US flat; Europe off on earnings, virus worry; Asia mixed

United States

US equities ended narrowly mixed Friday as the market continued to grapple with fallout from the Chinese coronavirus. The Dow industrials eased 0.1 percent, the S&P 500 gained 0.2 percent, and the NASDAQ also rose 0.2 percent.

A mixed batch of US economic reports left the market uncertain, including weak industrial production and core retail sales readings, offset in part by a better than expected consumer sentiment report.

In economic data, US retail sales rose 0.3 percent in January and also gained 0.3 percent excluding autos. Both of these are moderate and both hit Econoday's consensus. When excluding autos and also gasoline, retail sales rose a slightly better 0.4 percent, which just exceeds Econoday's consensus range. But when excluding not only autos and gas but also food services and building materials, sales came in unchanged, which missed expectations.

Separately, the shutdown of the Boeing 737 Max and a drop in utility production pulled down industrial production by an as-expected 0.3 percent in January. Manufacturing fell 0.1 percent. In another report, consumer sentiment rose for a second straight month, 1.2 points higher in the preliminary February reading, the best since March 2018.

Among stock sectors, real estate remained the top performer on the day and on the week. Technology shares outperformed, with help from software stocks. Energy lagged the most, despite an uptick in oil prices. Consumer staples were hurt by weakness in food and drug stores. Communications services lagged, along with industrials, consumer discretionary, and health care.

Among winners Friday, Chipmaker Nvidia rose 7.1 percent after its results and guidance beat expectations. eBay, the online auctioneer, rose 2.6 percent after raising its guidance and buyback plans. Expedia, the travel agency, rallied 11 percent after an earnings beat and strong 2020 guidance.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 83 cents to US$57.35, while gold rose US$6.90 to US$1585.60. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 3 basis points to 2.04 percent while the 10-year note yield fell 3 basis points to 1.59 percent.

Europe

Weak corporate earnings and coronavirus worries weakened equities slightly Friday. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX was off 0.01 percent, the French CAC declined 0.4 percent, and the UK FTSE-100 fell 0.6 percent.

Among sectors in the STOXX 600, outperformers included defensive sectors -- real estate, utilities, food & beverage, and insurance. Lagging were basic resources, autos & parts, banks, health care, and travel & leisure.

Among companies in focus, AstraZeneca, the UK pharma, dropped 4.3 percent after guiding lower on the expected impact of the coronavirus on business in China. Renault, the French automaker, fell 0.9 percent after poor results, lower guidance, and cutting its dividend. Royal Bank of Scotland fell 6.8 percent after the market reacted poorly to its latest business plan. Pernod Ricard and Remy Cointreau, French liquor companies, fell 0.5 percent and 0.9 percent, respectively, after an analyst downgrade.

On the positive side, Electricite de France rose 10 percent after its earnings beat expectations. Unipol Gruppo, the Italian financial services, rose 6.4 percent on a positive earnings surprise.

In economic data, the German economy stagnated at the end of 2019. Zero quarterly growth was at the weak end of market expectations and, following a 0.2 percent fall and a 0.2 percent rise in second and third quarters respectively, means that total output has been essentially just flat for the last three quarters.

Asia Pacific

Major Asian markets posted mixed results on the day Friday and also diverged over the week. The regional data calendar was again relatively light at the end of the week, keeping the focus of investors on incoming news relating to the coronavirus outbreak. Reports late in the trading session quoted a senior executive from Chinese e-commerce firm Alibaba advising that the outbreak had caused significant disruption to the firm's operations, while the Singapore government was also reported to have warned that the impact of the outbreak on the Singapore economy has already exceed that of the SARS outbreak in 2003.

The Shanghai Composite index and Hong Kong's Hang Seng index both closed up on the day and on the week, the former up 0.4 percent and 1.4 percent respectively and the latter up 0.3 percent and 1.5 percent respectively. Australia's All Ordinaries index posted similar gains, up 0.3 percent on the week and 1.5 percent on the day. Japanese markets, however, closed lower, with shares of automaker Nissan down sharply to ten-year lows after it cut forecasts for operating revenue and announced it would not pay a dividend in the second half. The Nikkei index fell 0.6 percent on the day and on the week, while the Topix index closed down 0.6 percent on the day and 1.7 percent on the week.

Japan's Index of Tertiary Industry Activity fell 0.2 percent on the month in December after advancing 1.4 percent in November, broadly in line with the previously published Markit services sector PMI survey. India's wholesale price index increased by 3.1 percent on the year in January, up from 2.59 percent in December, mainly reflecting stronger fuel prices. WPI inflation is now at its highest level since April 2019 and has rebounded strongly from a slump towards the end of last year.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward

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