European stocks climb on upbeat U.S. data; Ukraine remains in focus

European stocks were in the up-trend last week amid positive quarterly results and robust U.S. numbers. Meanwhile, some European data also was in the forefront of traders’ minds. The ECB left its monetary policy on hold at its meeting in the middle of the week. Other numbers worth looking at were German factory orders and trade surplus that missed estimates in March. Turmoil in Ukraine also remained at a play, creating additional pressure on riskier assets across the globe.

Eurostoxx adcanced 1.32%, while regional indices saw bigger gains, with German DAX and British FTSE 100 adding 1.43% and 1.71%, respectively.

Among top movers were Viscofan and Balfour Beauty. Viscofan, artificial casings manufacturer, rose 8.52% over the week despite announcing a 4.3% annual decline in Q1 profit. The top laggard, Balfour Beauty, the U.K. infrastructure company, slumped more than 20% last week amid on-going investigation linked with a 480-million-pound worth contract with National Grid. BMW and Credit Suisse also were in focus. BMW reported a 2.6% increase in Q1 operating profit, while talks that the Swiss lender may pay $1.6 billion to the U.S. authorities in relation to helping Americans to evade taxes put a heavy drag on the bank’s stock.


U.S. stocks mostly lower despite positive macro data

The Wall Street opened on the positive note last week as a better-than-expected reading of the U.S. ISM non-manufacturing index added to signs that the world’s largest economy is recovering. However, later in the week positive macro data failed to bolster equities that followed the bearish trend amid a bunch of disappointing earnings releases. Tech stocks were among the worst-performers, sending Nasdaq 1.6% lower on a weekly basis, compared to a 0.33% decline in S&P 500 and a 0.32% gain in the blue chips index. One of the top decliners among technology firms was Twitter. The firm lost about 15% after expiration of its half-year period that blocked the sale of circa 82% of the company’s outstanding stock. In addition to negative corporate news, global issues such as on-going tensions in Ukraine were pushing U.S. stocks lower.

Among 10 industries included in the S&P 500 six ended the week in the red zone, three gained and one was unchanged. Considering separate firms, Electronic Arts Inc led gains, soaring 23.23% after its quarterly report revealed profits and revenues that were better than expected. On the downside, Whole Foods Market Inc dived 20.81% during the last five trading sessions as the organic grocer posted disappointing second-quarter results and lowered its outlook for the current financial year.


Japanese shares mixed as reporting season continues

Japanese stock indices were mixed last week, with Nikkei 225 losing 0.62% and broader Topix adding 0.41%. Shares of the world’s third largest economy felt pressure from stronger yen that pushed exporters lower. Moreover, persistent tensions over Ukraine hurt market sentiment thus weighting on global stocks. At the same time, the current weakness of the Japanese stock market was also attributed to internal factors such as the recent retail sales tax hike that is likely to put a heavy drag on retailers in following months.

The top-performing industries were energy, insurance and banking adding 3.98%, 2.39% and 2.03%, respectively. The worst-performing industries were oil and coal, mining and services, slumping 3.41%, 1.99% and 1.87%, respectively.

Meanwhile, companies that were due to announce quarterly results were in the spotlight. Toshiba Corp. added almost 2% last week after predicting a record operating profit in the current financial year thanks to robust sales of memory chips and power grid equipment. Nintendo Co slumped over 6% week-on-week after registering a 46.4-billion-yen operating loss for the year ended in March, economists called for a 35-billion-yen loss. Toyota Motor Corp traded flat after forecasting a decline in profit this year.


Asia Pacific shares decline on economic data

Asia-Pacific shares closed in the red zone last week. Australian S&P/ASX 200 edged lower 0.03%, New Zealand’s NZX 50 lost 0.92%, while Hong Kong’s Hang Seng slumped 0.52%.

Australian shares were mainly tracking economic data releases. The RBA left its monetary policy unchanged on hopes that macro numbers would point to economic recovery. However, the actual data released later in the week was mixed. The jobless rate dropped to 5.8% in April, while retail sales and trade balance missed expectations. Among top performers was Envestra, adding 15.58%. Envestra soared to an all-time high on Thursday after it got a takeover proposal from a group including Hong Kong’s Cheung Kong Industrial Group. Meanwhile, Lynas Crop plunged 20.59%. The rare earth producer slid on talks that it is going to undertake an underwritten share purchase to raise at least A$30 million in line with a placement to raise A$10 million.

New Zealand and Hong Kong stocks also followed economic numbers. The NZX 50 dropped after the data showed the jobless rate unexpectedly remained unchanged at 6%, experts predicted it to drop to 5.8%. Meanwhile, the final HSBC manufacturing PMI indicated that China’s manufacturing sector contacted at faster pace than initially estimated in April.


EXPLANATIONS

Indexes

  • Standard & Poor's 500 Index (S&P 500) or (SPX) - U.S. stock market index consisting of the 500 large-cap shares widely traded on the New York Stock Exchange and the NASDAQ.

  • Dow Jones Industrial Average Index (INDU) - U.S. stock market index consisting of the 30 large publicly owned U.S. companies , primarily industrials

  • NASDAQ Composite Index - U.S. stock market index representing all the stocks that are traded on the Nasdaq stock market, mostly technology and Internet-related

  • New Zealand Exchange 50 Gross Index (NZX 50) - stock market index consisting of the top 50 companies listed on the New Zealand Stock exchange

  • S&P/ASX 200 -a market-capitalization weighted stock market index of stocks listed on the Australian Securities Exchange from Standard and Poor’s

  • Hang Seng Index (HI) - Hong Kong’s stock market index consisting of 48 largest companies listed on the Hong Kong Exchange

  • Japan’s Nikkei Stock Average (Nikkei 225 Index) or (NKY) - Japanese stock market index consisting of the 225 largest companies listed on Tokyo Stock Exchange

  • FTSE 100 Index (UKX) - U.K. stock market index consisting of the 100 most capitalized U.K. companies trading on the London Stock Exchange

  • DAX Index (DAX) - German stock market index consisting of the 30 largest and most liquid German companies trading on the Frankfurt Stock Exchange

  • Eurostoxx 600 - stock market index, derived from the Stoxx Europe Total Market Index, consisting of 600 large, mid– and small-sized companies from 18 European countries

Chart

  • Correlation - statistical measure of the linear relationship between two random variables. It is defined as the covariance divided by the standard deviation of two variables.

  • Historical price changes - chart reflecting the historical price changes of particular region’s stock indices

Indicators

  • Industry performance - weekly performance of industries within the particular stock market index

  • Top performers - companies within a particular stock market index showing the best or worst weekly performance

  • Performance - relative historical change of stock market index value

This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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