On 19 October, 2017 – Stocks were mixed as investors took profits on recent record gains
United States
US stocks paused after their recent run of record highs, as technology shares dragged and some earnings disappointed. Apple was down and headed for its worst day in more than two months, as doubts about its double 2017 iPhone release strategy weighed on investors. After initially coming under pressure, stocks regained ground over the course of the trading day. The indices climbed off their lows. The Dow Jones industrials and the S&P turned positive prior to the close to reach new record closing highs. The Dow was up 5.44 point and the S&P added 0.84 point. The Nasdaq lost 0.3 percent. Early losses were partially due to profit taking after recent gains.
Shares of eBay declined after it reported third quarter earnings that met estimates but provided disappointing guidance. Philip Morris was lower after reporting weaker than expected third quarter earnings and revenues. United Continental was down even though the airline reported better than expected third quarter results but its adjusted earnings fell sharply when compared with a year ago. Verizon Communications advanced after the company said it gained wireless subscribers in the latest quarter. Alcoa retreated after the manufacturer of aluminum and bauxite products reported earnings that missed estimates.
Weekly jobless claims for the October 14 week were down 22,000 to 222, 000 — the lowest reading in 44 years. Levels have now mostly returned to pre-hurricane levels. The October Philadelphia Fed report continues to post very unusual levels of strength. October’s headline was 27.9. Employment, at 30.6, is a record in 48 years of this report’s data.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$6.20 to US$1,286.40. Copper futures were down 0.3 percent to US$3.17. WTI spot crude was down 66 US cents to US$51.38. Dated Brent spot crude was down 92 US cents to US$57.23. The US dollar was up against the pound and the Canadian dollar. It was down against the yen, euro, Swiss franc and the Australian dollar. The Dollar Index was down 0.15 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 2 basis points to 2.83 and 2.32 percent respectively.
European markets
European stock indices tumbled Thursday thanks to the release of some disappointing economic reports and some weak corporate earnings soured the mood among investors. Profit taking also played a role. However, the chief concerns among traders Thursday were China and Spain. Concerns over Catalonia were thrust back to the forefront after the Spanish government said it would continue with the procedures set out in Article 155 of the Constitution to restore the legality of self-rule in the region. Spain’s prime minister will convene a special Cabinet meeting Saturday to trigger process to take control of Catalonia’s powers. Traders also fretted over China after GDP data showed that the pace of growth has slowed marginally. Property sales also fell for the first time in more than two-and-half years. The FTSE and CAC lost 0.3 percent, the DAX retreated 0.4 percent and the SMI declined 0.8 percent.
Kion tumbled after the manufacturer of materials handling equipment cut its 2017 revenue and profit guidance, citing weak orders for its warehouse automation business. SAP advanced despite its third-quarter profit miss. Publicis Groupe dropped after its third-quarter sales came in below market forecasts. Thales was lower after reporting a fall in third quarter sales. Pernod Ricard was higher after the drinks maker confirmed its profit target after posting a better-than-expected 5.7 percent rise in first-quarter underlying sales.
Carrefour rallied after it reported growth in third-quarter sales despite soft demand in France. Unilever was down after a weak third-quarter update. Roche Holding declined in Zurich after posting muted sales growth for the first nine months of the year. Novartis also retreated. Nestlé weakened even though nine month results came in better than expected, reporting organic growth of 2.6 percent. Julius Baer, UBS and Credit Suisse declined.
UK September retail sales declined the most in six months as high inflation squeezed household spending amid subdued wage growth. Retail sales including auto fuel dropped 0.8 percent, reversing a 0.9 percent rise in August. This was the first declined in four months and the biggest since March.
Asia Pacific
Shares in this region were mixed Thursday after the release of key economic data from China and Japan.
The Shanghai Composite was down 0.3 percent with financials and property developers losing ground. The Hang Seng tumbled 1.9 percent. China’s third-quarter gross domestic product was up 6.8 percent when compared with the same quarter a year ago. September industrial output and retail sales advanced 6.6 percent and 10.3 percent respectively while fixed investment growth eased to an increase of 7.5 percent from 7.8 percent in August. Property sales fell for the first time in more than two-and-half years.
The Nikkei and Topix advanced 0.4 percent and 0.3 percent respectively as they extended gains for the 13th straight session as the US dollar hit a two-week peak against the yen and Japan’s trade surplus jumped almost 38 percent in September from a year ago. Exports were up 14.1 percent from a year ago while imports were 12.0 percent higher. Kobe Steel jumped after three Japanese automakers said they haven’t found vehicle-safety issues from aluminum supplied by the steelmaker. Mitsubishi UFJ Financial and Sumitomo Mitsui Financial gained, tracking overnight gains among their US peers.
Both the S&P/ASX and All Ordinaries added 0.1 percent, extending gains for a seventh consecutive session after Chinese GDP data met expectations and domestic data showed the country added more jobs than expected in September, with the jobless rate hitting a four-year low. In September, Australia added 19.800 jobs while unemployment slipped to 5.5 percent from 5.6 percent in August. Banks ANZ, Commonwealth and Westpac advanced. South32 tumbled after the miner warned of cost pressures from rising raw material costs and a weaker US dollar. BHP Billiton and Rio Tinto were also lower after iron ore and copper prices dipped overnight.
The Kospi was 0.4 percent lower. The Bank of Korea voted to keep its interest rate unchanged at the record low 1.25 percent for the 13th straight month. “The board will maintain its accommodative policy stance while closely checking future economic growth and inflation trends,” the bank said in a statement. Indian markets were closed for a public holiday.
Looking forward
Canada posts August retail sales and September consumer price index. In the US, September existing home sales will be released. Late Friday night (US ET) Fed chair Janet Yellen will speak.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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