Global stocks uninspired as focus turns towards US jobs data

LONDON — Global stock markets traded in fairly narrow ranges Thursday as the attention in markets shifted towards upcoming U.S. jobs data following the publication of the minutes to the Federal Reserve’s last board meeting.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was steady around its all-time closing high at 7,188, while Germany’s DAX fell 0.2 percent to 11,564. The CAC-40 in France was 0.2 percent lower at 4,891. U.S. stocks were poised for modest losses at the open with Dow futures and the broader S&P 500 futures down 0.2 percent.

FED MINUTES: U.S. central bank officials think they may need to accelerate interest rate hikes if a faster-growing economy leads to lower than expected unemployment. For now they believe they can stick to gradual increases, according to minutes of the Fed’s December meeting. Officials also discussed the impact of Donald Trump’s proposed economic stimulus program and attributed surging stock prices, rising bond rates and the stronger dollar following the election to investor enthusiasm over the president elect’s plans.

JUST THE PRECURSOR: The minutes were just a taster for the likely big economic event of the week — Friday’s publication of the nonfarm payrolls report for December. Though the upcoming moves by the incoming Trump administration are likely to have an impact on Fed rate hike predictions, the backdrop is likely to remain that the U.S. economy is growing strongly with unemployment falling steadily. Later Thursday, traders will have the monthly non-manufacturing survey from the Institute for Supply Management to digest.

ANALYST TAKE: “Given the uncertainties that lie ahead though, I expect it will be another volatile year in which expectations for interest rates will change on a regular basis,” said Craig Erlam, senior market analyst at OANDA.

UPBEAT ASIA: Solid figures out of China and Hong Kong raised investor optimism about the outlook for their economies. Caixin’s monthly purchasing managers index, or PMI, for the services industry posted its biggest rise in activity for 17 months in December. The Nikkei composite PMI for Hong Kong, meanwhile, showed that activity expanded for the first time since February 2015.

ASIA’S DAY: Japan’s benchmark Nikkei 225 index fell 0.4 percent to close at 19,520.69 a day after hitting its highest level in 13 months as the yen’s strength hurt shares of some exporters. South Korea’s Kospi edged 0.2 percent lower to 2,041.95 but Hong Kong’s Hang Seng rose 1.5 percent to 22,456.69. The Shanghai Composite index in mainland China added 0.2 percent to 3,165.41. Australia’s S&P/ASX 200 climbed 0.3 percent to 5,753.30.

CURRENCIES: The euro clawed back some further ground against the dollar, trading 0.2 percent higher at $1.0508, while the dollar slid 0.7 percent at 116.37.

ENERGY: Benchmark U.S. crude was up 36 cents at $53.62 a barrel while Brent rose 41 cents to $56.87 a barrel in London. TVJ

source: business.inquirer.net

China stock markets among world’s worst in 2016

SHANGHAI, China — China is the world’s second-largest economy and has one of the fastest growth rates of any G20 nation, but its stock markets have been among the worst performing in the world this year.

Starting with a botched attempt to reduce volatility that instead triggered a spectacular meltdown, Chinese bourses have spent the year struggling against feckless policymakers, massive capital flight and a languishing currency.

The benchmark Shanghai Composite Index (SCI) struggled towards the finish line Thursday down 12.5 percent for the year, compared to falls of 0.6 percent by the Hang Seng Index in Hong Kong and 2.2 percent for Japan’s Nikkei 300. Both markets are trading Friday.

As of Thursday, it had the worst showing among the 40-plus countries tracked by Wall Street Journal’s Market Data Center, behind even debt-ridden Portugal.

It is a significantly worse performance than 2015’s wild ride, when the SCI surged by 60 percent in the first half before plunging by more than 40 percent in under three months. Even so, it finished the year with an overall gain of 9.4 percent.

Then authorities brought in a “circuit breaker” mechanism in January to automatically shut down trading if prices plunged. It went into effect twice in one week, kicking off a self-reinforcing selling panic that spread to global markets, and was scrapped after just four days.

“The Chinese market had a meltdown this year, and so far it has only half recovered from that,” Northeast Securities analyst Shen Zhengyang told AFP, adding the market was still in “slow and gradual restoration”.

The chairman of the China Securities Regulatory Commission was sacked over the debacle.

His replacement, Liu Shiyu, has kept a low profile, hurting market confidence and leaving investors seeking direction, said Oliver Rui, a professor at the China Europe International Business School (CEIBS).

“People don’t understand much about the regulator’s policy direction,” he said, adding that the lack of clarity partly explained the market’s weak performance.

The falling yuan — lowered seven percent by the central bank over the year in the face of a surging dollar — has also driven investors abroad in search of better performance.

“When the yuan falls, market capital runs off overseas to hedge the risks,” said Dickie Wong, Hong Kong-based research director for Kingston Securities, adding it also made foreign investors “less optimistic about mainland companies”.

Missed connection

Even the year’s few bright spots have failed to live up to expectations.

Earlier this month, China launched a long-delayed programme connecting its second exchange in Shenzhen — which has lost 14.8 percent so far this year — with the bourse in Hong Kong.

The Hong Kong-Shenzhen Stock Connect builds on a similar scheme with Shanghai and gives foreign investors access to many mainland tech shares.

But it has so far failed to live up to the hype, with Shenzhen’s shares more expensive than those in Hong Kong, making it unattractive to foreign investors, while the entry threshold for mainlanders to buy Hong Kong shares was set as high as half a million yuan ($72,000).

Other anticipated reforms, such as a new system for initial public offerings (IPOs), have all failed to materialise or were quietly shelved after January’s drama.

Currently, the Chinese government — rather than the market — decides which companies offer shares and when, and at what price.

As a result Chinese flotations are always underpriced, which “sends the wrong signals to the market”, according to Oliver Rui of CEIBS.

Authorities should “not intervene too much” but “are always afraid that the market will lose control”, he told AFP.

“But if you do not let go, then you will never know if the market can accept the new system or not. Mistakes are a necessary step.”

‘Least profitable’

Unlike most global exchanges where institutions hold sway, China’s stock markets are dominated by small investors, heightening volatility and short-termism.

Government-backed funds injected billions of dollars into China’s markets in 2015 in an effort to stop them bleeding out, and still play a major role, ignoring profit, loss and everything in between, and creating huge price distortions.

“In such an environment, it’s quite difficult for investors to apply whatever money-making strategies that they have learned over the years,” said Citic Securities analyst Zhang Qun.

He called China’s stock market “the least profitable” option in China or abroad.

Even so, brokers are mildly optimistic about next year — but hedge their bets with huge ranges for their 2017 year-end forecasts.

China Merchant Securities projects the SCI at anything from 2,900 — a six percent decline — to 3,800, which would represent a leap of 23 percent.

“With the government taking tighter controls over the property market and bonds also falling, not many choices are left,” said Kingston’s Dickie Wong. “Funds must go somewhere and stocks are ultimately one choice.” CBB

source: business.inquirer.net

Stock market rally fades ahead of US holiday

BEIJING  — The rally in global stock markets, which saw the Dow close above 19,000 for the first time, petered out on Wednesday as investors prepared for a holiday in the U.S.

KEEPING SCORE: Britain’s FTSE 100 rose 0.3 percent to 6,636 while Germany’s DAX shed 0.6 percent to 10,655. France’s CAC 40 dropped 0.4 percent to 4,529. On Wall Street, the futures for the Dow Jones industrial average and the Standard & Poor’s 500 index were both unchanged, a day after the Dow closed above the 19,000 mark for the first time. The U. S. markets will be closed Thursday for Thanksgiving holiday.

WALL STREET: U.S. markets have been the focus since the election of Donald Trump as U.S. president, which many investors bet will be positive for companies. They expect less regulation of financial services and possibly tax cuts as well as spending on infrastructure. He has affirmed plans to withdraw from the Trans-Pacific Partnership but avoided mentioning his campaign pledge to build a wall along the Mexican border. “As Trump has rowed back and not mentioned some of his more extreme policy sound bites, some worries about the nature of his presidency may have begun to abate,” Alex Furber of CMC Markets said in a report. That has helped U.S. indexes hit record highs, with the Dow surpassing 19,000 for the first time and closing at a record high six times in the two weeks.

ANALYST’S TAKE: “The bulls have got control here,” Chris Weston of IG said in a report. “U.S. equity and many other developed markets are going higher, at least in the short-term.” Weston noted investors assume the U.S. Federal Reserve will go ahead with an interest rate hike in December. “Emerging markets have found support and are even attracting buyers,” said Weston. “If the Fed were to assess financial conditions in the wake of a potential rate hike they would be wholly enthused.”

ASIA’S DAY: Sydney’s S&P-ASX 200 rose 1.3 percent to 5,484.40 and Seoul’s Kospi advanced 0.2 percent to 1,987.95. India’s Sensex gained 0.5 percent to 26,081.22 and Hong Kong’s Hang Seng ended unchanged at 22,676.69. The Shanghai Composite Index shed 0.2 percent to 3,241.14. Japanese markets were closed for a holiday. Benchmarks in New Zealand and Taiwan gained while Indonesia retreated.

ENERGY: Benchmark U.S. crude fell 16 cents to $47.87 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost 21 cents on Tuesday. Brent crude, used to price international oils, shed 12 cents to $49.00 in London. The contract added 22 cents the previous session.

CURRENCY: The dollar was roughly steady at 111.21 yen while the euro fell to $1.0615 from Tuesday’s $1.0630. TVJ

source: business.inquirer.net

World stocks rise again on stimulus hopes, yuan’s gain

HONG KONG — World stock markets were mostly higher Tuesday as a strengthening yuan and hopes for more central bank stimulus gave investors relief from the mauling that markets have suffered so far this year.

KEEPING SCORE: European stocks were higher in early trading. France’s CAC 40 climbed 0.4 percent to 4,131.18 and Britain’s FTSE 100 added 0.2 percent to 5,831.64. Germany’s DAX dipped 0.3 percent to 9,181.45. U.S. benchmarks were poised to open sharply higher after a long weekend. Dow futures rallied 1.5 percent to 16,148.00 and broader S&P 500 futures jumped 1.5 percent to 1,886.40.

STIMULUS HOPES: Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank. With the ECB set to discuss policy measures on March 10, Mario Draghi told the European Parliament on Monday that the bank has a range of instruments it can deploy if it decides more stimulus is needed. Earlier, a disappointing report on Japanese economic growth also raised hopes for more policy easing.

RENMINBI RELIEF: China’s strengthening currency also helped boost sentiment. The yuan hovered near its strongest level so far this year a day after the central bank guided the currency, also known as the renminbi, sharply higher. Previous weakness in the yuan triggered worries the Chinese economy was in worse shape than thought. Meanwhile, new yuan loans jumped 71 percent in January, the official Xinhua news agency reported Tuesday, suggesting solid demand in the world’s No. 2 economy.

ANALYST’S TAKE: “Since the start of January everything went south and we really needed some positive news,” said Jackson Wong, associate director at Huarong International Securities. “Factors that were affecting the markets negatively have turned positive now: the yen is weaker, the renminbi is stronger, global markets like the U.S. are stabilizing. All the negative catalysts from January are turning better.”

ASIA’S DAY: Japan’s Nikkei 225 added 0.2 percent to close at 16,054.43 after soaring 7.2 percent the day before, which was its biggest daily gain since September. South Korea’s Kospi rose 1.4 percent to 1,888.30 and Hong Kong’s Hang Seng advanced 1.1 percent to 19,122.08. The Shanghai Composite Index in mainland China surged 3.3 percent to 2,836.57 and Australia’s S&P/ASX 200 was up 1.4 percent to 4,910.00. Benchmarks in Taiwan and most of Southeast Asia also rose.

ENERGY: Benchmark U.S. crude rose $1.28, or 4.4 percent, to $30.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.23 to settle at $29.44 a barrel on Friday. Brent crude, a benchmark for international oils, added $1.38 to $34.77 a barrel in London.

CURRENCIES: The dollar eased to 114.06 yen from 114.54 yen in Monday’s trading. The euro edged up to $1.1174 from $1.1168. TVJ

source: business.inquirer.net

Ukraine plane crash hits global stocks

LONDON – Global stock markets slid on Friday after the crash of a Malaysian Airlines jet which killed 298 people over rebel-held eastern Ukraine, amid signs it was hit by a missile.

Russian shares and the ruble sank, as the disaster dramatically raised tensions between the Kremlin and the West.

The investment climate was already heavily clouded by broadened US and EU sanctions linked to Ukraine.

Sentiment was also rocked as Israel launched a ground invasion of Gaza, with tanks and warplanes sweeping into the area in a bid to stop rocket fire.

The heightened geopolitical tensions sent traders fleeing risky assets such as equities and into safer investments like gold, US bonds and the yen.

European equity markets, which had already fallen late on Thursday as news of the crash broke, extended losses in late morning Friday deals.

London’s benchmark FTSE 100 sank 0.63 percent to 6,696.85 points, despite gains for drugmaker Shire Pharmaceuticals which agreed to a $54-billion takeover from US giant AbbVie.

Frankfurt’s DAX 30 index shed 0.83 percent to 9,672.96 points and the Paris CAC 40 lost 0.37 percent to 4,300.13. Milan stocks dropped 0.42 percent and Madrid decreased by 0.94 percent.

The euro meanwhile hit a February low against the safe-haven Japanese currency at 136.71 yen.

“Thursday’s tragic Malaysian Airlines plane crash has spooked financial markets as tension increased between Russia, Ukraine and the West,” said Laith Khalaf, head of corporate research at brokerage Hargreaves Lansdown.

“Geopolitical tension was also elevated as Israel launched a ground offensive into Gaza.”

He added: “Investors fled shares for the perceived safe haven of US government bonds and gold, while the price of oil also climbed.”

IMF warning on asset prices

Meanwhile, the IMF said that the Ukrainian economy was being unexpectedly badly damaged by the crisis, and said it now expected the economy to shrink by 6.5 percent this year instead of 5.0 percent.

In Paris, the head of the International Monetary Fund, Christine Lagarde, warned that European asset markets were perhaps too high relative to fundamental economic indicators, and also said that unduly low inflation could badly damage European growth..

In Asia, markets mostly fell after the disaster sparked geopolitical tensions.

Hong Kong dropped 0.28 percent, Tokyo sank 1.0 percent and Seoul slid 0.07 percent, while Sydney ended 0.17 percent higher.

Airline stocks in Asia retreated, led by a slump in already under-pressure Malaysia Airlines as the company faced up to its second major disaster in four months.

Shares in Malaysia Airlines tumbled by as much as 17.8 percent on the news, which comes months after Flight MH370 went missing with hundreds on board in a remote part of the Indian Ocean.

In Moscow, the ruble-denominated Micex stock index fell by 1.67 percent, and the dollar-based RTS index was down 2.23 percent.

The ruble meanwhile fell to 35.1 to the dollar and to 47.5 to the euro.

source: business.inquirer.net