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On 19 April, 2017 - Global stocks were mixed

Anne D Picker, Econoday

Investors focused on earnings reports.

United States

US shares ended the day mixed Wednesday — the Dow Jones industrials declined 0.6 percent and the S&P was down 0.2 percent, but the Nasdaq added 0.2 percent. Investors continue to monitor corporate earnings growth to support current stock prices.

Energy stocks including Exxon Mobil and Chevron were pulled down by sinking oil prices. Oil prices were pressured by an unexpected increase in weekly US gasoline inventories even though crude inventories were down for a second week. Utilities tracked a decline in Treasuries and were lower.

IBM tumbled in their heaviest decline since the market tumult that followed the Brexit vote last June. Morgan Stanley said its quarterly profit jumped to $1.93 billion or $1 per share from $1.13 billion or 55 cents per share in the first quarter of 2016. Revenue grew to $9.75 billion from $7.79 billion a year ago. Intuitive Surgical advanced after the company reported higher-than-expected first-quarter revenue and profit. Yahoo declined after the company released results above expectations and reaffirmed it expects to close its deal with Verizon by the end of June. After US markets closed, American Express said revenues slipped 2 percent on the year to $7.9 billion. Net income declined to $1.2 billion or $1.34 per share from $1.4 billion or $1.45 per share. Ebay reported a 3.7 percent increase in quarterly revenue. The company's net income rose to $1.04 billion or 94 cents per share in the first quarter ended March 31 from $482 million or 41 cents per share a year earlier. Revenue rose to $2.22 billion from $2.14 billion.

The Federal Reserve published its Beige Book in preparation for its May 1 and 2 FOMC meeting. All 12 Districts described the economy as growing modest to moderate. While inflation remains under control, the labor market is tight. Businesses in most of the Federal Reserve's 12 districts reported difficulty finding not only highly skilled employees but low skilled ones as well. A larger number of firms said they faced more problems in retaining workers. Wage increases, though modest, are broadening along with input costs. Uncertainty over government policy and especially trade policy — along with the strong dollar, were described as headwinds for the factory sector. The Fed said that consumer spending was once again soft. The report was prepared by the Richmond Fed.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up 10 US cents to US$1,279.05. Copper futures were virtually unchanged at US$2.54. WTI spot crude was down US$1.84 to US$50.57. Dated Brent spot crude was down US$1.88 to US$53.01. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and the Australian dollar. The Dollar Index was up 0.3 percent. The yields on both the US Treasury 30 year bond and on the 10 year note were up 3 basis points to 2.87 percent and 2.21 percent respectively.

Europe

Stock markets advanced Wednesday with the exception of the FTSE. Automakers were among the best performing stocks following stronger-than-expected March sales data. Geopolitical concerns eased somewhat Wednesday and investors shifted their focus to corporate earnings, both in Europe and in the United States. Investors continue to keep a close eye on the upcoming election in France. The FTSE lost 0.5 percent while the CAC and DAX were up 0.3 percent and 0.1 percent respectively. The SMI was virtually unchanged (up 2.99 points).

Prime Minister Theresa May won overwhelming backing from MPs for a snap UK election that she said would give her more room for maneuver in Brexit negotiations if her Conservative Party wins the poll. The Prime Minister won a vote in the House of Commons Wednesday by 522 to 13, allowing her to press ahead with an early general election on June 8. The motion overrode the Fixed-term Parliaments Act, which had set May 2020 as the date of the next election. Only last month Mrs May had ruled out an early election, saying it would be “self-serving” and would create uncertainty.

Zalando dropped after the retailer said discounting for post-Christmas sales weighed on its margin in the first quarter. L’Oréal advanced after reporting an 8 percent rise in first-quarter revenue, boosted by strong sales in Asia and North America. Associated British Foods was higher after the company lifted its interim dividend after reporting a sharp increase in first half profits. Tesco slipped after announcing the sale of its opticians business in Ireland and the UK to Vision Express.

Burberry tumbled after the company's quarterly sales missed estimates as tough conditions in the United States overshadowed 'exceptional' performance in its home market. Heineken increased after the company reported net profit for the first quarter of 2017 of €293 million compared to €265 million the prior year. Nestlé declined ahead of its earnings report Thursday. Royal Dutch Shell, BP, Fresnillo and Randgold Resources all retreated.

Europe's passenger car registrations grew for the fifth successive month in March and at an accelerated pace according to the European Automobile Manufacturers Association. March total passenger car registrations surged 11.2 percent on the year after increasing only 2.2 percent in February. The Eurozone’s harmonized consumer price index rose 1.5 percent on the year after a 2 percent increase in February. February’s merchandise trade surplus climbed to €19.2 billion from €15.7 billion in the previous month

Asia Pacific

Asian stocks were lower Wednesday as lingering geopolitical tensions coupled with political uncertainty in Europe sent investors fleeing from riskier assets. Tepid corporate earnings from the US also weighed on markets. Britain's parliament votes later in the global market day on holding a snap election on June 8. France holds its first round of presidential elections Sunday.

Chinese shares hit their lowest level in two months, closing lower for the fourth straight day. Commodity prices declined and investors remained skeptical about the prospects for faster economic growth. Tuesday, the IMF raised its economic growth forecast for China for this year and next but warned of serious longer-term problems unless it reduces its reliance on credit. The Shanghai Composite dropped 0.8 percent while the Hang Seng lost 0.4 percent.

The Nikkei inched up 0.2 percent while the Topix was virtually unchanged (down 0.11 point). Commodity trading houses ended broadly lower as copper prices hovered near three-month lows. Exporters were mixed with Toyota and Honda retreating while Panasonic advanced. Shippers Mitsui OSK Lines and Nippon Yusen tumbled.

The S&P/ASX was down 0.6 percent and the All Ordinaries declined 0.5 percent. The big four banks were lower on concerns over rising housing market risks. Woodside Petroleum and Oil Search declined thanks to oil prices that hovered near two-week lows on concerns over increasing US supplies. Miners Rio Tinto and Fortescue Metals Group however rallied. Logistics firm Brambles soared after a solid third-quarter update.

The Kospi was 0.5 percent lower even though worries over North Korea appeared to ease. The Sensex edged 0.1 percent higher.

Looking Forward

Japan releases March merchandise trade data. The Eurozone reports the flash consumer confidence index for April. In the US, the April Philadelphia Fed survey, March leading indicator and the weekly jobless claims, money supply and Fed balance sheet will be released.

Global Stock Markets

Global Stock Markets

*Note — all releases are listed in local time.

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