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Markets Update, May 10

 

 

 

  • European stocks dip 
  • S&P futures point at opening down 0.2%
  • Dollar halts winning rally
  • Asian stocks rise on earnings

 

The Stoxx Europe 600 slipped 0.1% in European morning trade after closing on Tuesday at its highest level since August 2015. Roche Holding AG was the biggest drag on Europe’s Stoxx 600 Index after a cancer drug failed in a late-stage clinical trial.

Stock markets in Asia were mixed:

Asian shares, however, edged up for a third consecutive day. MSCI’s main index of Asia-Pacific shares, excluding Japan rising 0.1 percent, having earlier matched a two-year high hit last week.

Twelve-month forward earnings-per-share for the index is at its highest level in more than three years.

South Korean stocks led losers as investors took profits after liberal leader Moon Jae-in was elected president, while Chinese shares closed lower after factory gate prices ion the world’s second-biggest economy cooled more than expected in April.

Tokyo shares hit a 17-month high, up 0.3 percent on the day as a relatively weak yen outweighed concerns triggered by Trump’s sacking of Comey.

Financial markets received with a muted reaction to the firing of FBI director Comey by Trump. The dollar fell on concerns that U.S. President Donald Trump’s dismissal of his FBI chief could make passage of his tax reform plans more difficult.

First quarter company reporting set expectations higher as results have lifted stock markets across the globe, with European full-year earnings forecasts set to be their best since 2010. The prospect of U.S. tax cuts has also helped push shares higher.

Major stock markets have gained in recent weeks as corporate earnings have exceeded analyst expectations. U.S. companies have largely beat estimates, with most S&P 500 companies now having reported results, according to FactSet.

With the earnings season now drawing to a close, some investors believe President Donald Trump needs to deliver the corporate tax cuts he has promised if equity markets are to climb further reports the WSJ

The VIX’s low level “is a signal [that] the market is complacent. Demand for haven assets rose slightly on Wednesday though, as riskier assets slipped. The yield on the 10-year Treasury note declined from 2.405% to 2.377% recently, according to Tradeweb, reversing most of Tuesday’s rise. Yields move inversely to prices. Gold prices, meanwhile, gained 0.6% to $1,224 an ounce.

In Europe, a 0.8% decline in the construction and materials sector weighed on the broader market. HeidelbergCement AG fell 2% after the German firm reported a net loss.

Still, many investors see good reasons to be upbeat on European stocks. the European company earnings season is on track for its strongest quarter in a decade, according to a recent report fromMorgan Stanley

 

Oil climbed following an industry report that showed American stockpiles declining for a fifth week.

 

Apple stock closed at a record high $153.99 on Tuesday, giving Apple a stock market value of $802.88 billion. Apple becomes the first-ever U.S. company with a stock-market value over $800 billion.

 

 

Today will be watched

  • Earnings are expected from companies including Deutsche Telekom AG and Snap Inc. Toyota Motor Corp. and SoftBank Group Corp. posted results after the close of Japanese markets.
  • The Bank of England on Thursday publishes its interest-rate decision and quarterly Inflation Report. 

     

     

    MAin market moves

    • The Stoxx Europe 600 slipped 0.1 percent as of 10:41 a.m. in London, after climbing 0.5 percent Tuesday to the highest since August 2015.
    • S&P 500 futures dropped 0.2 percent.
  • Currencies 
    • The Bloomberg Dollar Spot Index lost 0.1 percent after climbing 0.4 percent Tuesday.
    • The euro was little changed at $1.0869, while the pound gained 0.1 percent.

    Bonds

    • The yield on 10-year Treasury notes fell two basis points to 2.38 percent.
    • Benchmark German yields dropped one basis point to 0.42 percent, while French yields were down two basis points.

    Commodities

    • Gold gained 0.2 percent $1,223.50 an ounce, rebounding from five days of declines.
    • West Texas oil climbed 1 percent to $46.32 a barrel, resuming gains after dropping 1.2 percent on Tuesday.
    • Copper erased earlier gains to trade 0.2 percent down at $5,501.50 a ton on the London Metal Exchange.
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