- US stocks retreat slightly as market activity remains subdued
- Mixed bag of economic data pushes European indices in different directions
- Asian markets finished mixed as diverse set of domestic economic, political and regulatory factors weigh on markets
Muted week ends with modest weakness in US equities
Most of the US equity indices ended the week lower. The NASDAQ Composite was the only index to edge higher, as the tech-heavy index added 0.3% over the week. The Dow Jones declined by 0.5%, while the S&P 500 fell 0.3%.
The Wall Street resisted reacting to political turmoil in Washington, as Donald Trump shockingly fired FBI Director James Corney. Strength in semiconductor stocks aided the NASDAQ Composite in reaching its new high. Also, Apple surpassed USD800 billion in market capitalisation for the first time, benefiting from the news that Warren Buffet’s Berkshire Hathaway has further raised its stake in the company. The Dow Jones suffered due to a disappointing performance by few blue chip stocks. Retail sector stocks suffered a setback as Kohl’s and Macy’s reported disappointing first-quarter numbers.
On the economic front, weekly jobless claims fell unexpectedly to near four-decade lows, while continuing claims reached their lowest level since 1988. Also, April’s retail sales grew less than expected.
European markets finish mixed
European equity markets begun the week on a quiet note, as investors had already priced in Emmanuel Macron’s victory in France’s presidential elections. France’s CAC 40 dropped 0.5%, as profit booking subsequent to Macron’s victory in the presidential election weighed on the index. Germany’s DAX 30 added 0.4% on account of positive economic data, as the country’s March manufacturing orders’ number increased a greater-than-anticipated 1.0% m/m. Spain’s IBEX fell 2.1%, while Italy’s FTSE MIB added 0.4% during the week.
The Bank of England (BoE) kept its policy Bank Rate unchanged at 0.25%. The central bank downwardly revised its 2017 growth outlook to 1.9% from 2%, citing weakening household spending. However, it lifted the growth projection for 2018 to 1.7% from 1.6% and that for 2019 to 1.8% from 1.7%. UK’s FTSE 100 climbed higher for the third successive week as the index gained 1.9% over the week.
In economic news, German March industrial output declined marginally by 0.4% m/m following February’s 1.8% increase. France’s March industrial production was up 2% on the month after it declined 1.7% in February.
Domestic factors weigh on Asian equities
Australia’s S&P/ASX index finished the week unchanged at 5,837, as mixed bag of economic data weighed on investor sentiments. Uptick in commodity prices propelled commodity sector stocks higher. Also, media stocks gained as the government proposed to repeal media ownership restrictions. However, a decline in retail sector stocks following the disappointing March retail sales data and weakness in banking sector stocks over rising concerns surrounding regulatory action to ease housing market, offset the gains in commodity sector stocks. Moreover, the economic data were mixed as the Australian business confidence reached its highest level in seven years in April, while building approvals declined at a faster-than-expected pace in March.
Japan’s Nikkei 225 added 2.3% to close at 19,883.90. The yen continued to weaken steadily against the USD. The Country’s current account surplus for 12 months ended March 2017 soared to USD180 billion, recording a gain of 13% y/y. The BoJ signaled continuation in its ultra-easy monetary policy as the central bank cautioned investors that the tight labor market may not necessarily drive inflation in the near term.
China’s Shanghai Composite Index fell 0.6% over the week following disappointing merchandise trade data. In April, the exports increased by 8% against the expectations of 12.1% rise, while the imports were up 11.9% against expectations of a 16.5% growth. In economic news, April’s consumer price index was up 1.2% y/y.
India’s Nifty gained 1.2% over the last week, as the prospect of normal monsoon uplifted the investor sentiments. Moreover, earnings recovery and strong liquidity flows in the markets aided Indian equities.
Global Equity Market Performance
Source: Reuters Eikon, Bloomberg