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May 7, 2018

Asia, Europe and U.S. Stock Markets Report - June 7, 2018


China stocks lead Asia higher, lifted by commodities

Joanne Chiu

The global equity rebound continued Monday in Asia after U.S. stocks rallied Friday on a solid April jobs report.
The gains were led by China, where indexes rose by more than 1% despite a lack of progress on trade talks with the U.S.
Small-cap companies outperformed, with the startup-heavy ChiNext climbing 2.3%, while the Shanghai Composite Index SHCOMP, +0.57%  gained 1.5%.
Daxiao Li, chief economist at Yingda Securities in Shenzhen, said sentiment on the sector was lifted by China’s late-Friday release of draft rules for depositary receipts. The rules would pave the way for Chinese technology companies listed abroad to also trade on the mainland.
More broadly, the market was helped by recent stock purchases by some major Chinese firms and executives, Li said, as well as a slower pace of initial public offerings. China’s stock market often struggles when the number of IPOs rises, as investors typically sell stocks to put some money into the debuts.
China’s gains helped push up Hong Kong’s benchmark index HSI, +1.21%  by 0.2%. The Hang Seng Index has underperformed amid worries about the city’s interest rates and the Hong Kong dollar, with the index falling in six of the previous seven weeks.
Ping An Healthcare 1833, +1.71%  continued to struggle after its debut on Friday, when it had the worst performance among major tech IPOs globally since October 2015. The stock ended 3.7% lower.
“This isn’t surprising as we’ve seen some other high-profile newly listed stocks trading below their IPO prices not long after their debuts,” noted Li Kwok Suen, a fund manager at Phillip Capital Management.
Commodities stocks helped Asian equities reverse Friday’s broad selling, which was led by weakness in financial shares. The U.S. oil benchmark CLM8, -1.06% topped $70 a barrel for the first time since late 2014 on Monday, rising 1% alongside a similar increase in the Brent LCON8, -0.81% global standard.
The Nikkei Stock Average NIK, +0.31%  ended marginally lower as the market reopened after a four-day weekend.


European markets higher amid rising oil prices

Alexandra Gibbs, Silvia Amaro, David Reid

European markets closed above the flatline Monday, as investors digested further earnings and pushed capital into the energy sector.


FTSE FTSE 7567.14
64.45 0.86% 907883149
DAX DAX 12948.14 --- UNCH 0% 0
CAC CAC 5531.42 --- UNCH 0% 47001976
IBEX 35 --- --- --- --- --- ---
The pan-European Stoxx 600 closed provisionally up by 0.6 percent. In the U.K., markets are closed due to a public holiday.
Food and beverage was among the top performing sectors, up by 0.7 percent. Kerry group drove the sector higher, up by nearly 3 percent. The company reported last week a 3.7 percent increase in volumes during the first quarter of the year. At the same time, the sector received news that Nestle will pay $7.15 billion to Starbucks to market the products of the U.S. coffee firm around the world. Nestle shares rose 1.3 percent.
Technology stocks took the lead Monday. At the top of the sector was Austria Microsystems, up by 3 percent. The company is one of the suppliers of Apple. Comments from Warren Buffett over the weekend that he had made a wrong call on the stock has increased investor focus on Apple.
Air France sank to the bottom of the index, down by around 10 percent. This was after comments from Bruno Le Maire, the finance minister of France, stating that the government would not bailout the airline.

Should Trump scrap the Iran deal?

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Stocks close off session highs, Trump tweets decision on Iran coming

Fred Imbert, Alexandra Gibbs

Stocks closed higher on Monday as technology shares posted a three-day winning streak. However, the major averages closed well off the highs of the day after President Donald Trump tweeted he will be announcing his decision on the Iran deal on Tuesday.
The Dow Jones industrial average ended 94.81 points higher at 24,357.32 after rising as much as 200 points, while the S&P 500 posted a gain of 0.4 percent to 2,672.63. The Nasdaq composite rose 0.8 percent to 7,265.21; it rose as much as 1.1 percent.
Trump — who has railed against the U.S.-Iran nuclear deal signed in 2015 — sent his tweet about the Iran decision at 2:44 p.m. ET. The deal lifts sanctions on Iran in exchange for the Middle Eastern nation curbing its nuclear program.
"Oil dove pretty good on that, then energy stocks led us off the highs," said Dave Lutz, head of ETF trading at JonesTrading. Crude fell in after-hours trading after settling 1.5 percent higher.
The major averages were first boosted by strong gains in energy stocks on Monday. The Energy Select Sector SPDR Fund (XLE) rose as much as 2.3 percent before closing 0.1 percent higher.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York. Brendan McDermid | Reuters
A trader works on the floor of the New York Stock Exchange (NYSE) in New York.
Energy stocks got a boost from rising oil prices earlier, as crude hit highs not seen since late 2014. Prior to the U.S. open, U.S. crude rose above $70 per barrel, while Brent hit $75.89 — a level not seen since November 2014.
"The oil market has turned a corner. Demand is rising and supply is getting tighter," said Peter Cardillo, chief market economist at Spartan Capital Securities. "Just based on fundamentals, we're looking at $72-to-$75 per barrel."
Nonetheless, stocks added to the strong gains seen in the previous session. On Friday, the major averages jumped more than 1 percent as shares of Apple hit an all-time high on news that Warren Buffett's Berkshire Hathaway bought 75 million shares of the company in the first quarter. Apple gained 0.7 percent on Monday.
In corporate news, Nestle agreed to pay $7.15 billion to Starbucks to for the rights to sell the coffee chain's products globally. Starbucks shares briefly rose before slipping 0.4 percent.
Meanwhile, Blackstone reached a deal with Gramercy Property Trust to buy it for $7.6 billion in cash. Gramercy's stock shot up more than 15 percent.

JPMorgan investment specialist: We're favoring international markets over U.S. markets

Anastasia Amoroso, JPMorgan investment specialist, and CNBC's Mike Santoli discuss Warren Buffett's comments on stocks and bonds and their performance thus far.