On 01 August, 2016 – Global stocks mixed
Investors begin month in a cautious mood as oil prices tumble.
United States
The Dow Jones industrials and S&P were lower Monday thanks to swooning energy stocks. However, Nasdaq was lifted by tech stocks. The Dow was down 0.15 percent while the S&P edged 0.1 percent lower. The Nasdaq added 0.4 percent. Health care and technology stocks underpinned the gain. Crude tumbled into a bear market, sinking below $40 for the first time since April amid renewed concerns of a supply glut.
Shares of Exxon Mobil, Chevron and Devon Energy were lower. Tesla agreed to buy SolarCity for $2.6 billion in stock. More than a month ago it offered to buy the company for about $2.5 billion, and investors had hoped for a bigger offer. SolarCity has 45 days to seek better offers. Tesla’s chief executive, Elon Musk, owns more than 20 percent of both companies, and SolarCity is run by his cousin Lyndon Rive. The deal must be approved by a majority of shareholders other than Mr. Musk.
Verizon Communications agreed to buy Fleetmatics Group for $2.4 billion or $60 per share. Fleetmatics makes software that cable companies, energy companies and others use to manage vehicle fleets. Its stock jumped while Verizon stock dropped. Ionis Pharmaceuticals rose after it said a drug designed to treat spinal muscular atrophy in infants worked in a late-stage clinical study. It also said the drug maker Biogen exercised an option to develop the drug globally and will pay Ionis $75 million. Caesars Entertainment said it agreed to sell its social and mobile games business to a Chinese consortium for $4.4 billion. Its stock advanced.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$7.65 to US$1,349.65. Copper futures were down 1.55 percent to US$2.19. WTI spot crude was down US$1.61 to US$39.99. Dated Brent spot crude was down US$1.37 to US$42.16. The US dollar was up against the euro, pound, yen and the Canadian and Australian dollars. However, it was virtually unchanged against the Swiss franc. The Dollar Index was up 0.1 percent. The yield on the US Treasury 30 year bond was up 6 basis points to 2.24 percent while the yield on the 10 year note was up 5 basis points to 1.50 percent.
Europe
Stocks retreated after release of disappointing British manufacturing data. British manufacturing activity tumbled to its lowest level since 2013 in the wake of the UK’s decision to exit the European Union. Markets remained in negative territory for the remainder of the session. The FTSE was down 0.5 percent, the CAC retreated 0.7 percent and the DAX slipped 0.1 percent. Swiss markets were closed for a holiday.
Bank stocks were a source of early strength, following the release of the EU stress tests. The results showed that the resilience of the euro area banking system improved since the last tests in 2014. However, those early gains eroded when the markets reversed. Italy’s troubled lender Monte dei Paschi di Siena, Austria’s Raiffeisen, Allied Irish Banks and Spain’s Banco Popular were among the banks that fared worst in EU stress tests.
Deutsche Bank and Commerzbank declined. RWE and E.ON also were lower. In Paris, Air Liquide tumbled after the company reported a drop in first half profit in the face of depressed demand conditions for gas installations at factories and refineries. Water and waste utility Veolia Environnement advanced after affirming its FY16 outlook. Société Générale, BNP Paribas lost 1.49 percent and Crédit Agricole finished lower. In London, Petrofac climbed after saying its independent investigation into allegations of bribery by Monaco-based oil contractor Unaoil SAM found no evidence of its involvement. GlaxoSmithKline gained after announcing a joint venture with a unit of Google’s parent to develop and commercialize bioelectronics medicines. Barclays, Royal Bank of Scotland and HSBC declined. Taylor Wimpey, Berkeley Group, Barratt Developments and Persimmon retreated. Anglo American advanced on a broker upgrade.
July Eurozone manufacturing PMI declined to 52.0 from a 6-month high of 52.8 in June. The “Brexit” uncertainty hurt the UK manufacturing sector and sent the manufacturing PMI tumbling to 48.2 from 52.4 in June.
Asia Pacific
Stocks were mixed after steadier oil prices, a weaker yen and the latest European stress tests, which painted a broadly positive picture of the region’s 51 largest banks, helped investors shrug off mixed data from China.
The Shanghai Composite retreated 0.9 percent thanks to a mixed picture of the Chinese economy. The two PMIs contradicted each other. The July CFLP PMI slipped below the breakeven 50 level to 49.9 from 50 in June. However, the Caixin manufacturing PMI was above the breakeven level for the first time in 17 months at 50.6, well above 48.6 in June. The Hang Seng added 1.1 percent.
Regional PMI data were mixed with Australia’s manufacturing sector clocking growth for the 13th straight month and activity in India hitting a four-month high. However, the manufacturing sector in South Korea expanded at a slower pace while Japan’s manufacturing sector contracted for a fifth consecutive month and Indonesia’s manufacturing activity deteriorated in July.
The Nikkei was 0.4 percent higher after erasing earlier losses. Financials extended Friday’s gains after the Bank of Japan left interest rates unchanged. Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial Group gained. Fast Retailing and Softbank also advanced as did Sony after its first-quarter results beat expectations. Panasonic slumped after its group net profit tumbled 64 percent in the April-June quarter.
Both the S&P/ASX and All Ordinaries gained 0.4 percent as higher commodity prices lifted resource stocks and a closely-watched survey showed Australian consumer prices declined in July, raising the pressure on the Reserve Bank of Australia to cut interest rates during its policy meeting Tuesday. BHP Billiton, Rio Tinto and Fortescue Metals Group advanced. Gold miners Newcrest, Regis Resources and Evolution Minding also were higher.
The Kospi was up 0.7 percent. The Sensex retreated 0.2 percent in choppy trading.
Looking forward
The Reserve Bank of Australia announces its monetary policy decision. Australia posts June merchandise trade data. The UK reports July construction PMI. The Eurozone releases June producer price index. The US reports June personal income and spending.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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