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May 25, 2018

Asia, Europe and U.S. Stock Markets Report - May 25, 2018: Markets | CNBC.


Asian stocks track lower after Trump cancels North Korea summit

Cheang Ming

Asian markets closed slightly lower on Friday following overnight news that U.S. President Donald Trump canceled a scheduled summit with Kim Jong Un.
South Korea's Kospi slipped 0.21 percent to 2,460.80, with gains in tech heavyweights failing to give the overall index a boost as steelmakers and financials took a hit. Over in Australia, the S&P/ASX 200 shed 0.07 percent to end at 6,032.80, with the energy and materials subindexes contributing to losses.
Greater China markets eased in the morning, with Hong Kong's Hang Seng Index slipping 0.48 percent by 3:00 p.m. HK/SIN as energy and tech sector stocks moved lower. On the mainland, the Shanghai composite edged down by 0.4 percent to finish at 3,142.17 and the Shenzhen composite declined 0.93 percent to 1,810.03.

13.78 0.06%
HSI HSI 30588.04
-172.37 -0.56%
ASX 200 S&P/ASX 200 6032.80
-4.30 -0.07%
SHANGHAI Shanghai 3142.17
-12.48 -0.40%
KOSPI KOSPI Index 2460.80
-5.21 -0.21%
CNBC 100 CNBC 100 ASIA IDX 8617.77
10.82 0.13%
Japan's Nikkei 225 erased early losses to close higher by 0.06 percent, 13.78 points, at 22,450.79. Airline stocks were buoyed after the fall in oil prices overnight while the Topix oil and mining sectors slid 0.87 percent and 2.82 percent, respectively.
Despite those slight gains, the Nikkei still finished the week down by more than 2 percent, according to Reuters data.
Other markets were also lower for the week, with the Shanghai composite declining around 1.2 percent. MSCI's index of shares in Asia Pacific excluding Japan was more sanguine, edging higher by 0.09 percent in Asia afternoon trade.

Trump complains about 'open hostility'

The moves lower came after Trump canceled a planned meeting with North Korean Leader Kim Jong Un that had been set to take place in Singapore on June 12. Trump said participating in the summit would be "inappropriate" given the "tremendous anger and open hostility" displayed by North Korea, which had reportedly suspended direct communication with the U.S. this week.
But following Trump's announcement on the cancellation, North Korea said it was willing to resolve issues with the U.S., the country's state-run KCNA reported on Friday.
"Risk aversion may persist in the interim, especially on uncertainty over China's role in the U.S.-DPRK negotiation (as suggested by Trump) amid the recent uptick in geopolitical tensions again," OCBC Bank analysts wrote in a morning note.
U.S. stocks finished the session lower, with the Dow Jones industrial average slipping 0.3 percent. Still, that was less severe than the 280-point fall seen after news of the cancellation was announced.
Gold, seen as a safe-haven during periods of uncertainty, pared some of its overnight gains but stayed above the $1,300 per ounce levels.
The dollar firmed against the Japanese yen after sliding overnight, last trading at 109.42 at 2:45 p.m. HK/SIN. The dollar index, which tracks the greenback against a basket of currencies, rose to 93.919 after dipping on Thursday.

Automakers take a hit

South Korean and Japanese automaker traded mostly lower, extending Thursday's declines after the U.S. Department of Commerce said it had started an investigation into automobile imports on a "national security" basis. U.S. Commerce Secretary Wilbur Ross told CNBC on Thursday that "economic security is military security."
On Friday, Toyota Motor declined 1.29 percent, Honda Motor was lower by 0.93 percent and in Seoul, Hyundai Motor and Kia Motors slipped 0.71 percent and 1.38 percent, respectively.
Markets in the region had closed mostly lower in the last session following that announcement.
In individual movers, shares of Samsonite fell 13.19 percent by 3:00 p.m. HK/SIN in Hong Kong after the luggage maker said allegations in a recent short seller report were "one-sided and misleading." Blue Orca Capital, which issued the report, had accused Samsonite of having questionable accounting practices.
Lenovo Group, meanwhile, was up 6.65 percent by 3:01 p.m. HK/SIN after the PC maker announced fourth-quarter revenues rose 11 percent on year, full-year revenue coming in at a three-year high, according to Reuters. The company also recorded at $189 million loss for the fourth quarter, which was larger than the $161.3 million average in a Thomson Reuters poll.

European stocks close up despite political uncertainty in Italy

Sam Meredith

European stocks closed slightly higher on Friday amid continued uncertainty surrounding Italy's government-in-waiting. Traders also continued to monitor U.S.-North Korea relations.

FTSE FTSE 7730.28
13.54 0.18% 870469524
DAX DAX 12938.01
82.92 0.65% 107262643
CAC CAC 5542.55
-5.90 -0.11% 90526300
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed up 0.14 percent, with most major bourses negative and sectors mixed.
Italy's designated Prime Minister Giuseppe Conte, whose credentials have been hit with scrutiny, met with Bank of Italy Governor Ignazio Visco on Friday. Italian short-dated bond yields soared as uncertainty over the country's incoming anti-establishment government continued. The two-year note rose as high as 35 basis points on Friday. Italy's FTSE MIB benchmark, meanwhile, was down 1.54 percent.
Bank stocks were among the worst performers, down 0.76 percent. European finance ministers struck a deal for risk reduction in the continental banking system. Italian lender Banco BPM was the worst performer in the sector, down 7.34 percent.
Europe's travel and leisure stocks led the gains Friday lunchtime, up more than 1 percent amid earnings news. British gambling firm GVC Holdings forecast higher cost synergies following its £4 billion ($5.4 billion) acquisition of bookmaker Ladbrokes Coral late last year. The group's total gaming revenue rose 7 percent for the period of January 1 through to May 20. Shares of GVC Holdings rose more than 4 percent on the news.
Looking at individual stocks, gold miner Centamin tumbled to the bottom of the European benchmark after it announced a hefty cut to its full-year production guidance on Friday. It also raised its cost expectations because of lower grade ore at a mine in Egypt. Shares of Centamin were down over 18 percent on the news.

Singapore summit

On Wall Street, stocks were mixed as geopolitical fears balanced solid earnings from corporates. President Donald Trump said the U.S. administration had reopened talks with North Korea following the cancellation of the meeting with leader Kim Jong Un.
North Korea's vice foreign minister had said the country was still hopeful of a "Trump formula" in order to resolve a standoff over its nuclear weapons program.
Back in Europe, sweeping new data laws are set to be rolled out across the region on Friday. The introduction of General Data Protection Regulation (GDPR) is expected to have a far-reaching impact on some of the world's biggest technology firms.
On the data front, household spending in Britain slowed to its weakest level in three years, while falling levels of business investment dragged the economy to its worst quarter for five years. The U.K.'s Office for National Statistics confirmed Friday that growth came in at 0.1 percent during the first three months of the year.


Stocks hold weekly gains as solid earnings overshadow geopolitical fears

Thomas Franck

U.S. stocks fell Friday as geopolitical fears following President Donald Trump's move to cancel a key summit with North Korea weighed on solid corporate earnings.
The Dow Jones industrial average fell 50 points amid losses in shares of Chevron and Caterpillar and gains in UnitedHealth and McDonald's. The S&P 500 fell 0.2 percent amid continued losses in energy and financials stocks.
Both sectors have been under pressure this week as a decline in oil prices weigh on industry leaders like Exxon Mobil and Chevron, which was down 4 percent Friday. Lower interest rates, meanwhile, dragged on bank stocks.
U.S. West Texas Intermediate crude futures fell $2.83, or 4 percent, to settle at $67.88 on Friday after several headlines suggested OPEC and non-OPEC members could increase supply. Russian Energy Minister Alexander Novak met with his Saudi counterpart, Khalid Falih in St. Petersburg to discuss current output caps.
The move Friday represents WTI crude's worst day since July 2017; oil is off more than 7 percent from recent highs above $72.
The rate on the benchmark 10-year Treasury note has fallen roughly 15 basis points since Monday; it was last seen at 2.93 percent. The Federal Reserve's May meeting minutes released this week showed the central bank may be willing to let inflation run a little hotter than its two percent goal. A pivot to safer asset classes in the wake of geopolitical concerns has also helped send rates lower.
Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange (NYSE), April 6, 2018 in New York City. Getty Images
"I think we're facing a situation akin to that in 2008, when we had the Fed saying the economy was very strong," said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. "Despite the fiscal stimulus from the tax cuts, the optimism is not reflected in the bond market."
"The other thing I would say concerns the Fed minutes – the Fed blinked. That was the beginning of the downturn this week," he added. "The Fed tried to make up for it up by saying that they would allow inflation to rise above its target ... [but] the Fed never admits to an error."
The Nasdaq composite was up 0.1 percent between gains in Netflix and Apple and losses in Facebook and Cisco. Trading volume across the U.S. has been below its recent trend this week as traders leave Wall Street ahead of the long weekend. Markets will be closed Monday for the Memorial Day holiday.
A string of solid earnings reports has helped keep equities on track for weekly gains, with Foot Locker adding to the optimism on Friday.
The athletic shoe retailer handily beat Wall Street expectations, posting adjusted earnings per share of $1.45 versus expectations of $1.24 per share. It posted revenue of $2.03 billion, also ahead of estimates.
The company's stock rose 19.8 percent following the report, on track for its best day since November.
"At the end of the day, it's going to come down to earnings and the ability of companies to beat," said Jeremy Klein, chief market strategist at FBN Securities. "Things are quiet ahead of the holiday ... [but] there's nothing to suggest corporate earnings in the next couple quarters will be any less impressive."
Customers walk with Foot Locker shopping bags on the Third Street Promenade in Santa Monica, California. Patrick T. Fallon | Bloomberg | Getty Images
Customers walk with Foot Locker shopping bags on the Third Street Promenade in Santa Monica, California.
Several other S&P 500 components also gave investors reason for optimism throughout the week, including home improvement retailer Lowe's.
Though the Mooresville, North Carolina-based company missed expectations for the first quarter on Wednesday, its stock rose more than 10 percent after it maintained its annual financial targets.
Shares also rallied after famed hedge fund manager Bill Ackman revealed a $1 billion stake in the company; the stock is up more than 12 percent since Tuesday's close.
High-end jeweler Tiffany & Co., meanwhile, is having one of its best weeks on Wall Street.
The company's stock rose more than 23 percent after reporting that same-store sales rose 7 percentin the quarter, overshooting expectations of only 2.6 percent. It also raised its full-year guidance in light of the solid beat.
The New York-based company suggested its comeback plan is working to retain price-conscious millennial shoppers from drifting to new competitors. Its stock is up 25 percent this week.
The generally buoyant sentiment following the earnings numbers was tempered after President Trump's abrupt decision to scrap a landmark summit with North Korean leader Kim Jong Un. The meeting would have been the first face-to-face encounter between a sitting U.S. president and a North Korean premier.
In response, Pyongyang's vice foreign minister said the country still hoped for a "Trump formula," before adding the Asian state would remain open to resolving long-standing issues with the world's largest economy. This helped market sentiment to recover Friday morning with European stocks posting solid gains.
The Stoxx Europe 600 rose 0.1 percent Friday, while the Korean Kospi lost 0.2 percent.
U.S. stocks finished lower on Thursday on the news of the canceled summit in Singapore. The Dow Jones industrial average fell 75 points to finish at 24,811.76 by the closing bell, well off a 280-point drop immediately after Trump's statement.
New orders for U.S.-made capital goods increased more than expected in April, hinting that business spending on equipment was accelerating after a slowdown toward the end of the first quarter.
The Commerce Department said Friday that orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 1 percent last month. Economists polled by Reuters had forecast core capital goods orders rising 0.7 percent last month.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, dropped 1.7 percent in April.

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