04/07/2018 – Argonaut Morning Note

Market Update & Important Indicators:

U.S. stocks fell in the final hour of trading in a holiday-shortened session, dragged down by shares of technology and financial companies. Major indexes had traded higher for most of the day but, for the second consecutive session, changed directions shortly ahead of the close. Technology stocks, which have powered the market this year, took a breather after leading Monday's modest charge higher. The Dow Jones Industrial Average fell 132 points, or 0.5%, to 24175, after earlier rising as much as 138 points. The S&P 500 dropped 0.5%, while the technology-heavy Nasdaq Composite declined 0.9%. The declines came as trading volumes fell to their lowest level since the abbreviated session on Nov. 24, 2017. U.S. stock markets closed at 1 p.m. EDT ahead of the U.S. Independence Day holiday. Five of 11 sectors in the broad S&P 500 declined. Energy shares were one of the bright spots in the index, climbing 0.7%, even after U.S. crude prices turned lower after topping $75 a barrel. The US gold price gained 0.9% to 1,252 US$/oz.

The Stoxx Europe 600 index ended up 0.8% at 379.81 after Angela Merkel's CDU party reached a compromise deal with its Bavarian sister party about the country's migration policy. This helped to lift investor mood, while trade war worries eased for now. Germany's DAX ended up 0.9% and France's CAC 40 up 0.8%. The U.K.'s FTSE 100 ended up 0.6%, underperforming its European counterparts as heavyweight mining stock Glencore slid 8.1% after the U.S. Department of Justice requested information from the company regarding its businesses in Nigeria, Venezuela and the Congo. Spain's Ibex 35 ended up 1.1% and Italy's FTSE MIB up 1.6%. 

A number of Asian stock markets saw an afternoon rebound as Monday's wide selling carried over into the morning. As there appeared to be a buyer's strike Monday, it looked by midday that the selling had run its course for now. Chinese indexes finished higher, though big caps again lagged, as the market was helped by a bounce in the yuan after the PBoC's chief looked to soothe investors. Japan's Nikkei nearly erased an earlier near-1% drop and Korea's Kospi rebounded 0.5%. But Hong Kong stocks were down upwards of 2% after not partaking in Monday's market festivities due to a holiday and Indonesia's benchmark is off 1.5%. S&P 500 futures are up 0.2%. Hong Kong's Hang Seng dropped 1.4%. The Shanghai Composite Index was up 0.4% after plunging 2.5% to its lowest close since early 2016. Some emerging market stocks and currencies have taken a battering in recent weeks as trade-related tensions between the world's two largest economies have continued to escalate. 

Australian stocks rebounded after two days of modest drops. Gains were broad in Oz, helped by the heavily weighted big banks and a jump in beaten-down Telstra. The S&P/ASX 200 ended up 0.5% at 6210.2, moving back toward last month's 10 1/2-year high, as energy sector climbed amid the morning's gains in oil prices. That countered a drop-in mining stocks following further weakness in base metals and recent softness in Chinese iron-ore futures.

Base metal prices were mostly down on the London Metal Exchange. The largest falls were seen in aluminium and zinc, which both fell 1.2% to close at 2,096/t and 2,844/t. Nickel lost 0.8% to finish at 14,354/t. Lead gained 0.2% to end at 2,386/t