Morning Message

Friday Market Update

Friday 2nd June 2017

European stocks gained in early trading, surfing a wave of positive economic data lifting stocks across Europe, with cyclicals leading the way. The ESTX 50 (+0.80%), UK markets (+0.32%), Dax (+0.93%) and the CAC 40 (+0.62%) all posted gains. Positive employment and manufacturing data from the US pushed world stocks to a record high this morning. Ispen jumped +9.8% after the company said it would buyback €1.67 billion worth of its shares. Banco Popular rose +4%, recovering some ground after yesterdays sharp sell-off on concerns about the banks liquidation. B&M dropped -3.3% after private equity firms CD&R and SSA sold a 12.5% stake in the firm. Linde rose +1.4% after sealing a $73 billion merger deal with US peer Praxair to create an industrial gas leader.

US stocks trimmed gains but remained higher as investors turned their focus to the monthly employment data, after better than expected private sector hiring pointed to strength in the labour market. The Dow Jones Industrial Average (+0.65%), S&P 500 (+0.76%) and the Nasdaq Composite (+0.78%) all increased. The ADP private sector employment report showed that 253,000 jobs were added in May, well above the 185,000 jobs estimated by economists polled by Reuters. Deere’s shares were up +2.5% after saying it would buy privately held German road construction company Wirtgen Group for $5.2 billion, including debt. Hewlett Packard Enterprise fell -5.6% after the company reported a steep fall in its quarterly revenue. Palo Alto Networks jumped as much as +18% after the cybersecurity company’s forecast topped expectations.

Asian markets were positive after the release of strong private payrolls stateside and as President Trump announced the US would be withdrawing from the Paris climate accord. The Nikkei 225 (+1.60%), Hang Seng (+0.44%) and the S&P/ASX 200 (+0.87%) all advanced. Trump said the US would withdraw from the climate agreement, but wanted to negotiate for new arrangements that were more fair to the US. In response, European leaders said in a statement that the Paris agreement “cannot be renegotiated”. Shares of Japanese car manufacturers traded higher after May vehicle sales in the US reflected that Nissan and Honda recorded increases in sales. Nissan shares jumped +2.71%, Honda was up +2.63% and Toyota was higher by +1.72%.

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