Global stocks were mostly higher thanks to upbeat corporate earnings

Global stocks were mostly higher thanks to upbeat corporate earnings

US shares were higher Tuesday as market volatility retreated to its lowest in a half a year. The Dow Jones industrials were up 0.5 percent while both the S&P and Nasdaq were 0.3 percent higher.

US markets

US shares were higher Tuesday as market volatility retreated to its lowest in a half a year. The Dow Jones industrials were up 0.5 percent while both the S&P and Nasdaq were 0.3 percent higher. The VIX fell as low as 10.52, the first time the measure of market volatility had been below 11 since January 24, just before it then spiked higher and triggered a sharp stock market sell-off. The continued strength came as upbeat corporate earnings news overshadowed concerns about the ongoing trade dispute between the US and China.

Consumer staples declined along with utilities and healthcare. In afternoon trading, Tesla stock trading was halted for about an hour after Elon Musk tweeted he was considering taking the company private. His tweets sent shares to spike higher. Shares jumped before trading was halted pending the release of material information, according to the Nasdaq.

Amazon, Alphabet and Microsoft advanced. Investor sentiment was boosted by a strong second quarter earnings season that fueled optimism about the strength in the US economy. Walt Disney was higher prior to the release of its earnings. Mosaic gained after the fertilizer maker said higher prices helped boost its sales in the latest quarter. Online retailer Etsy also gained after it increased its revenue guidance for the year and posted stronger-than-expected quarterly sales growth.

The JOLTS (Job Openings and Labor Turnover Survey) June job openings rate was unchanged at 4.3 percent. There were an additional 20,000 jobs in the education sector, but vacancies declined by 84,000 jobs in the transportation, warehousing and utilities industry. There have been reports of a widespread shortage of truck drivers. In June, hiring slipped by 96,000 to 5.7 million. The hiring rate dipped to 3.8 percent from 3.9 percent in May. While the number of Americans voluntarily quitting their jobs fell 78,000 to 3.4 million in June, the quits rate, which policymakers and economists view as a measure of job market confidence, held at 2.3 percent for a fourth straight month.

These data reflect observations at 4:00 PM US ET. Gold was up 90 US cents to US$1,218.60. Copper futures were up 0.8 percent to US$2.75. WTI spot crude was up 1 US cent to US$69.02. Dated Brent spot crude was up 75 US cents to US$74.50. The US dollar was up against the Canadian dollar and down against the euro, Swiss franc and the Australian dollar. It was virtually unchanged against the pound and yen. The Dollar Index was down 0.16 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 3 basis points to 3.12 percent and 2.97 percent respectively.

European markets

European markets rebounded Tuesday from Monday’s losses. Mining and energy stocks advanced thanks to rising commodity prices. Automakers were also among the top performing stocks of the session. The FTSE was up 0.7 percent, the CAC gained 0.8 percent, the DAX added 0.4 percent and the SMI was 0.6 percent higher.

Commerzbank declined — the lender swung to a profit in its second quarter but raised its cost target for 2018. SGL Carbon jumped on posting turnaround results for the first half of 2018. Deutsche Post gained after confirming its 2020 outlook. Bonduelle retreated after warning of slower growth in FY 2018-19. Intertek dropped after it posted a decline in first-half revenue. Hargreaves Lansdown declined after its CEO made some cautious comments on the impact of Brexit and the prevailing political and economic turbulence.

InterContinental Hotels Group was down after reporting a drop in first-half pretax profit. UniCredit jumped in Milan after its second quarter profit rose on lower operating costs and a decline in write-downs on loans and provisions. Jeweler Pandora plummeted in Copenhagen after the company trimmed its sales and profit margin guidance for this year. Swatch Group and Richemont gained. Crédit Suisse, UBS and Julius Baer finished higher. Nestlé and Novartis were also higher. BP and Royal Dutch Shell advanced as oil prices gained. Rio Tinto, BHP and Glencore rallied as metal prices gained.

Germany’s June merchandise surplus declined to €19.3 billion from €20.4 billion in May. Exports remained flat while imports were up 1.2 percent. June industrial production dropped a monthly 0.9 percent. The French June trade deficit widened to €6.25 billion from €6.02 billion in the previous month. UK house in July increased a monthly 1.4 percent after increasing 0.9 percent in June.

Asia Pacific Markets

Asian stocks were mixed Tuesday as fears over US/China trade tensions offset higher oil prices and upbeat US corporate earnings results. Iranian President Hassan Rouhani dismissed calls for talks with the US as the first phase of sanctions came into effect overnight.

The Shanghai Composite jumped 2.7 percent after dropping 1.3 percent on Monday. The Hang Seng was 1.5 percent higher.

The Nikkei and Topix advanced 0.7 percent and 0.8 percent respectively. SoftBank climbed to hit a nine-month high after the company reported a 49 percent jump in quarterly operating profit, helped by its sale of shares in Indian e-commerce firm Flipkart. Japan Steel Works and Rakuten advanced after well-received earnings updates. Pioneer tumbled after its first quarter net loss widened from last year. June household spending declined 1.2 percent on the year after dropping 3.9 percent in May.

Both the S&P/ASX and All Ordinaries were down 0.3 percent after the Reserve Bank of Australia kept its key policy interest rate unchanged at 1.5 percent where it has been for two years. It said the unchanged policy is consistent with sustainable growth in the economy and achieving the inflation target over time. A drop in base metal prices pulled down mining stocks, with BHP Billiton and Rio Tinto retreating. Packaging firm Amcor tumbled after it agreed to take over US Bemis Company. Wesfarmers edged up slightly after it agreed to sell its 40 percent stake in the Bengalla Joint Venture thermal coal mine project to partner New Hope for A$860 million. New Hope shares soared. Banks ANZ, NAB and Westpac climbed. Santos and Beach Energy jumped after oil prices rose Monday amid reports that Saudi crude production unexpectedly fell in July.

The Kospi was up 0.6 percent. The Sensex slipped 0.1 percent.

Looking forward

Australia releases June home loans. China tentatively will report merchandise trade data. The US releases weekly EIA petroleum status report.

Global Stock Markets

    End 2018 Daily Percent Change
  Index 2017 Aug 6 Aug 7 Change Daily 2018 Yr/Yr
North America                
United States Dow 24719.22 25502.18 25628.91 126.73 0.5 3.7 16.0
  NASDAQ 6903.39 7859.68 7883.66 23.98 0.3 14.2 23.8
  S&P 500 2673.61 2850.40 2858.45 8.05 0.3 6.9 15.5
Canada S&P/TSX Comp 16209.13 * 16286.30 -133.94 -0.8 0.5 6.8
UK FTSE 100 7687.77 7663.78 7718.48 54.70 0.7 0.4 2.3
France CAC 5312.56 5477.18 5521.31 44.13 0.8 3.9 5.8
Germany XETRA DAX 12917.64 12598.21 12648.19 49.98 0.4 -2.1 2.9
Italy MIB 21853.34 21580.18 21853.81 273.63 1.3 0.0 -0.9
Spain Ibex 35 10043.90 9722.70 9772.80 50.10 0.5 -2.7 -9.0
Sweden OMX Stockholm 30 1576.94 1608.48 1619.89 11.41 0.7 2.7 2.4
Switzerland SMI 9381.87 9149.36 9201.22 51.86 0.6 -1.9 0.4
Australia All Ordinaries 6167.29 6359.00 6340.84 -18.16 -0.3 2.8 9.4
Japan Nikkei 225 22764.94 22507.32 22662.74 155.42 0.7 -0.4 13.3
  Topix 1817.56 1732.90 1746.05 13.15 0.8 -3.9 6.8
Hong Kong Hang Seng 29919.15 27819.56 28248.88 429.32 1.5 -5.6 1.4
S. Korea Kospi 2467.49 2286.50 2300.16 13.66 0.6 -6.8 -3.9
Singapore STI 3402.92 3285.34 3340.00 54.66 1.7 -1.8 0.7
China Shanghai Comp 3307.17 2705.16 2779.37 74.21 2.7 -16.0 -15.3
Taiwan TAIEX 10642.86 11024.10 10983.44 -40.66 -0.4 3.2 3.9
India Sensex 30 34056.83 37691.89 37665.80 -26.09 -0.1 10.6 17.7
*Market  closed              

Data Source — Haver Analytics

Bond markets

10-Yr Govt BondsClosing YieldChange Yield (bp)
US 2.97% 3
UK 1.32% 2
Germany 0.40% 2
Japan 0.10% 1
Australia 2.65% -7

Source — Bloomberg

Currencies and commodities

CurrencyAugust 6August 7Change (%)
Japanese yen 111.4100 111.4000 0.0%
Australian dollar 0.7390 0.7425 0.5%
Yuan 6.8535 6.8314 0.3%
Euro 1.1554 1.1599 0.4%
British pound 1.2942 1.2941 0.0%
Swiss franc 0.9967 0.9953 0.1%
Canadian dollar 0.7689 0.7660 -0.4%

Source — Bloomberg 

CommoditiesAugust 7Change
Brent Spot $74.50 1.02%
Gold $1,218.60 $0.90
Thompson-Reuters/ Jeffreys Commodity index 199.72 0.30%

Source — Bloomberg 

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