Morning report

Morning News Summary

Good News Boosts Optimism

Global markets were lifted after positive news emerged that the Chinese Commerce Ministry will send a delegation to the US later this month to resume trade talks, while it was reported that Qatar would invest $15bn in Turkey. US indices rallied and recorded broad gains. Europe and the UK rebounded modestly as optimism rose. Asian benchmark indices remained in negative territory.

US indices rallied as earnings and positive news lifted investor sentiment

US markets staged a broad-based rally to rebound from the previous session’s losses, as strong corporate earnings boosted investors’ risk appetites, while positive news about US-China relations and the Turkey currency crisis also lifted sentiment. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite Index added +1.7%, +1.0% and +0.7% respectively.

Walmart shares soared +9.4% higher after reporting adjusted second quarter earnings that surpassed expectations and gave an outlook that was higher than forecast. Palo Alto Networks bounced up +3.1%. Lululemon lifted +2.1% after an analyst upgraded the stock from Hold to Buy. Comcast Corporation added on +2.1%. Healthcare stocks Merck & Co (+1.8%), Johnson and Johnson (+1.5%) and Alexion Pharmaceuticals (+1.3%) progressed upwards. Facebook fell -1.9% after admitting that it has been ‘too slow’ to fight hate speech in Myanmar. Tesla shrank -0.8% after federal regulators ramped up an investigation into whether Elon Musk was truthful when he tweeted last week that he had secured the funding to take the electric-car maker private.

Europe and the UK rebounded following rising international optimism

European and UK equities rebounded and closed in the green as Turkey’s currency crisis continued to show signs of easing, while optimism rose as the prospect of new talks between the US and China on trade emerged. The Stoxx Europe 600 rose +0.5%. LVMH shares grew +2.3%. Adidas tacked on +1.4%. Italian toll road operator Atlantia plunged -23% after Italy’s government said it is launching a process to withdraw some or all of the firm’s concessions following this week’s collapse of a bridge that Atlantia operated in Genoa. Bayer shares slid an additional -4.6% after a California court turned down the company’s attempt to keep Roundup off a list of carcinogenic chemicals.

The UK’s FTSE 100 grew +0.8%. WPP climbed +2.9% after announcing it will move out of its London headquarters in an attempt to leave former CEO Sorrell’s era in the past. Prudential added +1.8%. Johnson Matthey bounced up +1.4%. Kingfisher fell -4.8% after it reported its second-quarter results.

Asian benchmark indices extend the previous session’s losses

Asian markets remained in negative territory even as reports emerged that China has agreed to take part in trade negotiations with the US later this month. The Hang Seng (-0.8%), Kospi (-0.8%), Shanghai Composite (-0.7%), Topix (-0.6%) and HSCEI (-0.5%) all fell.

The ASX 200 ended narrowly lower as resource sector losses outweighed industrial gains, while the unemployment rate fell to a six-year low.

Crude and gold climb higher, iron ore dips

WTI crude gained +0.5% to US$65.34, while gold rose +0.1% to US$1,176.28. Meanwhile, iron ore lost -0.8% to US$66.50/MT.

Today’s events

  • Stats NZ: Business price indexes - June 2018 qtr
  • Asset Plus Ltd (APL) AGM


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