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31 January 2019
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| Financial Markets (The Total Investment & Insurance Solutions) |
Stock markets mostly rose Thursday after the U.S. Federal Reserve
signaled it would be cautious in raising interest rates and as investors
monitor U.S-China trade talks. Economic data was mixed, with one survey
pointing to improved Chinese manufacturing but another showing a slowdown in
eurozone growth.
KEEPING SCORE: Germany's DAX added 0.1
percent to 11,193 and the CAC 40 in France rose 0.3 percent to 4,988. Britain's
FTSE 100 gained 0.6 percent to 6,984. Wall Street appeared set for a quiet
open, with the future contract for the Dow Jones Industrial Average down 0.1
percent and that for the S&P 500 up 0.1 percent.
THE DAY IN ASIA: Japan's Nikkei 225 index
gained 1.1 percent to 20,773.49 and the Hang Seng in Hong Kong climbed 1.1
percent, to 27,942.47. South Korea's Kospi fell back after Samsung Electronics
reported a near 30-percent drop in operating profit in the last quarter, losing
0.1 percent to 2,204.85. Australia's S&P ASX 200 gave up 0.4 percent to
5,864.70. The Shanghai Composite index climbed 0.4 percent to 2,584.57 and
India's Sensex advanced 1.4 percent to 36,091.27. Shares were higher in
Southeast Asia.
FED TALK: With pressures on the U.S. economy
rising — a global slowdown, a trade war with China, a nervous stock market —
the Fed signaled it's in no hurry to resume raising interest rates. And with
inflation remaining tame, the rationale to tighten credit has become less
compelling. "The situation calls for patience," Chairman Jerome
Powell said at a news conference. "We have the luxury to be patient."
That has supported investor sentiment as higher rates can weigh on growth.
CHINA MANUFACTURING: An official measure of
China's manufacturing improved in January but forecasters say economic activity
is sluggish as Chinese leaders try to resolve a tariff battle with Washington.
The purchasing managers' index issued Thursday by the government statistics
agency and an industry group rose 0.1 points on a 100-point scale but stayed
below a level that shows activity expanding. Measures for employment and
domestic demand weakened. China's economic growth sank to a three-decade low in
2018 after activity decelerated in the final quarter of the year.
US-CHINA TRADE: Trade talks opened Wednesday
between the U.S. and China and will loom over the market for the remainder of
the week. The high-level talks are aimed at settling a months' long trade war
that has raised fears of slower economic growth. Industrial and technology
companies have warned about slowing sales because of the trade impasse.
ANALYST'S VIEWPOINT: "Today what is most
important is that we get day two of the two-day U.S.-China trade talks. Let's
see who folds there. But with the Fed having delivered unto Trump what is Trump's,
and the Dow over 25,000, does he really need that easy deal, or can he let his
team push back harder?" Michael Every, a senior strategist for the
Asia-Pacific for Rabobank, said in a commentary.
EUROPEAN GROWTH: Investor sentiment was hit
in Europe after official data showed the 19-country eurozone economy grew only
0.2 percent in the fourth quarter from the previous three-month period. Italy
fell into recession, darkening the outlook for the country, where the populist
government has been in a dispute with EU officials over its spending plans.
EARNINGS: Samsung Electronics Co. said it
posted a near-30 percent drop in operating profit for the last quarter after
seeing slowing global demand for its memory chips and smartphones. It still
finished the year with record earnings, but Samsung said it expects its overall
annual earnings to decline this year. Other companies were more upbeat in
Europe: profits rose at consumer goods giant Unilever, oil company Shell and
networks maker Nokia.
ENERGY: U.S. crude oil rose 2 cents in
electronic trading on the New York Mercantile Exchange to $54.25 per barrel. It
gained 1.7 percent to settle at $54.23 per barrel in New York on Wednesday.
Brent crude, used to price international oils, added 30 cents to $61.95 per barrel.
It had added 0.5 percent to close at $61.54 per barrel in London.
CURRENCIES: The dollar weakened to 108.60 yen
from 109.04 yen on Tuesday. The euro rose against the dollar to $1.1489 from
$1.1479.The Total Investment &
Insurance Solutions
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