Skip Header

On 21 October 2019 - US, Europe up on hopes for US-China trade pact; Asia firm

Anne D Picker

Anne D Picker - Econoday

Cyclicals, trade-sensitive stocks lead gains

US markets

US equities rose Monday as markets saw progress on a partial US-China trade deal after positive comments from US and Chinese officials. The Dow industrials rose 0.2 percent, the S&P 500 gained 0.7 percent, and the NASDAQ gained 0.9 percent.

President Trump said the trade talks are advancing, US Trade Representative Robert Lighthizer said he would speak with his Chinese counterparts on Friday, and White House economic adviser Larry Kudlow said US tariffs scheduled to take effect in December may be called off if talks go well. Earlier, Chinese Vice Premier Liu He said the talks were progressing.

Technology shares, especially semiconductors with heavy exposure to US-China trade, were among the leaders. Other winning sectors included banks, on rising interest rates, energy shares, despite weaker oil prices, and industrials. Laggards included health care, materials, and consumer staples. US Treasuries weakened and the yield curve steepened as economic prospects appeared to improve on the positive trade news.

Haliburton, the oil driller, was up 6.4 percent after reporting better margins and in-line earnings. On the losing side, weakness in Boeing, down 3.7 percent, amid ongoing fallout from the 737 Max scandal was a drag on the Dow industrials.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 26 cents to US$59.06, while gold fell by US$9.80 to US$1,485.50. The US dollar was little changed on net against most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 2.29 percent while the 10-year note yield rose 5 basis points to 1.80 percent.

European markets

European equities gained Monday on positive US-China trade deal comments, and optimism about a Brexit deal. The Europe-wide STOXX 600 rose 0.6 percent, the German DAX gained 0.9 percent, the French CAC and the UK FTSE-100 both rose 0.2 percent.

Markets noted Chinese Vice Premier Liu He’s weekend comment that the two sides made “concrete progress” in many areas and had laid the foundation for a trade pact. In addition, White House adviser Larry Kudlow said US tariffs set to take effect in December could be withdrawn if trade talks go well. On the Brexit front, traders appear hopeful that a deal will emerge to limit the negative economic fallout from Brexit, even though Parliament rejected Prime Minister Boris Johnson’s proposed Brexit agreement Saturday.

Among shares in the Stoxx 600, outperformers included basic resources, banks, travel & leisure, and technology. Underperformers included real estate, food & beverage, personal & household goods. Among big gainers in the news, Atlas Copco, a Swedish tool-maker, rallied 9.4 percent, and AP Moeller Maersk, a Danish shipping company, rose 7.8 percent on positive earnings surprises.

In economic news, German producer prices unexpectedly rose 0.1 percent on the month in September, only their second increase since April. The monthly gain still reduced annual PPI inflation from 0.3 percent to minus 0.1 percent, its first sub-zero reading since October 2016.

Asia Pacific markets

Price action was limited across most major Asian markets Monday, with renewed uncertainty about the Brexit outlook the main focus for regional investors. Chinese Vice Premier Liu He made broadly positive comments about US-China trade talks over the weekend but provided few details about the progress of negotiations. Japan’s Nikkei and Topix indices posted modest gains of 0.3 percent and 0.4 percent respectively, while the Shanghai Composite index advanced just 0.1 percent. Hong Kong’s Hang Seng index and Australia’s All Ordinaries index both closed unchanged on the day.

Japan's merchandise trade deficit narrowed from a slightly revised ¥143.5 billion in August to ¥123.0 billion in August, compared with the consensus forecast for a surplus of  ¥54.0 billion. Exports fell 5.2 percent on the year in August after dropping 8.2 percent in August, in line with previously released Chinese and Singaporean data, with weakness again broad-based across major trading partners. Imports fell 1.5 percent on the year after dropping 11.9 percent previously, with the smaller drop largely reflecting stronger growth in petroleum imports. Also published Monday, Japan's All Industry Index was flat on the month in August, moderating from an increase of 0.2 percent in July, with the industrial production index posting weaker growth and the tertiary index slightly stronger growth, broadly in line with previously released PMI survey data.

Looking forward

On Tuesday in Europe, UK public sector finances, and UK CBI industrial trends figures are due. In North America, the Bank of Canada Business Outlook survey, Canadian retail sales figures, and US existing home sales data are scheduled for release.

Global stock markets

 

Index

18 Oct 2019

21 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

 

United States

Dow

26770.2

26827.64

57.44

0.2

 

NASDAQ

8089.54

8162.99

73.45

0.9

 

S&P 500

2986.2

3006.72

20.52

0.7

Canada

S&P/TSX Comp

16377.12

16418.45

41.33

0.3

Europe

 

 

 

 

 

UK

FTSE 100

7150.57

7163.64

13.07

0.2

France

CAC

5636.25

5648.35

12.10

0.2

Germany

XETRA DAX

12633.6

12747.96

114.36

0.9

Italy

MIB

22321.77

22478.19

156.42

0.7

Spain

Ibex 35

9329.8

9402.3

72.50

0.8

Sweden

OMX Stockholm 30

1697.91

1724.36

26.45

1.6

Switzerland

SMI

9965.49

9991.42

25.93

0.3

Asia/Pacific

 

 

 

 

 

Australia

All Ordinaries

6758.36

6757.66

-0.70

0.0

Japan

Nikkei 225

22492.68

22548.9

56.22

0.3

 

Topix

1621.99

1628.6

6.61

0.4

Hong Kong

Hang Seng

26719.58

26725.68

6.10

0.0

S. Korea

Kospi

2060.69

2064.84

4.15

0.2

Singapore

STI

3114.16

3139.15

24.99

0.8

China

Shanghai Comp

2938.14

2939.62

1.48

0.1

Taiwan

TAIEX

11180.22

11184.15

3.93

0.0

India

Sensex 30

39298.38

*

*

*

*Markets closed

 

 

 

 

 

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.