Morning report

Morning News Summary

Markets Slip on Weak Data

As trade negotiations between the US and China develop, investors turned their focus to the release of weak regional economic data and earnings reports, which saw the US, Europe and UK struggle. Asian markets gained on reports of the progress being made in Washington.

Weak economic data drags markets as US–China negotiations continue

US stocks edged lower on Thursday, albeit have picked up a touch from intraday lows, as investors weighed up weak data such as a fall in existing home sales and a decline in manufacturing activity. There were reports that US and Chinese negotiators were in the early stages of outlining a deal to potentially bring the long-running trade spat to an end. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite slid lower by -0.3%, -0.4% and -0.4% respectively.

Shares of Nike dipped -1.4% following yesterday’s departure of top NBA prospect Zion Williamson during a widely watched college basketball game, after his Nike shoes split open causing him to sprain his knee, raising doubts over whether he will eventually sign with the company. Shares in America’s Domino’s Pizza tumbled -9.5% after the company reported fourth-quarter earnings, revenue and same-store sales that fell short of expectations. Dragging the core indices lower were losses in the healthcare sector, led by a decline in shares of Biogen (-3.6%) after the company was downgraded to hold by a Wall Street broker. Shares of Nektar Therapeutics (-5.1%), Abbvie (-2.4%), CVS Health Corp (-2.3%), Allergan (-2.3%), Alexion Pharmaceuticals (-2.1%), Illumina (-2.1%), Gilead Sciences (-1.5%) and Johnson & Johnson (-1.1%) also fell. Among the top performers, shares of Microsoft climbed +1.9% higher to take back yesterday’s lost ground.

European and UK stocks close in the red

European equities struggled with the Stoxx Europe 600 closing -0.3% lower as a weak batch of both company earnings and regional economic data clouded investor sentiment in the region. Moeller Maersk, the world’s largest container shipping company, saw shares plummet -10.1% after net profit missed expectations for the fourth quarter as higher freight rates failed to offset rising fuel costs.

The UK’s FTSE 100 dropped by -0.9% as losses seen in the heavily weighted mining and energy sectors were partnered by significant drops in a few heavyweights following poor earnings reports. Shares of energy utility Centrica tumbled -11.7% after warning it will struggle to reach cash flow targets in 2019. Bae Systems shares plunged -7.9% lower despite increasing profit by +14%, after it admitted Germany’s ban on selling arms to Saudi Arabia could prove difficult for the company in the long run.

Asian markets given boost by US–China negotiations update

Asian markets were mostly higher following reports outlining a plan to end the US–China trade spat. The Taiwan SE (+0.5%), Hang Seng (+0.4%) and Nikkei 225 (+0.2%) rose, while the Shanghai Composite fell -0.3%. The ASX 200 rose by +0.7% following a solid batch of earnings.

Crude and gold down, iron ore flat

WTI crude fell -0.2% to US$56.81 and gold fell -0.5% to US$1331.83, while iron ore remained flat at US$88.30.

Today’s events

• 1H19 result: Auckland International Airport
• FY18 result: Refining NZ, Summerset Group

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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your Authorised Financial Adviser.