While Japanese stocks were boosted by Abe’s landslide victory, Spanish woes weighed on shares elsewhere.
US stocks retreated Monday, as a drop in General Electric weighed on industrial shares. The Dow Jones industrials were down 0.2 percent, the S&P declined 0.4 percent and the Nasdaq was 0.6 percent lower. Trading was choppy. Investors are waiting for news on the next Federal Reserve chair. President Trump told reporters on Monday he is “very, very close” to making his decision on who should chair the Fed.
General Electric tumbled after a host of brokerages downgraded the company. However, major indexes held near their all-time highs after a strong start to third-quarter earnings and on hopes President Donald Trump’s tax plans move forward after the Senate’s approval of a budget resolution on Friday. Arconic retreated after the specialty metals maker missed profit estimates and announced a new chief executive.
Schlumberger, Baker Hughes and Halliburton also were lower on the day. Hasbro dropped after the toymaker’s forecast for the holiday season fell below estimates as Toys ‘R’ Us bankruptcy began to hurt its operations. Mattel also was lower. State Street declined even though it posted better-than-expected earnings but reported foreign exchange trading results that disappointed.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$6.30 to US$1,274.90. Copper futures were up 0.6 percent to US$3.19. WTI spot crude was up 6 US cents to US$51.90. Dated Brent spot crude was down 38 US cents to US$57.37. The US dollar was up against the euro and the Canadian and Australian dollars. It was unchanged against the Swiss franc and down against the pound and yen. The Dollar Index was up 0.1 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 1 basis point to 2.89 percent and 2.37 percent respectively.
Most stock indices ended with small gains while Spanish shares lagged at the start of a crucial week in the Catalan independence saga. The FTSE was up 1.22 points, the CAC added 0.3 percent and the DAX and SMI both were 0.1 percent higher. The IBEX closed down 0.6 percent after Prime Minister Mariano Rajoy sought new powers to remove Catalonia's secessionist leaders over the weekend. On Thursday, the regional assembly will meet to decide how to respond to direct rule from Madrid, which the national Senate is expected to approve the next day.
A dip in the value of the euro provided a boost to shares of exporters. Mining stocks however, were under pressure as metal prices weakened. Traders are waiting for the European Central Bank's monetary policy decision on Thursday.
Air France-KLM advanced after the airline announced that KLM has reached new pension scheme agreements with its pilot and cabin staff unions. Building materials group CRH climbed after the company said it would go ahead with its $3.5 billion acquisition of Ash Grove Cement Company. Engineering group GKN jumped after a report that it was considering splitting itself into two companies.
Spire Healthcare surged after the firm said it rejected a takeover by South African private hospitals operator Mediclinic International. Car dealer Pendragon sank after a profit warning. Philips rallied after it reported a 12 percent rise in third-quarter core profit. Banks including HSBC, Standard Chartered, RBS and Barclays declined, tracking a slide in European bank stocks as political uncertainty over Catalonia weighed.
Flash Eurozone consumer confidence index rose to minus 1 from minus 1.2 in September, marking the highest reading since April 2001. The October CBI Trends Survey was surprisingly downbeat about manufacturing conditions in the UK. The headline orders index came in at minus 2 percent, down from September's 7 percent and its weakest reading since November 2016.
Most Asian stocks advanced Monday after the US Senate approved a budget blueprint that paves the way for tax cuts and Japanese Prime Minister Shinzo Abe's ruling Liberal Democratic Party scored a big win in the nationwide parliamentary election Sunday, paving the way for a continuation of loose monetary policy.
The Shanghai Composite edged up 0.1 percent after home-price growth data disappointed investors and markets awaited cues from the ongoing party congress in Beijing. The Hang Seng lost 0.6 percent. Policymakers at the Communist Party congress in Beijing suggested that Beijing was formulating plans for a free port in Shanghai and accelerating the construction of the Xiong‘an special economic zone, which triggered buying in stocks that could benefit from the two projects.
The Nikkei jumped 1.1 percent and the Topix was 0.8 percent higher following the weekend election victory for Shinzo Abe. The Nikkei extended gains for the fifteenth straight session, marking its longest winning streak on record. Exporters — thanks to the weaker yen — and banks led gains. Analysts and investors cite strengthening domestic corporate earnings and signs of a strengthening economy as catalysts for the Japanese market’s recent surge to its highest level since 1996. Panasonic, Nissan Motor and Mitsubishi UFJ Financial advanced.
Both the S&P/ASX and All Ordinaries were 0.2 percent lower. ANZ Banking slid after it settled court action over alleged interest rate rigging. Commonwealth bank and Westpac also declined. Miners were mixed even though Chinese iron ore futures were higher. Gold miners succumbed to selling pressure, with Northern Star and Evolution Mining declining after gold prices dropped to their lowest in two weeks on Friday.
The Kospi was up 0.51 point. The Sensex added 0.4 percent. Prime Minister Modi's optimistic comments about the economy and the Revenue Secretary’s announcement that there is need for some revisions in the GST rate structure also supported underlying sentiment.
Flash October manufacturing will be released for Japan. Flash October composite PMIs will be released for the Eurozone, France, Germany and the US.
Global Stock Markets
Note — all releases are listed in local time.