Morning Notes

17/07/2017 Argonaut Morning Note

Market Update & Important Indicators
The S&P 500 hit a fresh record Friday and posted its best weekly performance since late May. Investors poured money into stocks as weak data on retail sales and inflation suggested the Federal Reserve may be slow in raising interest rates and reducing its balance sheet. Stocks that pay out steady dividends rose on anticipation of low rates for the foreseeable future. The gains by utilities companies and other bond proxies offset a drop in shares of financial companies following a slew of bank-earnings reports. The S&P 500 rose 0.5%, the Dow Jones Industrial Average added 0.4%, and the Nasdaq Composite rose 0.6%. The Dow industrials notched their third consecutive record close, and all three posted weekly gains. The S&P 500 gained 1.4% for the week. The latest reading of the U.S. consumer-price index showed inflation in the U.S. was flat in June. Fed Chairwoman Janet Yellen said during the week that officials expect a recent downturn in inflation would prove transitory, and that they expect to tighten monetary policy at a slow but steady clip. She added that if data continues to disappoint the Fed could adjust its strategy. The U.S. gold price was higher overnight, finishing up 1% at 1,229 US$/oz.

European stock markets largely finished lower Friday, with bank shares taking a hit after their U.S. peers kicked off a new earnings season, but regional equities on the whole marked their best weekly performance in more than two months. Benchmarks in Germany, France, Spain, Italy and the U.K. each closed in the red, but the Stoxx Europe 600 managed to finish higher by 0.2%, with commodity shares among its advancers. The pan-European gauge was also aided by Greek stocks, whose rise left the Athex up 0.3% at 856.47. Investors will watch for any word on whether the Greek government will return to the bond market as early as next week. For the week, Stoxx 600 finished up by 1.8%, the largest percentage gain since the week ended May 5, FactSet data showed.

Asian stocks had an early upside bias but struggled to keep it as Friday's trading progressed, resulting in an number of indexes finishing little changed but maintaining generally solid gains for the week. Japan's Nikkei Stock Average edged up 0.1%, while Korea's Kospi, coming off two consecutive record closes, added 0.2%. Hong Kong's Hang Seng added 0.2%, taking it near its best level since mid-2015. It closed out the week with a 4% advance, its biggest in a year. The Shanghai Composite was up 0.1%, but the Shenzhen Composite fell 0.4%, as investors exercised a bit of caution ahead of possible financial-system changes from the National Financial Work Conference, which started Friday. Singapore's benchmark surged 1.6%.

Energy shares led broad gains in Australian stocks, driven by overnight strength in oil prices, while banks tracked financial shares on Wall Street higher. The S&P/ASX 200 extended Thursday's rally, rising for the fourth time in the past five days to finish 0.5% higher at 5765.1. The index gained 1.1% for the week.

The London Metal Exchange's three-month copper contract gained 0.9% overnight to close at $5,905/t. The other base metals finished mostly higher. Aluminium prices rose 0.1% to 1,908/t, whilst nickel prices added 4.0% to finish at 9,530/t. Lead prices gained 0.9% to 2,296/t, tin prices closed up 0.02% to 19,890/t, whilst zinc prices bucked the trend, dropping 0.9% to 2,805/t.

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