Asia Pacific stocks broadly decline amid expectations of less aggressive Fed
Mainland Chinese shares recovered from an earlier dip to end the trading day higher, as the Shanghai composite rose 0.24% to 2,944.54 and the Shenzhen component advanced fractionally to 9,349.00. The Shenzhen composite also gained slightly to 1,573.45.
Hong Kong’s Hang Seng index fell 0.69%, as of its final hour of trading, after the city reported Thursday that it saw its biggest annual drop in exports in almost three and a half years in June.
The Nikkei 225 in Japan slipped 0.45% to close at 21,658.15, as shares of index heavyweight Softbank Group gained 1.09% after the conglomerate launched Vision Fund 2, the sequel to its landmark investment fund. The Topix index declined 0.4% to end its trading day at 1,571.52.
Shares of automaker Nissan Motor dropped 3.21%, after the company announced Thursday it would slash 12,500 jobs worldwide following a 95.5% drop in its first-quarter operating profit.
In South Korea, the Kospi declined 0.4% to finish its trading day at 2,066.26. Australia’s S&P/ASX 200 also shed 0.36% to close at 6,793.40 as most sectors fell.
Meanwhile, Tokyo could rule to remove Seoul from a so-called white list with minimum trade restrictions as soon as August 2, Reuters reported Friday, citing Japan’s Kyodo news agency.
Overall, the MSCI Asia ex-Japan index slipped 0.59%.
Asia-Pacific Market Indexes Chart
|NIKKEI||Nikkei 225 Index||NIKKEI||21658.15||-98.40||-0.45|
|HSI||Hang Seng Index||HSI||28397.74||-196.56||-0.69|
|ASX 200||S&P/ASX 200||ASX 200||6793.40||-24.60||-0.36|
|CNBC 100||CNBC 100 ASIA IDX||CNBC 100||8154.36||-61.64||-0.75|
Some traders took this to mean the central bank would not be as aggressive in its easing measures and that the Fed could follow suit when it meets next week.
“The ECB disappointed markets looking for a ‘whatever its takes’ moment; as the shortfall on conviction, commitment and details overtook the dovish stance and easing bias,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note.
“The ECB’s fizzle, rather than sizzle, raises questions about (Federal Open Market Committee) expectations for next week; and markets may have a weekend of soul-searching ahead,” he added.
William Adams, senior economist at PNC, however, told CNBC’s “Squawk Box” on Friday that he’s looking at a 25 basis points cut in July and another one in October. “We see these as insurance cuts to prolong ... the expansion, not because we’re headed to a recession in the near term in the United States.”
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.816 after falling below 97.6 yesterday.
The Japanese yen, widely viewed as a safe-haven currency, traded at 108.61 against the dollar after weakening sharply from levels below 108.4 in the previous session. The Australian dollar was at $0.6939 after slipping from levels above $0.696 yesterday.
Oil prices were up in the afternoon of Asian trading hours, with international benchmark Brent crude futures 0.22% higher at $63.53 per barrel, while U.S. crude futures added 0.52% at $56.31 per barrel.
— CNBC’s Fred Imbert contributed to this report.
European stocks close higher after ECB holds interest rates; Sopra Steria jumps 16%
European Markets: FTSE, GDAXI, FCHI, IBEX
The ECB held interest rates steady on Thursday, but outgoing President Mario Draghi all but pledged to ease monetary policy further as the growth outlook deteriorates.
Speaking to reporters at a press conference Draghi said the economic outlook was “getting worse and worse,” citing a weak manufacturing sector as well as uncertainty over trade and Brexit.
The euro dipped versus the dollar Friday to $1.1118.
Policymakers at the central bank are also considering other measures to support the euro zone over the coming months, including resuming quantitative easing.
The latest guidance from the ECB comes shortly before an eagerly anticipated rate decision from the Federal Reserve. The U.S. central bank is widely expected to cut rates by 25 basis points at the end of the month.
U.S. gross domestic product (GDP) grew by 2.1% in the second-quarter, data released Friday showed, a decrease from 3.1% in the previous quarter, and the weakest increase since the first quarter of 2017 when President Donald Trump took office.
Back in Europe, France’s Sopra Steria Group surged to the top of the European benchmark, after the information technology company raised its organic revenue target for 2019. Shares of the Paris-listed stock rose 16% on the news.
Meanwhile, Vodafone was also among the top gainers, after announcing plans to move its mobile mast operations in 10 European markets into a new company that could potentially be listed. Shares of the U.K. telecommunications giant rose over 10%.
In terms of sectors, Europe’s retail stocks dipped over 1%, with France’s Kering leading the losses. The luxury goods group reported a slower-than-expected rise in second-quarter sales at Gucci in the previous session. Shares fell almost 8%.
Elsewhere, uncertainties over whether the world’s two largest economies would be able to settle a long-running trade dispute kept many investors on guard.
Trade officials from the U.S. and China are scheduled to meet in Shanghai next week.
S&P 500, Nasdaq notch another record close after strong earnings from Alphabet, Starbucks
The S&P 500 gained 0.7% to close at 3,025.86, posting a record high. The Nasdaq Composite also hit an all-time high, rising 1.1% to 8,330.21. The Dow Jones Industrial Average closed 51.47 points higher, or 0.2%, at 27,192.45.
The major indexes briefly pared gains after National Economic Council Director Larry Kudlow told CNBC’s “Squawk on the Street ” he would not expect a “grand deal ” to come out of next week’s U.S.-China trade talks.
For the week, the S&P 500 and Nasdaq posted solid gains. The indexes climbed 1.7% and 2.3%, respectively. The Dow advanced 0.1% this week.
Alphabet reported better-than-expected earnings Thursday and announced a massive $25 billion share repurchase program. The results and buyback sent the stock up 9.6%.
Twitter shares gained more than 8% on the back of second-quarter results that topped estimates. The social media company also reported a 14% rise in monetizable daily active users.
More than 40% of S&P 500 companies have reported quarterly earnings for the second quarter. Of those companies, 76.4% have posted a stronger-than-forecast profit, according to FactSet.
The U.S. economy expanded by 2.1% in the second quarter, the Commerce Department said Friday. The broadest measure of the U.S. economy was expected to come in at 1.8%, according to economists surveyed in CNBC/Moody’s Analytics Rapid Update.
Growth was driven by a 4.3% increase in consumer expenditures, which offset a 5.5% slump in business investment.
“The consumer and government spending drove all of the gain in GDP as trade, inventories and investment reversed the Q1 gains,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. “On the question that everyone tries to answer in light of the longest economic expansion on record, when will we see the next recession, I again believe it will be determined by the direction of the stock market.”
The data release comes as investors await a potential rate cut from the Federal Reserve next week. Market expectations for a 25 basis-point rate cut were at 78.6% on Friday morning, according to the CME Group’s FedWatch tool.
The Fed is scheduled to start its two-day monetary policy meeting on Tuesday. An announcement on rates is set for Wednesday at 2 p.m. ET.
“The market owes its strength in large part to the Fed eases priced in. And the Fed has noted the slowdown in business resulting from the generally slower global economy,” said Steve Blitz, chief U.S. economist at TS Lombard. “The net of this is ... the Fed has no option other than to cut 25 on Wednesday and see whether the data unfold to create the need for a further cut in September. The push is to keep equities up and help the world be safe for dollar debt.”
—CNBC’s Silvia Amaro contributed to this report.