The ASX will be looking for a modest recovery today from Friday’s nasty sell off after the futures market ended the week early Saturday with a gain of 24 points on the day.
If that happens it will be a rise of less than a third of Friday’s 1.2%, 82 point slump in the ASX 200 – a fall which came out of the blue.
Trading in Europe and the US saw a fall of 0.8% and 0.1% respectively on Friday night. The London market fell 72 points thanks to move in the US to cut nicotine content in cigarettes – news that send tobacco company shares lower.
For the week Eurozone shares rose 0.2%, US shares were flat despite good earnings news but Japanese shares fell 0.7%, Chinese shares lost 0.2% and Australian shares were down 0.4%, thanks to Friday’s slide.
Bond yields generally rose and the continuing softness in the $US (not helped by a dovish post meeting statement from the US Federal Reserve, and no let up in the ongoing mayhem around Trump.
This and rising commodity prices (oil, iron ore, copper, gold) and saw the $A briefly rise above $US0.80 for the first time since May 2015, and the dollar ended just under that level at 79.85 – up around 0.70 of a cent over the week.
The S&P 500 and Nasdaq both finished slightly lower on Friday for weekly losses as Amazon shares fell on disappointing June quarter figures, but the Dow finished at a record for a weekly gain.
European stocks though ended at three month lows, despite investors voting the region as the best buy globally – specially compared to Wall Street which is looking more and more ’toppy’.
The first estimate of US second-quarter reading GDP showed a rise at an annual rate of 2.6%, below the 2.8% market forecast. First-quarter GDP growth was revised down to 1.2% from 1.4% in a bit of a surprise to economists.
The cost of employing the average US employ rose 0.5% in the second quarter and there was little acceleration despite the tightest labor market in years. That was down sharply from the 0.8% rate in the first quarter.
And inflation slowed sharply – to an annual rate of just 0.3%, from a faster 2.2% annual rate in the first quarter. According to the Fed’s preferred measure, the Personal Consumption Index, a core measure of this index rose 0.9% (it’s the Federal Reserve’s preferred measure) down from a faster 1.8% rate in the first quarter and the slowest rate in two years..
The S&P 500 index ended down 3.32 points, or 0.1%, at 2,472.10 on Friday, for a weekly loss of less than 0.1%.
The Dow, which touched an all-time intraday high, rose 33.76 points, or 0.2%, to close at a record 21,830.31. The Dow was up 1.2% for the week.
And the Nasdaq lost 7.51 points, or 0.1%, to close at 6,374.68. The index finished down 0.2% on the week, despite solid results from Facebook and Alphabet as Thursday’s weak earnings report from Amazon delivered a hit on Friday.
Amazon’s shares fell 2.5% after the 77% sump in earnings for the quarter.
Shares in tobacco giant, Altria Group slumped 9.5% and the US Food and Drug Administration said it wants to reduce nicotine levels in cigarettes and move smokers toward potentially less harmful e-cigarettes.
Altria, which makes Marlboro brand cigarettes, was the biggest drag on the S&P 500 on the day, while the US-traded shares of British American Tobacco dropped 7.0%.
Exxon shares fell 1.5% after a rare earnings miss, but shares of rival oil major Chevron climbed 1.9% after its results also missed analysts forecasts.
Starbucks shares plunged 9.2% after it said it was closing its tea chain, Teavana and Mattel dropped 7.8% after its weak quarterly figures.
In Australia Friday’s 1.2% slide hit confidence. Over the week the ASX200 lost 0.4% and the All Ordinaries was off 0.3%.
All four banks closed fell with the Commonwealth Bank off 0.3% for the week, the NAB down1.6%, Westpac closed 1.6% lower as well and the ANZ lost 1.4%.
Big miners, BHP Billiton and Rio Tinto managed to finish the week up 3.4% and 1.9% respectively as iron ore prices topped $US70 a tonne for two days.
Fortescue Metals finished the week up 7% after reporting solid production figures on Thursday.
