MACRO STRATEGY

Investment Perspectives: Issue 37 - Global Growth Accelerating

The accelerating global recovery and low inflation are positive for corporate earnings growth and supportive of equity valuations.

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Morning News Summary

Markets Struggle to Find Footing

Global markets remained mixed on Wednesday as some indices feel the pressure. US stocks recovered from the previous afternoon’s sell-off. Europe and the UK were in the red as consumer services led most sectors lower. Asia was mixed as some markets pulled back while some hit all-time highs.

US stocks in the green as indices recover

US stocks rose on Wednesday as major indices recovered from a selloff in the previous session, although major financial stocks sold off after their quarterly results limiting the overall market’s advance. The S&P 500 was up +0.5%, the Dow Jones Industrial Average added +0.6% and the Nasdaq Composite increased +0.5%.
General Electric (-4.4%) continued to fall after the industrial conglomerate announced a fourth quarter after-tax charge of $6.2 billion and a $3 billion cash capital contribution to its insurance subsidiary. Shares of International Business Machines gained +2.2%, as a broker upgraded the stock to overweight from underweight. Investment bank Goldman Sachs Group was down -3.1% after posting lower profit and revenue for its fourth quarter. Shares of biotechnology company Gilead Sciences rose +1.7%, while its peer Celgene lost -1.7% following the previous evening’s report that it is in talks to buy cancer immunotherapy company Juno Therapeutics (+48.7%).

European and UK stocks headed down

European stocks came under pressure on Wednesday, as a round of corporate financial updates failed to lift an investing mood dimmed by the previous afternoon’s losses on the US stock markets. The Stoxx Europe 600 index nudged -0.1% lower, with consumer services and telecom sectors losing the most. Pharmaceutical company Roche lost -1.1% and shares of athletic apparel marketer Adidas (-0.8%) and automaker Daimler (-0.6%) both fell.
UK stocks fell on Wednesday as more corporate updates for the new earnings season rolled in. The FTSE 100 was down -0.4%, with consumer services leading most sectors lower. Luxury-goods brand Burberry dropped -9.3% after it said third-quarter retail sales fell by -2%. Shares of Pearson fell -4.6% after the publisher said sales of US higher education courseware were declining. Shares of Rolls-Royce jumped +5.4% as the company considers the sale of its commercial marine business, which has been hit by weak demand in offshore oil and gas markets.

Asian markets mixed on Wednesday

Asian stock markets ended mixed on Wednesday with Hong Kong shares scoring a fresh all-time closing high, while other markets pulled back. The Hang Seng progressed +0.3% and the Shanghai Composite ended +0.2% higher as banking stocks remained strong with investors looking to capitalise on value. In Japan the Topix lost -0.2% and South Korea’s Kospi decreased -0.3%.

ASX 200 was down

The ASX 200 ended -0.5% lower, following a negative hit to mining stocks.

Crude, gold and iron ore all tumble

WTI crude fell -0.1% to US$63.65, gold lost -0.2% to US$1,335.86 and iron ore decreased -US$0.40 to US$73.03.

Today’s events

  • ENS ex interim div 1.00 cps
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