Global stock indices were mixed Friday but mostly lower for the week

Global stock indices were mixed Friday but mostly lower for the week

US stocks advanced Friday as traders reacted to the upbeat May employment data. The Dow Jones industrials were up 0.9 percent, the S&P added 1.1 percent and the Nasdaq advanced 1.5 percent. For the holiday-shortened week, the Dow declined 1.0 percent while the S&P added 0.5 percent and the Nasdaq added 1.6 percent.

US markets

US stocks advanced Friday as traders reacted to the upbeat May employment data. The Dow Jones industrials were up 0.9 percent, the S&P added 1.1 percent and the Nasdaq advanced 1.5 percent. For the holiday-shortened week, the Dow declined 1.0 percent while the S&P added 0.5 percent and the Nasdaq added 1.6 percent.

Markets got a reprieve as Italy installed a coalition government, removing the risk of a repeat vote dominated by debate on whether the country would quit the euro. Further calming geopolitical concerns, US President Donald Trump announced the resumption of plans for a summit with North Korea’s leader Kim Jong Un on June 12. However, investors monitored trade developments after Washington imposed steel and aluminum tariffs on imports from Canada, Mexico and the European Union. Canada and Mexico retaliated, targeting US steel and aluminum imports and products such as whiskey and blue jeans.

Friday’s rally followed the May employment report release. Non-farm payroll increased 223,000 after climbing by a downwardly revised 159,000 jobs in April. With the stronger than expected job growth, the unemployment rate edged down to 3.8 percent in May from 3.9 percent in April — the lowest level since April of 2000. The May ISM manufacturing survey indicated that manufacturing activity accelerated with the index climbing to 58.7 from 57.3 in April. April construction spending also rallied.

Most of the major sectors moved to the upside Friday with considerable strength among computer hardware stocks. Apple, Microsoft and Alphabet advanced.

These data reflect observations at 4:00 PM US ET. Gold was down US$5.40 to US$1,299.30. Copper futures were up 1.1 percent to US$3.10. WTI spot crude was down US$1.23 to US$65.81. Dated Brent spot crude was down 77 US cents to US$76.79. The US dollar was up against the yen, euro and the Swiss franc. It retreated against the pound and the Australian dollar and was virtually unchanged against the Canadian dollar. The Dollar Index was up 0.2 percent. The yield on the US Treasury 30 year bond was up 3 basis points to 3.05 while the 10 year note was up 5 basis points to 2.90 percent.

European markets

Stocks in Europe rallied Friday after being dragged down by political concerns for much of the trading week. Investor sentiment received a boost from the news that Italy has managed to form a new government and that Spain will get a new Prime Minister. Italy's anti-establishment Five Star Movement and the far-right League reached a deal to form a populist government, helping avert the prospect of a snap election. Meanwhile, Spanish Prime Minister Mariano Rajoy was ousted by a no-confidence vote in Parliament. He will be replaced by Socialist leader Pedro Sanchez.

The FTSE was up 0.3 percent, the DAC gained 1.2 percent, the DAX advanced 0.9 percent and the SMI bounced 1.9 percent higher. The MIB and IBEX rallied 1.5 percent and 1.8 percent respectively. On the week, all the indices declined. The FTSE was down 0.4 percent, the CAC declined 1.4 percent, the DAX retreated 1.7 percent and the SMI was 1.6 percent lower. The MIB and IBEX lost 1.3 percent and 2.0 percent respectively.

Deutsche Bank rallied. Responding to media reports regarding the regulatory ratings of its US entities, the German lender said that it is highly focused on addressing identified weaknesses in its US operations. Dialog Semiconductor tumbled after a warning that Apple will source fewer main smartphone power chips from the company. Elior Group jumped on a broker upgrade. Royal Bank of Scotland Group gained.

Rio Tinto advanced after completing the sale of its 75 percent interest in the Winchester South coal development project in Queensland, Australia, to Whitehaven Coal Limited. Barratt Developments climbed on a broker upgrade. Roche, Novartis and Nestlé finished higher. Bank stocks rebounded with UBS, Crédit Suisse and Julius Baer ending the day higher. Swiss Life, Swiss Re, and Zurich Insurance gained. Swatch and Richemont advanced.

May manufacturing PMI declined to a 15-month low of 55.5 from 56.2 in April. The UK May manufacturing PMI expanded at a faster pace in May climbing to 54.4 from a 17-month low of 53.9 in April.

Asia Pacific Markets

Asian Pacific stock indices were mixed Friday thanks to trade war concerns and nervous investors looked ahead to the May US jobs report that would be released after markets here were closed for the week.

The Shanghai Composite was down 0.7 percent even though global index provider MSCI added around 230 mainland-listed Chinese stocks to its flagship Emerging Markets Index and other indexes. The Hang Seng edged up 0.1 percent. On the week, the Shanghai Composite and Hang Seng lost 2.1 percent and 0.3 percent respectively. China’s May manufacturing PMI remained unchanged at 51.1.

The Nikkei edged down 0.1 percent while the Topix inched 0.1 percent higher in choppy trading after fears of a global trade war resurfaced and US President Donald Trump downplayed the chances of reaching a quick resolution with North Korea in the upcoming summit. On the week, the Nikkei and Topix dropped 1.2 percent and 1.7 percent respectively. Fast Retailing dropped while Mazda and Toyota Motor climbed on a weaker yen. Olympus rallied after activist investor ValueAct Capital became a major shareholder in the medical equipment and camera maker. Upon his arrival for a meeting of finance ministers and central bank governors of the Group of Seven advanced economies, Bank of Japan Governor Haruhiko Kuroda called for "rational" debate to prevent protectionist trade measures from disrupting the global economy. Investors also looked ahead to a meeting between Trump and Japanese Prime Minister Shinzo Abe at the White House on June 7.

The S&P/ASX declined 0.4 percent while the All Ordinaries was 0.3 percent lower. Banks declined as ANZ faced criminal cartel charges relating to 2015 equity placement. The former was down 0.7 percent on the week while the All Ordinaries was 0.6 percent lower. ANZ and the other three banks declined. Rio Tinto, which has aluminium smelters in Canada, retreated while rival BHP Billiton advanced. Woodside Petroleum, Santos, Oil Search and Beach Energy all were lower after crude oil prices declined overnight.

The Kospi advanced 0.7 percent and were down 0.9 percent on the week. The Sensex was down 0.3 percent but was up 0.9 percent on the week.

Looking forward

Central Bank activities
June 5 Australia Reserve Bank of Australia Monetary Policy Announcement
June 6 India Reserve Bank of India Monetary Policy Announcement
     
The following indicators will be released this week...
Europe
June 5 Eurozone Manufacturing, Services  & Composite PMI (May)
  Germany Manufacturing, Services  & Composite PMI (May)
  France Manufacturing, Services  & Composite PMI (May)
  UK Services PMI (May)
June 7 Eurozone Gross Domestic Product (Q1.2018 final)
  Germany Manufacturing Orders (April)
  France Merchandise Trade (April)
June 7 Germany Industrial Production (April)
    Merchandise Trade (April)
  France Industrial Production (April)
     
Asia Pacific
June 4 Australia Retail Sales (April)
June 5 Japan Services PMI (May)
June 6 Australia Gross Domestic Product (Q1.2018)
June 7 Australia Merchandise Trade (April)
June 8 Japan Gross Domestic Product (Q1.2018 second estimate)
  China Merchandise Trade (May)
    Consumer Price Index (May)
    Producer Price Index (May)
     
Americas
June 4 United States Factory Orders (April)
June 5 United States Services PMI (May)
    ISM Manufacturing Survey (May)
    JOLTS (April)
June 6 Canada International Trade (April)
  United States International Trade (April)
June 7 United States Initial Unemployment Claims (week ending prior Saturday)
    Consumer Credit (April)
June 8 Canada Labour Force Survey (May)
    Housing Starts (May)

 

Global Stock Markets

    End 2018 Daily Percent Change
  Index 2017 May 31 June 1 Change Daily 2018 Yr/Yr
North America                
United States Dow 24719.22 24415.84 24635.21 219.37 0.9 -0.3 16.2
  NASDAQ 6903.39 7442.12 7554.33 112.21 1.5 9.4 19.8
  S&P 500 2673.61 2705.27 2734.62 29.35 1.1 2.3 12.1
Canada S&P/TSX Comp 16209.13 16061.50 16043.54 -17.96 -0.1 -1.0 3.9
                 
Europe                
UK FTSE 100 7687.77 7678.20 7701.77 23.57 0.3 0.2 2.0
France CAC 5312.56 5398.40 5465.53 67.13 1.2 2.9 2.3
Germany XETRA DAX 12917.64 12604.89 12724.27 119.38 0.9 -1.5 -0.8
Italy MIB 21853.34 21784.18 22109.55 325.37 1.5 1.2 5.6
Spain Ibex 35 10043.90 9465.50 9632.40 166.90 1.8 -4.1 -11.7
Sweden OMX Stockholm 30 1576.94 1549.94 1569.51 19.57 1.3 -0.5 -4.7
Switzerland SMI 9381.87 8456.95 8618.54 161.59 1.9 -8.1 -4.7
                 
Asia/Pacific                
Australia All Ordinaries 6167.29 6123.48 6104.04 -19.44 -0.3 -1.0 4.9
Japan Nikkei 225 22764.94 22201.82 22171.35 -30.47 -0.1 -2.6 9.9
  Topix 1817.56 1747.45 1749.17 1.72 0.1 -3.8 8.5
Hong Kong Hang Seng 29919.15 30468.56 30492.91 24.35 0.1 1.9 17.6
S. Korea Kospi 2467.49 2423.01 2438.96 15.95 0.7 -1.2 2.8
Singapore STI 3402.92 3428.18 3427.51 -0.67 0.0 0.7 5.8
China Shanghai Comp 3307.17 3095.47 3075.14 -20.33 -0.7 -7.0 -1.0
Taiwan TAIEX 10642.86 10874.96 10949.08 74.12 0.7 2.9 7.8
India Sensex 30 34056.83 35322.38 35227.26 -95.12 -0.3 3.4 12.6

Data Source — Haver Analytics

Bond markets

10-Yr Govt BondsClosing YieldChange Yield (bp)
US 2.90% 5
UK 1.28% 5
Germany 0.38% 5
Japan 0.04% 1
Australia 2.70% 3

Source — Bloomberg

Currencies and commodities

CurrencyMay 31June 1Change (%)
Japanese yen 108.7700 109.5700 -0.7%
Australian dollar 0.7564 0.7568 0.1%
Yuan 6.4106 6.4204 -0.2%
Euro 1.1691 1.1655 -0.3%
British pound 1.3289 1.3346 0.4%
Swiss franc 0.9855 0.9884 -0.3%
Canadian dollar 0.7717 0.7714 0.0%

Source — Bloomberg 

CommoditiesMay 31Change
Brent Spot $76.79 -0.99%
Gold $1,299.30 ($5.40)
Thompson-Reuters/ Jeffreys Commodity index 206.38 -0.55%

Source — Bloomberg 

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