Market Review for September 13 2017

Asian stocks wobbled on Wednesday but still marked a 10-year peak, cheered by record highs on Wall Street, while shares of Apple Inc’s (AAPL.O) suppliers dipped following the release of the latest iPhone.

Futures suggested a downbeat start to the European trading day, with the Eurostoxx 50 STXEc1 down 0.1 percent, DAX futures FDXc1 also down 0.1 percent and FTSE futures FFIc1 0.2 percent lower.

 MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was slightly lower, after earlier poking up to its highest level since October 2007. Australian shares ended fractionally higher and South Korean shares .KS11 rose 0.2 percent.

On Tuesday, the S&P 500 .SPX, Dow Jones industrials .DJI and Nasdaq Composite .IXIC all finished at record levels as investors' concerns faded about North Korean tensions as well as the impact of Hurricane Irma.[.N]

U.S. gains were kept in check, however, by a decline in shares of Apple Inc (AAPL.O) after it unveiled its newest line of iPhones. Apple fell 0.6 percent but pared some losses in afterhour’s trade.

The new iPhone’s sales will have repercussions beyond Apple for many suppliers as well as its rivals.

Japan's Nikkei stock index .N225 added 0.5 percent to a one-month high, getting a tailwind as the yen stayed far away for its recent peaks.

Moving to the currency market, The dollar inched 0.1 percent lower on the day to 110.11 yen JPY=, but remained well above last Friday's 10-month low of 107.32 plumbed when Hurricane Irma loomed and investors braced for the possibility of another missile or nuclear test to mark North Korea's founding day on Sept. 9.

The yen tends to benefit during times of economic and political uncertainty due to Japan’s net creditor nation status, and the expectation that Japanese investors would repatriate assets during times of crisis.

Investors remained wary of a flare-up of tensions at any moment on the Korean Peninsula, with U.S. President Donald Trump saying on Tuesday that U.N. sanctions on North Korea this week were a “very small step,” and “nothing compared to what ultimately will have to happen” to deal with the country’s nuclear program.

North Korea remained defiant over the latest sanctions, vowing to redouble efforts to fight off what it said was the threat of a U.S. invasion.

The euro was up 0.1 percent at $1.1979 EUR=, while the dollar index .DXY was down 0.1 percent at 91.815, holding well above Friday's 2-1/2-year low of 91.011.

In commodities, Crude oil futures were mixed after gaining on Tuesday, when OPEC forecast higher demand in 2018 and Russia and Venezuela confirmed their commitment to a production-cutting deal to reduce the global crude glut. [O/R]

Brent crude LCOc1 slipped 0.2 percent to $54.18 per barrel, while U.S. crude CLc1 rose slightly to $48.25.

Oil prices eased on Wednesday, dampened by reports of rising U.S. crude stockpiles, but retaining some of the gains made in the previous session after OPEC said it expected higher demand for its crude next year.

 U.S. West Texas Intermediate (WTI) CLc1 was down 5 cents, or 0.1 percent, at $48.18 a barrel at 0650 GMT after rising earlier in the day. The contract rose 0.3 percent on Tuesday.

International benchmark Brent crude LCOc1 was down 11 cents, or 0.2 percent, at $54.16 a barrel, having settled up 0.8 percent in the previous session.

The difference between Brent and WTI, WTCLc1-LCOc1 known as the spread, was at $5.46 in the favour of the global benchmark, as Hurricanes Harvey and Irma continued to impact demand for both crude and oil products in the U.S.

Wednesday’s drop came after a rise the day before when the Organization of Petroleum Exporting Countries (OPEC) forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut that has weighed on prices.

Analysts have warned current U.S. stocks data may not give a full picture in coming weeks because of weather disruption, but industry group the American Petroleum Institute reported late on Tuesday that U.S. crude stockpiles rose nearly twice expected levels last week. Refineries cut output following Hurricane Harvey, while gasoline and distillate inventories fell. [API/S]

Crude inventories rose by 6.2 million barrels in the week to Sept. 8 to 468.8 million, nearly double analysts’ expectations of an increase of 3.2 million barrels.

The U.S. Department of Energy’s Energy Information Administration (EIA) reports on stockpiles and refinery runs later on Wednesday. [EIA/S]

The EIA also said on Tuesday it had revised both its 2017 and 2018 oil production forecast figures lower to reflect, in part, the effects of Hurricane Harvey.

Finally in Japan, Japanese wholesale prices rose at the fastest annual pace in nearly nine years in August as robust Chinese demand boosted commodity prices, offering glimmers of hope consumer inflation will accelerate toward the central bank’s 2 percent target.

But some analysts warn the pick-up in wholesale inflation won’t be strong enough to nudge companies into boosting retail goods prices.

Wholesale prices rose 2.9 percent in August from a year earlier, increasing for the eighth straight month and marking the fastest pace of growth since October 2008, Bank of Japan data showed on Wednesday.

The rise in the corporate goods price index (CGPI), which measures the price that firms charge each other for their goods and services, was roughly in line with a median market forecast for a 3.0 percent increase. The July gain was 2.6 percent.

The increase was driven largely by rising import prices of crude oil, scrap metal and other commodities on robust demand from China, the data showed.

Overall final goods prices - the prices of finished products charged to businesses - rose 1.4 percent from a year earlier, the data showed.

Domestic final goods prices, which loosely track the consumer price index, rose 0.7 percent from a year earlier.

Japan’s economy expanded at an annualized rate of 2.5 percent in the second quarter thanks to robust exports and a long-awaited pick-up in private consumption.

 But core consumer prices rose just 0.5 percent in July from a year earlier, well below the BOJ’s elusive 2 percent target, as companies remain hesitant to pass along rising labor and raw material costs to households.

The BOJ has had to push back the timing for reaching its price target six times since it deployed its massive stimulus programme in 2013.

It now hopes consumer inflation will hit its target by March 2020, as signs of strength in the economy and a tight job market boost wages and give households more purchasing power, thereby allowing firms to hike prices.

View our full economic calendar for a daily roundup of major economic events.

 

 


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