US shares once again reached new highs.
United States
US stocks closed higher Friday, lifting the S&P to its fifth record close in a row. The Dow Jones industrials, which crossed the 23,000 mark for the first time Wednesday, also finished the day with its fifth-straight all-time high. The Nasdaq closed at a record high as well. On Friday, the Dow was up 0.7 percent (2.0 percent on the week), the S&P added 0.5 percent (0.9 percent) and Nasdaq was 0.4 percent higher (0.4 percent).
Investors were encouraged by the Senate’s narrow passage of a nonbinding budget resolution that is expected to ease the path for the White House’s tax cut proposal. The budget resolution now goes to the House of Representatives. The bill sets the stage for tax legislation later this year that could pass through the Senate without the threat of a filibuster by Democrats. It also adds an estimated $1.5 trillion to the deficit over the next 10 years.
Synchrony Financial and Citizens Financial Group were higher after both reported higher quarterly earnings than expected. First Republic Bank, People’s United Financial and Capital One also advanced. PayPal Holdings climbed after the payment technology company reported big gains in new users and transactions. Skechers USA soared after the shoe company said that its profit and sales were stronger than expected. Atlassian jumped after the business software company’s earnings and revenue beat expectations. The company also raised its forecast. Maxim Integrated advanced after it posted better-than-expected results.
General Electric rebounded after the industrial conglomerate slashed its annual forecast and reported a disappointing third quarter. The company’s new chief executive vowed to shed more than $20 billion worth of assets after the company’s quarterly results badly missed expectations. Procter & Gamble was under pressure after the company reported better than expected fiscal first quarter earnings but on sales that came in slightly below estimates.
September existing home sales climbed 0.7 percent to an annual rate of 5.39 million from a rate of 5.35 million in August.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$5.20 to US$1,281.20. Copper futures were down 0.1 percent to US$3.17. WTI spot crude was up 33 US cents to US$51.84. Dated Brent spot crude was up 52 US cents to US$57.75. The US dollar was up against its major counterparts including the yen, euro, Swiss franc and the Canadian and Australian dollars. It was down against the pound. The Dollar Index was up 0.6 percent. The yield on the US Treasury 30 year was up 7 basis points to 2.90 percent and the 10 year note was up 6 basis points to 2.38 percent.
European markets
European markets advanced Friday with strength sparked by optimism for US tax reform and a slew of upbeat earnings reports. However, concerns over the situation in Spain weighed on investors going into the weekend. A special cabinet meeting Saturday could trigger process to take control of Catalonia’s powers. The FTSE, DAX and SMI were up 0.19 point, 1.18 points and 3.61 points respectively. The CAC added 0.1 percent. For the week however, most indices declined. The FTSE was down 0.2 percent, the SMI lost 0.8 percent and the DAX inched down 0.6 point. The CAC added 0.4 percent.
Daimler declined after reporting a sharp drop in quarterly profit, hit by costs to fix emissions controls on diesel vehicles. Metro declined after posting muted growth in like-for-like sales for the fourth quarter of 2016/17. Accor declined after the hotel group said third-quarter revenues came in at €504 million, up 7.2 percent from €470 million last year. Gold miner Acacia Mining sank after it reported lower production and earnings for the third quarter.
ArcelorMittal advanced on a broker upgrade. Ericsson jumped in Stockholm. The company posted wider than expected third quarter loss on higher charges and weak sales, but said it sees positive effects on gross margin in 2018. Volvo surged after it reported a bigger-than-expected rise in quarterly core earnings and raised its outlook for truck markets on both sides of the North Atlantic this year. Both Roche and Nestlé declined after releasing their quarterly results on Thursday. However, Novartis edged higher. Fresnillo declined after a broker downgrade.
German producer prices were up 3.1 percent in September from a year ago, up from 2.6 percent in August. This was the fastest increase since April, when prices advanced 3.4 percent.
Asia Pacific
Stocks were mostly higher Friday after the US Senate adopted a fiscal 2018 budget resolution Thursday, and taking step forward towards overhauling the tax code. However, overall gains remained muted as investors waited for the outcome of Sunday’s Japanese general election. People’s Bank of China governor Zhou Xiaochuan warned that excessive optimism could lead to a “Minsky moment.” Investors also kept an eye on political tensions in Spain as a deadline set by Madrid for a final decision on independence approached.
The Nikkei inched up 9.12 points and the Topix added 0.60 point, rising for the 14th straight session to post their longest winning streak since January 1961. Investors were hoping that Prime Minister Shinzo Abe’s ruling coalition will win Sunday’s general election. While exporters were mixed, suppliers to Apple including Murata Manufacturing and Alps Electric declined on signs of weak demand for Apple’s iPhone 8 models.
The Shanghai Composite was up 0.3 percent but retreated 0.4 percent on the week on concerns of slowing growth. The Hang Seng was up 1.2 percent Friday but was virtually unchanged on the week.
The S&P/ASX was up 0.2 percent on Friday while the All Ordinaries was up 0.1 percent. On the week, the former was up 1.6 percent and the latter, 1.4 percent. National Australia Bank and Commonwealth Bank advanced as their chief executives face a parliamentary inquiry. Both BHP Billiton and Fortescue Metals Group were higher despite a decline in iron ore prices overnight.
The Kospi was up 0.7 percent and added 0.6 percent for the week. The Sensex was closed for a holiday Friday but slipped 0.1 percent for the holiday shortened week.
Looking forward

Central Bank activities

Oct 25

Canada

Bank of Canada Monetary Policy Decision and Report

Oct 26

Eurozone

European Central Bank Monetary Policy Decision

The following indicators will be released this week…

Europe

Oct 23

Eurozone

EC Consumer Confidence (October flash)

Oct 24

Eurozone

Manufacturing, Services & Composite PMI (October flash)

Germany

Manufacturing, Services & Composite PMI (October flash)

France

Manufacturing, Services & Composite PMI (October flash)

Oct 25

Germany

Ifo Survey (October)

Oct 26

Eurozone

M3 Money Supply (September)

Asia Pacific

Oct 24

Japan

Manufacturing PMI (October flash)

Oct 25

Australia

Consumer Price Index (Q3.2017)

Oct 27

Australia

Producer Price Index (Q3.2017)

Japan

Consumer Price Index (September)

Americas

Oct 24

United States

Manufacturing, Services & Composite PMI (October flash)

Oct 25

United States

Durable Goods Orders (September)

New Homes Sales (September)

Oct 26

United States

International Trade in Goods (September)

Pending Home Sales (September)

Initial Unemployment Claims (week ending prior Saturday)

Oct 27

United States

Gross Domestic Product (Q3. 2017 advance)

Consumer Sentiment (October final)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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