Market Update & Important Indicators:
U.S. financial stocks rose Friday, as the start of banks' earnings season reignited buying in the sector after its postelection rally had stalled. Shares of J.P. Morgan Chase, Bank of America and Wells Fargo jumped after the banks reported quarterly results. The gains spread to other lenders, sending the KBW Nasdaq Bank index up 0.9%. Financial shares jumped after the November election on expectations for higher U.S. interest rates and a rollback of regulation, helping send major stock indexes to record highs. Between Nov. 8 and Dec. 8, financial stocks in the S&P 500 rose 18%. The sector has been little changed since then, rising less than 0.1%. On Friday, the S&P 500 rose 0.2%–led by a 0.6% rise in the financial sector–and the Nasdaq Composite added 0.5%. The Dow Jones Industrial Average slipped 5.3 points, or less than 0.1%, to 19,886. Stocks soared in the weeks following the election on hopes that the new administration would help accelerate a rise in growth and inflation. But for the past month, U.S. stocks have largely moved sideways, keeping the Dow Jones Industrial Average just shy of the 20000 milestone. Both the blue-chip index and the S&P 500 are on track to post weekly declines.
Asian stock indexes ended the week broadly lower after choppy trading Friday, as markets sought direction after largely trending higher in 2017. Japan's Nikkei Stock Average stood out as the day's best performer, reversing a large chunk of Thursday's 1.2% decline as the dollar regained some footing versus the yen. Market players have begun to adopt a wait-and-see approach following the great expectations a number of people had in the immediate aftermath of Donald Trump's election win. Taking office next Friday, some have been harvesting profits — especially given the lack of detail in his press conference last Wednesday. The Nikkei had fallen in 10 of the past 13 sessions through Thursday, but it closed up 0.8%. Hong Kong was also a bright spot amid gains in energy names, notably coal. The Hang Seng Index gained 0.5% to undo Thursday's pullback, in the process logging its highest close since Nov. 1. Meanwhile, China's exports fell a bigger-than-expected 6.1% in dollar terms last month from a year earlier, helping result in a smaller trade surplus than analysts anticipated.
Australian shares were held back Friday by a retreat in bank stocks, as investors questioned the sector's strong rally since the U.S. election. The performance locally tracked Wall Street's decline overnight, which analysts said reflected disappointment that President-elect Donald Trump provided little clarity on his proposed stimulus measures during his first press conference since the November election. Falling for the third session this week, the S&P/ASX 200 declined 45.8 points, or 0.8%, to close at 5721.1. That left the index down 0.6% for the week, snapping a run higher over the past three weeks that took it to a 20-month high on Monday. The financial sector led the decline, with the four biggest banks collectively knocking nearly 22 points off the ASX 200. The materials sector, which has also climbed strongly in recent months, also weakened for the day, though energy stocks outperformed as crude prices were lifted by reports that major producing nations had started cutting output as pledged.
The London Metal Exchange's three-month copper contract closed up 1.2% at $5,909/t. Other base metals also rose on Friday. Aluminium gained 1.1% to $1,811/t, zinc rose 2.4% to $2,774/t, tin rose 0.4% to $21,155/t, nickel gained 1.7% to $10,400/t and lead rose 5.2% to $2,308/t.
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