Global shares: US gains on US data, risk-on mood; Europe, Asia mixed

United States

US equities perked up Thursday on upbeat US economic data and on strength in financials and technology stocks as risk-on mood returned after the US-China trade pact. The Dow industrials rose 0.9 percent, the S&P 500 gained 0.8 percent, and the NASDAQ advanced 1.1 percent.

A strong quarterly report and upbeat guidance from Morgan Stanley (up 6.7 percent), along with strength in regional banks, bolstered financials. Microsoft ( up 1.9 percent) led technology shares higher, and chip stocks advanced following positive guidance from chipmaker TSM which rose 0.6 percent. A rise in oil prices on the overall risk-on mood lifted energy shares, including Exxon Mobil up 0.6 percent.

Among companies in the news, Alcoa plunged 11.9 percent on an earnings and revenues miss, and negative guidance. PPG Industries, the chemicals company, fell 2.5 percent on earnings and revenue misses, and a bearish forecast. Bombardier, the Canadian aircraft maker, fell 13 percent on gloomy guidance.

In US economic news, retail sales rose 0.3 percent in a December gain that was held back by a sharp 1.3 percent drop in motor vehicle sales. Excluding autos, retail sales surged 0.7 percent. In a separate report, a very strong start to 2020 for the manufacturing sector is the signal from the Philadelphia's Fed index which jumped to 17.0 in January. This was well beyond Econoday's consensus for 3.0. Meanwhile, initial claims in the latest week dropped by 10,000 to 204,000 and at 216,250, the 4-week average, which had been moving higher through December, is now at its lowest level since early November.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 31 cents to US$64.61, while gold fell US$3.60 to US$1,553.00. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.26 percent while the 10-year note yield rose 2 basis points to 1.80 percent.


European equities were narrowly mixed Thursday as markets continued to react mildly to the US-China trade pact. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX eased 0.02 percent, the French CAC rose 0.1 percent, and the UK FTSE-100 slipped 0.4 percent.

Among sectors, utilities, real estate, and oil & gas outperformed, while autos, travel and health care lagged. German utility RWE rose 1.8 percent on reports Germany will pay for utilities to phase out coal. German food delivery company HelloFresh jumped 5.8 percent on strong guidance for 2019. REC Silicon, the Norwegian chipmaker, soared 65 percent on the phase-one US-China trade pact. On the downside, N Brown, the UK online retailer, dropped 25 percent on a big miss in its quarterly sales results.

In economic news, German consumer prices were unrevised in the final data for December. A 0.5 percent increase on the month was in line with the provisional estimate and lifted annual inflation from November's final 1.1 percent to 1.5 percent, its strongest reading since July and its steepest climb since March.

Asia Pacific

Major Asian markets recorded mixed but generally moderate changes Thursday, with details of the US-China trade deal broadly in line with expectations and regional data providing little guidance to investor sentiment. Australia's All Ordinaries index outperformed with an increase of 0.6 percent, while the Shanghai Composite index underperformed, down 0.5 percent. Japan's Nikkei and Topix indices rose and fell 0.1 percent respectively, while Hong Kong's Hang Seng index closed up 0.4 percent.

Japanese data published Thursday showed an acceleration in producer price inflation and a surge in machinery orders. The producer price index rose 0.9 percent on the year in December, up from 0.1 percent in November, with the headline increase largely driven by a rebound in petroleum and coal prices, partly offset by weaker growth in utilities charges. Private sector machinery orders (excluding volatile items) rose 18.0 percent in November after dropping 6.0 percent in October, much stronger than the consensus forecast for growth of 2.5 percent. Officials forecast orders to increase 3.5 percent on the quarter in the three months to December, suggesting non-residential investment will make a positive contribution to GDP growth.

Chinese data showed a sixth consecutive decline in house price growth in December, up 6.6 percent on the year after increasing 7.1 percent in November, and steady growth in bank lending in December. Australian data showed weaker growth in the number of home loans made in November.

Looking ahead*

On Friday in Asia/Pacific, Chinese fixed asset investment, GDP, industrial production, and retail sales reports will be released. In Europe, the following reports are scheduled: Swiss producer and import prices, UK retail sales, Eurozone HICP, and Italian CPI. In North America, US releases are scheduled for the following: housing starts, industrial production, consumer sentiment, and JOLTS.

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