent higher provisionally, with major bourses and sectors pointing in different directions.
Europe's oil and gas sector led the gains, climbing throughout the afternoon to close up nearly 1 percent. Oil prices themselves recently hit multi-year highs following strong global demand, tension in the Middle East and uncertainty about output from major exporter Iran. OPEC has reported that the global oil glut has virtually been eliminated.
Financial services also performed well, closing up 0.9 percent. British firm Hargreaves Landsown topped the sector to close up almost 2.5 percent. According to Reuters, the company's total assets grew 3.1 percent in the first quarter of this year on strong client demand.
Meanwhile, telecoms stocks led the losses, closing off by over 1.9 percent amid earnings news. French telecommunications firm Iliad slumped to the bottom of the benchmark after it reported earnings that missed expectations. Shares of the company closed 19.5 percent lower — touching their lowest level since late 2013 — after a weak performance in its landline business in the first quarter.Vodafone was also trading lower after the world's second-largest mobile operator reported its long-time CEO is poised to step down in October. Vittorio Colao is set to be replaced by Nick Read, the company's finance director since 2014. The firm's shares closed 4.3 percent down on the news.
Europe's banking sector bounced back from slight losses earlier on in the afternoon, closing up 0.3 percent. Raiffeisen Bank, Commerzbank and Credit Agricole posted their latest figures earlier in the day, with all three lenders near the top of the sector amid better-than-expected earnings over the first three months of 2018.
Looking at individual stocks, ThyssenKrupp posted earnings in line with expectations but higher cost savings and lower IT spending appeared to mask a surprise loss at the company's ailing Industrial Solutions business. Its shares closed 6.5 percent in the red.
Not a Scientific Survey. Results may not total 100% due to rounding.
On the data front, the mood among German investors remained unchanged at its lowest level in more than five years in May, a survey showed Tuesday. The ZEW research institute said its monthly survey showed a reading of -8.2 — it's lowest level of economic sentiment since November 2012.


Dow drops about 200 points, snaps 8-day winning streak

Fred Imbert, Thomas Franck, Silvia Amaro

U.S. stocks dropped sharply on Tuesday after Home Depot reported quarterly sales that fell short of Wall Street's expectations and interest rates breached new highs.
The Dow Jones industrial average fell 192 points, with Home Depot among the biggest contributors of losses. The index also snapped an eight-day winning streak.
The S&P 500 declined 0.7 percent as health care and real estate stocks lagged. The Nasdaq composite dropped 0.8 percent as Amazon, Microsoft and Google-parent Alphabet all pulled back more than 1 percent.
The decline in U.S. equities came after Home Depot reported first-quarter earnings that beat Wall Street's expectations, but its sales missed estimates thanks to what the company categorized as a "slow start" to spring sales.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange (NYSE) in New York.
Spring is an especially important season for the home improvement retailer as shoppers traditionally stock up on gardening supplies and renovation materials. Customer transactions, however, fell 1.3 percent during the quarter. Home Depot fell 1.6 percent.
"The Home Depot earnings did not help," said Mark Esposito, CEO of Esposito Securities. "People are trading the market in short increments, but they're not looking at the fundamentals" which are "still strong."
Stocks also slipped after the Commerce Department reported retail sales increased 0.3 percent in April, down from a 0.8 percent gain in March, which was revised higher. The solid read on consumer spending, however, was accompanied by an uptick in interest rates, a move some market watchers blamed for a further decline in equities.
The benchmark U.S. 10-year Treasury yield, which moves inversely to its price, hit 3.09 percent on Tuesday, its highest read since 2011. The 10-year yield is especially important to investors given its role as a barometer for mortgage rates and other financial instruments.
The dollar index, which tracks the dollar against a basket of other currencies, was up 0.7 percent at 93.23.
"The consumer being alive and well is a positive, but just after eight days of being higher, the market's looking for a reason" to pull back, said Art Hogan, chief market strategist at B. Riley FBR. "You've gradually seen a higher yield on that 10-year note, not draconian moves ... [but] positive economic data is going to drive them higher."
Hogan added that, while investors may have originally doubted that the Federal Reserve would be bold enough to hike rates four times in 2018, the market is gradually starting to "come around" to the idea that the Fed could hike rates in June, September and December.
Traders for the first time Monday assigned a 51 percent chance of a fourth interest rate hike this year by the Fed, according to the CME. The strong data Tuesday will only increase the ranks of traders and investors with that belief.
The Fed, tasked with keeping inflation around 2 percent and maintaining healthy employment levels, considers economic data when deciding whether to increase the benchmark federal funds rate. Despite a narrow CPI miss last week, personal consumption expenditures — the Fed's preferred inflation metric — is now near the central bank's target.
Overseas, the Stoxx Europe 600 was largely unchanged after data revealed a deceleration in euro-area economic growth to 0.4 percent in the first quarter, down from 0.7 percent in the fourth quarter of last year.
Germany, the euro zone's largest economy, cooled to 0.3 percent growth in the first quarter, down from 0.6 percent in the prior quarter.


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