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Jun 19, 2019

Markets | Asia, Europe and US Markets Closing Report on Wednesday 19, June 2019.

                                                                        ASIA

Chinese shares rise amid positive US-China trade development; yuan jumps

Eustance Huang



Stocks in Asia rose on Wednesday following positive developments overnight on the U.S.-China trade front.
Mainland Chinese stocks gained on the day, as the Shanghai composite rose 0.96% to 2,917.80 and the Shenzhen component gained 1.38% to 8,925.73, while the Shenzhen composite added 1.475% to 1,526.77.
Hong Kong’s Hang Seng index also jumped 2.35%, as of its final hour of trading, with shares of life insurer AIA surging more than 3.5%.
Over in South Korea, the Kospi rose 1.24% to close at 2,124.78, with shares of industry heavyweight Samsung Electronics and chipmaker SK Hynix jumping 2.25% and 5.99%, respectively.
Australia’s S&P/ASX 200 also gained 1.19% to finish its trading day Down Under at 6,648.10, with almost all sectors higher. The materials subindex rose 1.51% as mining shares advanced: Rio Tinto gained 1.94%, Fortescue Metals Group jumped 2.82% and BHP added 2.04%.
In Japan, the Nikkei 225 jumped 1.72% on the day to 21,333.87 as shares of conglomerate Softbank Group soared 4.03%. The Topix index also added 1.74% to finish its trading day at 1,555.27. Apple supplier Japan Display saw its stock surge 10.91% following a Wall Street Journal article that said Apple may help the display maker.
Data on Wednesday, however, showed Japan’s exports exports declined 7.8% in May from a year earlier, down for the sixth straight month.
“For the Bank of Japan and for policymakers, the message is very, very clear: the industrial part of the Japanese economy is in recession, ” Jesper Koll, senior adviser at WisdomTree Investments, told CNBC’s “Squawk Box” on Wednesday.

Asia-Pacific Market Indexes Chart


TICKER COMPANY NAME PRICE CHANGE %CHANGE
NIKKEINikkei 225 IndexNIKKEI21333.87361.161.72
HSIHang Seng IndexHSI28202.14703.372.56
ASX 200S&P/ASX 200ASX 2006648.1078.101.19
SHANGHAIShanghaiSHANGHAI2917.8027.640.96
KOSPIKOSPI IndexKOSPI2124.7826.071.24
CNBC 100CNBC 100 ASIA IDXCNBC 1007973.89165.282.12
US-China trade
Stocks surged overnight on Wall Street. The Dow Jones Industrial Average soared 353.01 points to 26,465.54 and the S&P 500 advanced 1% to 2,917.75. The Nasdaq Composite rose 1.4% to 7,953.88.
That jump in U.S. markets came after U.S. President Donald Trump said in a tweet he “had a very good telephone conversation ” with Chinese President Xi Jinping. He added: “We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.” The summit will start on June 28.
The offshore Chinese yuan saw strong gains against the greenback following Trump’s comments, it last traded at 6.9067 after seeing levels above 6.93 yesterday, while its onshore counterpart changed hands at 6.9047.
Still, one economist voiced doubt about the upcoming meeting.
“We do not believe that the meeting will deliver a trade deal, even if the meeting does take place. From the Chinese side, the discussion with US President Trump is expected only to exchange views on fundamental issues concerning the development of China-US relations,” Iris Pang, Greater China economist at ING, wrote in a note.
“The news on the talks in Osaka is a short term positive for asset markets, but we believe any talks will change little unless either side makes some meaningful concessions, which we do not view as likely at this time,” Pang said.
Trade tensions between the two economic powerhouses had worsened in recent weeks with both raising tariffs on billions of dollars worth of their goods. Trump had also previously suggested that additional levies could be imposed on more Chinese imports.
Central bank watch
Meanwhile, the U.S. Federal Reserve kicked off a two-day monetary policy meeting on Tuesday. The Fed is widely expected to leave interest rates unchanged at this meeting, though investors will be watching out for hints on rate cuts later in the year.
Expectations for a rate cut have increased in recent weeks, amid data on slowing jobs growth and manufacturing activity, as well as concerns over the impact of Washington’s protracted trade fight with Beijing on the global economy.
Meanwhile, Mario Draghi, president of the European Central Bank, indicated there could be more stimulus measures in Europe. He said Tuesday: “In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required.”
Trump criticized Draghi’s remarks, noting additional ECB stimulus makes it “unfairly easier ” for Europe to compete with the U.S. For his part, Draghi responded by saying “we don’t target the exchange rate. ”
The euro last traded at $1.1196, following a slide yesterday from levels above $1.123.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.621 after rising from levels below 97.6 yesterday.
The Japanese yen traded at 108.27 against the dollar after a volatile session on Tuesday which saw it swinging between levels below 108.2 and above 108.6. The Australian dollar was at $0.6877 after rising from levels below $0.685 yesterday.
Oil prices were higher in the afternoon of Asian trading hours, with the international benchmark Brent crude futures contract 0.13% higher at $62.22 per barrel and U.S. crude futures adding 0.15% to $53.98 per barrel.
— Reuters and CNBC’s Fred Imbert contributed to this report.

                                                                   EUROPE


European stocks close mixed as investors monitor Fed meeting; auto stocks rise

Chloe Taylor,Elliot Smith



European stocks ended the session little changed on Wednesday ahead of a much-anticipated U.S. Federal Reserve decision on interest rates.

European Markets: FTSE, GDAXI, FCHI, IBEX


TICKER COMPANY NAME PRICE CHANGE %CHANGE VOLUME
FTSEFTSE 100FTSE7403.54-39.50-0.53774630702
DAXDAXDAX12308.53-23.22-0.19104190582
CACCACCAC5518.458.720.1696950789
The pan-European Stoxx 600 hovered around the flatline at the end of the session, with sectors and major bourses mixed. Basic resources led the losses with a 1.5% decline while autos and bank stocks both rose around 1%.
In terms of individual stocks, German telecommunications company 1&1 Drillisch topped the European blue chip index, with shares gaining 9.5% by the end of the session. It comes after the telecoms firm won spectrum in Germany’s 5G auction last week.
Banking group CYBG also enjoyed gains on Wednesday. The owner of the U.K.’s Clydesdale and Yorkshire banks announced it would rename itself Virgin Money in a major rebranding, sending its shares 6% higher.
At the other end of the Stoxx 600, Belgian retailer Colruyt plunged more than 15% following the company’s full-year results.
Stateside, stocks were also little changed as investors awaited news from the Federal Reserve, which is due to deliver its latest policy update at 7 p.m. London time.
Global stocks rose in the previous session after President Donald Trump announced plans on Twitter for an “extended meeting” with Chinese President Xi Jinping at next week’s G-20 summit, sparking hopes of a resolution to the ongoing trade war between the two nations.
In the U.K., the number of Conservative party hopefuls to replace Prime Minister Theresa May is now down to five, with Conservative Members of Parliament (MPs) set to vote in their third leadership ballot Wednesday. Former Foreign Secretary Boris Johnson remains the frontrunner.
U.K. economic data published Wednesday showed the country’s inflation rate cooling in May, with cost pressures in factories falling to a three-year low. Consumer prices rose to an annual rate of 2% in May, matching expectations.

                                                                      EUROPE


European stocks close mixed as investors monitor Fed meeting; auto stocks rise

Chloe Taylor,Elliot Smith



European stocks ended the session little changed on Wednesday ahead of a much-anticipated U.S. Federal Reserve decision on interest rates.

European Markets: FTSE, GDAXI, FCHI, IBEX


TICKER COMPANY NAME PRICE CHANGE %CHANGE VOLUME
FTSEFTSE 100FTSE7403.54-39.50-0.53774630702
DAXDAXDAX12308.53-23.22-0.19104190582
CACCACCAC5518.458.720.1696950789
The pan-European Stoxx 600 hovered around the flatline at the end of the session, with sectors and major bourses mixed. Basic resources led the losses with a 1.5% decline while autos and bank stocks both rose around 1%.
In terms of individual stocks, German telecommunications company 1&1 Drillisch topped the European blue chip index, with shares gaining 9.5% by the end of the session. It comes after the telecoms firm won spectrum in Germany’s 5G auction last week.
Banking group CYBG also enjoyed gains on Wednesday. The owner of the U.K.’s Clydesdale and Yorkshire banks announced it would rename itself Virgin Money in a major rebranding, sending its shares 6% higher.
At the other end of the Stoxx 600, Belgian retailer Colruyt plunged more than 15% following the company’s full-year results.
Stateside, stocks were also little changed as investors awaited news from the Federal Reserve, which is due to deliver its latest policy update at 7 p.m. London time.
Global stocks rose in the previous session after President Donald Trump announced plans on Twitter for an “extended meeting” with Chinese President Xi Jinping at next week’s G-20 summit, sparking hopes of a resolution to the ongoing trade war between the two nations.
In the U.K., the number of Conservative party hopefuls to replace Prime Minister Theresa May is now down to five, with Conservative Members of Parliament (MPs) set to vote in their third leadership ballot Wednesday. Former Foreign Secretary Boris Johnson remains the frontrunner.
U.K. economic data published Wednesday showed the country’s inflation rate cooling in May, with cost pressures in factories falling to a three-year low. Consumer prices rose to an annual rate of 2% in May, matching expectations.


                                                                                   US

Stocks close higher, adding to big June gains, after Fed hints a rate hike could be near

Fred Imbert






Stocks rose on Wednesday, bolstering their gains for the month, after the Federal Reserve opened the door for looser monetary policy in the near future.
The Dow Jones Industrial Average rose 38.46 points to 26,504, while the S&P 500 gained 0.3% to close at 2,926.46. The Nasdaq Composite advanced 0.4% to 7,987.32.
The Fed kept interest rates unchanged at the meeting, as was widely expected. While not outright signaling a cut was ahead this year, the Fed did drop the word “patient ” from its statement and said it would “act as appropriate” to sustain the economy.
The central bank’s rate projections, released alongside the statement on Wednesday, showed that eight Fed members see a cut this year, which traders took as further sign the central bank was close to cutting rates. Its median forecast, however, still reflected no cuts this year, but additional easing in 2020.
Fed Chair Jerome Powell also said in a news conference after the announcement that some Fed officials believed the case for easier monetary policy had strengthened.
Health care stocks, which typically perform well after the Fed cuts rates, were the best performers on Wednesday. The sector rose 1%, led by gains in Allergan and DaVita.
“This was our baseline scenario. The Fed opened the door for cuts. They maintained some independence from some of the outreach for lower rates coming out of the administration,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities. “Short term, it’s going to depend on the data. If the data warrants a cut, the chairman is saying the Fed is prepared to adjust policy.”
Treasury yields fell following the announcement, pressuring bank shares. The benchmark 10-year yield traded down at 2.02%. Citigroup, Morgan Stanley, J.P. Morgan Chase and Bank of America all traded lower.
Traders are pricing in easier monetary policy as soon as July. They were also betting on rate cuts coming in September and December, according to the CME Group’s FedWatch tool.
Federal Reserve Board Chairman Jerome Powell speaks at the Economic Club of Washington January 10, 2019 in Washington, DC.
Win McNamee | Getty Images
Expectations of lower rates helped the market rebound this month after a torrid performance in May. The S&P 500, Dow and Nasdaq are all up more than 6% in June.
Those expectations increased amid lingering trade worries and weaker economic data. China and the U.S. hiked tariffs on billions of dollars worth of their goods, stoking fears that tighter trade conditions could slow down the global economy.
“It feels like the Fed doesn’t know how to react to that,” said Kevin Barry, Kevin Barry, chief investment officer at Captrust Advisors. “The main actors are Trump and Xi. If they are trying to increase animal spirits, then cutting rates won’t do that. Trump is the one that can increase animal spirits, not the Fed.”
“Animal spirits will be increased by a settlement between China and the U.S.,” he said.
The Fed’s meeting came after Bloomberg News reported the White House looked for a way to demote Powell earlier this year. Larry Kudlow, director of the National Economic Council, told reporters Tuesday that Trump is not planning to demote Powell, however.
Powell said in the news conference that he intends to fully serve his four-year term, noting “the law is clear ” on the matter.
—CNBC’s Silvia Amaro and John Melloy contributed to this report.

Source: CNBC



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