Morning Message

Friday Update

Friday 31st March 2017

European stocks declined in early trading as investors digested the new EU guidelines to a potential Brexit deal and reacted to a cabinet reshuffle in South Africa. The ESTX 50 (-0.41%), UK markets (-0.54%), Dax (-0.19%) and the CAC 40 (-0.38%) all posted losses in early trading. Basic resources slumped as South Arfica’s rand and government bonds both fell after President Zuma sacked finance minister Pravin Gordhan in a cabinet reshuffle overnight. BHP Billiton, Fresnillo and Antofagasta all slipped over -2%. Old Mutual dropped -7.5% as a result of its high exposure to trade in South Africa. Direct Line added +3.3% after JPMorgan announced it had raised its recommendation on the stock to “overweight” from “neutral”.

US stocks gained after data showed US economic growth was stronger than previously reported last quarter, helped by robust consumer spending. The Dow Jones Industrial Average (+0.33%), S&P 500 (+0.29%) and the Nasdaq Composite (+0.28%) all increased. US economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost. GDP increased at a 2.1% annualised rate instead of the previously reported 1.9% pace. The S&P energy sector rose for a third straight day, supported by stronger oil prices and a +8.8% gain for ConocoPhillips, the biggest riser on the S&P 500 after it agreed to sell oil and gas assets. Lululemon Athletica shares plunged -23.4% after saying first quarter comparable sales were expected to fall.

Asian stocks declined as investors await two expected executive orders by President Trump which will tackle trade deficit and tariff enforcement. The Nikkei 225 (-0.81%), Hang Seng (-0.78%) and the S&P/ASX 200 (-0.53%) all retreated. One of the executive orders is expected to commission a report on trade practices that contribute to trade deficit, and the other will strive to implement better collection of anti-dumping and countervailing duties. Air China fell -0.95%, China Eastern Airlines was off -2.27% and China Southern Airlines dropped -1.59% after they all reported earnings that missed analyst expectations. Toshiba gained.

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