On 07 September, 2017 – Stocks were mixed as investors evaluated the latest ECB statements

Investors also monitored Hurricane Irma as it prepared to hit Florida.
United States
US stocks were slightly lower Thursday. Steep losses for banks and insurance companies were countered by gains in health care and technology companies. Banks tumbled with bond yields, while insurance companies declined as investors weighed the chances of big losses from Hurricane Irma, which is projected to hit Florida this weekend. Analysts opined that the effects of the storms will make sure the Federal Reserve moves slowly in raising interest rates. The Dow Jones industrials were down 0.1 percent while the Nasdaq edged up 0.1 percent. The S&P was down 0.46 point.
Insurance companies slumped as Hurricane Irma cut a path of devastation across the northern Caribbean. Reinsurance companies were down sharply because many of their policies are for catastrophic losses such as those caused by a hurricane. Some firms were already dealing with claims from hurricane Harvey in Texas. XL Group, Everest Rem and Berkshire Hathaway, which owns GEICO and other insurers, retreated. Microsoft and Amazon were higher. Airline stocks including Delta, United Continental Holdings, American and Southwest Airlines retreated. MasterCard rose after the debit and credit card payment processor raised its 2017 revenue forecast and its growth forecast for next year. Visa along with PayPal and eBay also advanced. General Electric dropped after negative analyst comments. Apple retreated after a report that the company’s new iPhone was hit with production glitches.
AbbVie and Bristol-Myers gained after the companies reported positive clinical trial results. Eli Lilly climbed after it said it will cut 3,500 jobs or about 9 percent of its total jobs. Biotechnology companies also rallied. Cable providers and cable channel operators fell after Comcast said it expects to lose as many as 150,000 video subscribers in the third quarter and that competition has been unusually intense. It said intense storms also contributed to the problem. Disney was down after its CEO said the company’s earnings this year will be about the same as the year before, which disappointed analysts.
The US Senate on Thursday approved a $15.25 billion aid package for areas affected by Hurricane Harvey and other natural disasters along with measures that would fund the federal government and raise its borrowing limit through December 8. The legislation will now return to the House of Representatives, which is expected to vote on the revised package by the end of the week.
Initial jobless claims for the week ending September 2 jumped 62,000 to 298,000 thanks to more than 50,000 claims from Texas as a result of hurricane Harvey.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$5.65 to US$1,343.50. Copper futures were down 0.1 percent to US$3.15. WTI spot crude was down 2 US cents to US$49.14. Dated Brent spot crude was up 35 US cents to US$54.55. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.7 percent. The yields on both the US Treasury 30 year bond and the 10 year note were down 6 basis points to 2.66 percent and 2.04 percent respectively.
European markets
Most European stock markets advanced Thursday. Shares gained prior to the European Central Bank’s monetary policy announcement but pared their gains after US markets opened. The FTSE was up 0.6 percent, the CAC gained 0.3 percent, the DAX advanced 0.7 percent and the SMI was 0.5 percent higher.
The European Central Bank left its key interest rates unchanged — the refi rate stays at zero percent and the rates on the deposit and marginal lending facilities at minus 0.40 percent and 0.25 percent respectively. There was also no adjustment to the forward guidance which continues to anticipate interest rates remaining at their present levels for an extended period of time, and well past the horizon of the net asset purchases. The ECB also signaled no reduction in its quantitative easing program. Net monthly asset purchases were held at €60 billion a month at least through year-end and longer if deemed necessary.
RWE and E.ON gained. Automakers extended Wednesday’s rally after Barclays and Goldman Sachs upgraded their ratings on the sector. BMW, Daimler, Volkswagen, Renault and Peugeot climbed. Bovis Homes surged after the company posted weak half-year results but said it would raise its dividend this year and next, reflecting its confidence in the outlook for business under new chief executive.
AstraZeneca gained after posting positive results from a late-stage trial of its respiratory treatment. Imperial Brands rallied after trimming its stake in Spanish logistics company Logista. Capita tumbled after restating its 2016 accounts due to accounting changes. Novartis, Roche and Nestlé advanced in Zurich. Clariant, Richemont and Swatch also were higher. In London, Barclays, Royal Bank of Scotland, Standard Chartered and Lloyds all retreated.
Eurozone second quarter gross domestic product was up 0.6 percent on the quarter and 2.3 percent when compared with last year. German July industrial production was unchanged on the month and was up 4.0 percent from a year ago. The French merchandise trade deficit widened to €5.97 billion, as imports grew faster than exports. UK house prices increased at a faster pace in August according to Halifax. House prices advanced 2.6 percent on the year in three months to August, faster than the 2.1 percent increase seen in three months to July.
Asia Pacific
Asian stocks were mixed Thursday. While a temporary extension of the US debt ceiling to December helped spur gains earlier in the session, markets succumbed to selling pressure at higher levels as the day progressed. Investors were waiting for the European Central Bank decision on monetary policy going forward.
The Shanghai Composite was down 0.6 percent — banking and resource shares succumbed to profit taking after recent sharp gains. The Hang Seng was down 0.4 percent.
The Nikkei added 0.2 percent and the Topix was up 0.4 percent after the yen sold off overnight on news of extension of the US debt ceiling. Automakers and construction companies paced the gains. McDonald’s Holdings Company Japan gained after the company reported an increase in August same-store sales.
Both the S&P/ASX and All Ordinaries were virtually unchanged after the release of weaker than expected retail and merchandise trade data. While retail sales came in flat during July in seasonally adjusted terms, the trade surplus came in well below market expectations. Banks ended narrowly mixed while BHP Billiton dropped on going ex-dividend. Rio Tinto advanced after announcing a 50 percent increase in reserves at one of its coal mines in central Queensland. Sigma Healthcare rallied after the pharmacies and drug supplier lifted its half-year profit and said the outlook for fiscal 2019 is more positive.
The Kospi rallied 1.1 percent as investors hunted for bargains after losses in past five consecutive sessions. The index climbed on easing geopolitical tensions after US President Donald Trump said the use of military force against Pyongyang would not be his “first choice”. Investor sentiment was also buoyed by media reports quoting sources as saying that the US doesn’t plan to withdraw from its free trade agreement with South Korea for now.
The Sensex was virtually unchanged as geopolitical worries lingered and investors waited to hear comments from ECB President Mario Draghi on euro appreciation and tapering of the bank’s monetary stimulus measures.
Looking forward
Japan posts revised second quarter gross domestic product. Australia releases July home loans. China reports merchandise trade balance for August. Switzerland releases August unemployment. Germany posts July merchandise trade balance. France releases July industrial production. The UK reports July industrial production and merchandise trade balance. Canada releases August labour force survey.

*Note — all releases are listed in local time.

Source: Fidelity

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