US and European markets eyed French elections, while Asian markets rose on expectations of an imminent tax reform in the US.
United States
US stocks gyrated between gains and losses as traders looked ahead to Sunday’s elections in France. At the close, the Dow Jones industrials were down 0.2 percent, the S&P lost 0.3 percent and the Nasdaq slipped 0.1 percent. However, on the week, the three indices advanced 0.5 percent, 0.8 percent and 1.8 percent respectively. The choppy trading occurred amid geopolitical uncertainty prior to the first round of voting Sunday. With no candidate expected to win more than 50 percent of the vote, the top two candidates will likely head to a runoff on May 7.
Traders largely ignored the March existing home sales report that indicated sales jumped to their highest level in ten years. Existing home sales jumped 4.4 percent to an annual rate of 5.71 million after slumping by 3.9 percent to a downwardly revised 5.47 million February.
Kindred Healthcare moved sharply higher after a report from Reuters said the acute care provider is exploring a possible sale. Honeywell posted a strong gain after reporting better than expected first quarter results and raising the low end of its full-year earnings guidance. Mattel retreated after the toymaker reported a wider than expected first quarter loss on revenues that came in below expectations. Schlumberger dropped after reporting first quarter earnings that matched estimates but on weaker than expected revenues. General Electric declined after the company reported negative cash flow from its industrial operations in the first quarter.
Federal Reserve Vice Chair Stanley Fischer told CNBC that the central bank remains on track for two more interest rate increases this year despite some soft economic data recently.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 25 US cents to US$1,281.85. Copper futures were down 0.2 percent to US$2.55. WTI spot crude was down US$1.09 to US$49.62. Dated Brent spot crude was down US$1.03 to US$51.96. The US dollar was up against the euro, pound and the Canadian dollar. The currency declined against the yen, Swiss franc and the Australian dollar. The Dollar Index was down 0.1 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 1 basis point to 2.90 percent and 2.25 percent respectively.
Europe
European markets were mixed Friday with investors in a cautious mood prior to Sunday’s French election. The FTSE edged down 0.1 percent, the CAC declined 0.4 percent and the DAX added 0.2 percent. The SMI was virtually unchanged (down 3.88 points). On the week, the FTSE dropped 2.9 percent, the CAC slid 0.2 percent, the DAX was down 0.5 percent and the SMI was 0.9 percent lower.
Software AG jumped after the company reported a smaller-than-expected decline in quarterly core profit and confirmed its 2017 outlook. Danone declined after it reported muted growth in its underlying sales in the first quarter of the year. Reckitt Benckiser Group was lower after the consumer products group delivered flat sales on a like-for-like basis in the first quarter, reflecting challenging market conditions in Europe and North America. Restaurant Group was lower after the company said that its Chief Financial Officer, will step down from the board and leave the company immediately. Rio Tinto advanced on a broker upgrade. WS Atkins jumped after Canada’s SNC-Lavalin Group agreed to acquire the British engineering giant for C$3.6 billion.
In economic news, the flash April composite PMIs improved in the Eurozone to hit a six year high. The flash composite output index rose to 56.7 in April from 56.4 in March. The latest reading was the highest since April 2011. Germany’s private sector expanded strongly in April but at a slower pace in both manufacturing output and services. The flash composite output index dropped to 56.3 in April from March’s six-year high of 57.1. The French private sector expanded the most in almost six years in April. The flash composite output index rose to a 71-month high of 57.4 in April from 56.8 in March. However, March UK retail sales posted their biggest quarterly decline in seven years during the first three months of 2017. March retail sales including automotive fuel decreased 1.8 percent on the month, reversing a 1.7 percent rise in February.
Asia Pacific
Most stock indices advanced Friday after the Nasdaq hit record high overnight, buoyed by solid earnings and on optimism for a US tax overhaul. US Treasury Secretary Steven Mnuchin indicated on Thursday that the Trump administration is close to bringing forward a major tax reform plan “very soon”, regardless of the outcome of a healthcare overhaul bill. The Japanese yen weakened and crude prices rose after four days of losses during the Asian trading session, further supporting sentiment prior to Sunday’s presidential election in France.
The Shanghai Composite was virtually unchanged (up 1.05 points) while the Hang Seng slipped 0.1 percent. On the week, the Shanghai Composite was down 2.2 percent while the Hang Seng was 0.9 percent lower. Investors were concerned about cooling growth and tightening regulatory scrutiny.
The Nikkei was up1.0 percent and the Topix added 1.1 percent. Possible tax reforms in the US and comments from a Federal Reserve official affirming that three Fed rate increases this year remain appropriate helped weaken the yen against the dollar. Bank of Japan governor Haruhiko Kuroda said in an interview with Bloomberg Television Thursday that the BoJ will continue with very accommodative monetary policy for some time to ensure price stability. Exporters closed mostly higher, with Honda Motor, Toyota and Panasonic gaining. Daiwa Securities Group advanced after it acquired a stake in COL Financial Group. Fujifilm Holdings slumped after delaying the release of its four-quarter earnings following accounting irregularities at an overseas unit. April flash manufacturing PMI reading was 52.8, up from march’s final of 52.4.
The S&P/ASX was up 0.6 percent and the All Ordinaries was 0.5 percent higher. For the week, the former was down 0.6 percent and the latter was 0.7 percent lower. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group were higher along with the big four banks. Utility Duet Group jumped as the government approved its $5.5 billion takeover by Cheung Kong Infrastructure consortium. Soft drink giant Coca-Cola Amatil slumped after issuing a profit warning.
The Kospi was up 0.7 percent and 1.4 percent for the week. The Sensex slipped 0.2 percent Friday and was down 0.3 percent on the week.
Looking Forward

Central Bank activities

April 26

Japan

Bank of Japan Monetary Policy Announcement

April 27

Eurozone

European Central Bank Monetary Policy Announcement

The following indicators will be released this week…

Europe

April 24

Germany

Ifo Business Survey (April)

April 27

Eurozone

EC Consumer & Business Sentiment (April)

April 28

Eurozone

M3 Money Supply (March)

Harmonized Index of Consumer Prices (April flash)

Germany

Retail Sales (March)

France

Gross Domestic Product (Q1. 2017 flash)

Consumption of Manufactured Goods (March)

UK

Gross Domestic Product (Q1. 2017)

Asia Pacific

April 26

Australia

Consumer Price Index (Q1.2017)

April 28

Japan

Household Spending (March)

Consumer Price Index (March)

Unemployment Rate (March)

Retail Sales (March)

Industrial Production (March)

Australia

Producer Price Index (Q1.2017)

Americas

April 25

United States

S&P/Case Shiller House Price Index (February)

Consumer Confidence (April)

New Home Sales March)

April 26

Canada

Retail Sales (February)

April 27

United States

Initial Unemployment Claims (week ending prior Saturday)

Durable Goods Orders (March)

International Trade in Goods (March)

Pending Home Sales (March)

April 28

Canada

Monthly Gross Domestic Product (February)

industrial Product Price Index (March)

United States

Gross Domestic Product (Q1. 2017)

Consumer Sentiment (April final)

Chicago PMI (April)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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