European shares dropped as quarterly gain is erased

European shares dropped as quarterly gain is erased

European stock market traded in a red zone during the last trading week ended September 12. Fundamental data from the Eurozone and Britain was mixed in the reported time period, meaning that the influence on the equity market was less significant than some weeks before. Among negative statistics, British trade balance went deeper into the deficit side, while construction output stagnated in the country. At the same time, European data revealed some positive signs of long-awaited recovery, as industrial production in the region advanced, while German trade surplus increased to reach a record high number.

The benchmark Eurostoxx 600 Index, however, lost 0.5% to 344.27 points on Friday’s evening. Only health care and consumer goods sectors rose, while others plunged in value. They added 1% and 0.4%, respectively. Among the best performers, Electrolux AB surged 6.8% to 201.20 kronor in Stockholm, as the company is getting ready to acquire an appliances division of General Electric Company. On the other hand, Aveva Group Plc decreased 25.1% to trade at 20.78 euro per share at the end of the previous trading week. The software designer may potentially suffer from the Pound movements ahead and even after the Scottish independence referendum, as company’s losses may reach 14 million pounds.

Other European market indicators, German DAX and British FTSE 100, followed its pan-European counterpart by slipping 1.1% and 0.4% in five days of the last week to close at 9,651.13 and 6,806.96 points, respectively.

American equities traded lower as investors wait for FOMC meeting

Equity market in the United States performed worse than other global markets during the previous week, however, fundamental statistics used to be rather supportive. Retail sales in the country added 0.6% in August, while consumer sentiment hit the highest level in one year. Being that the market was generally silent, investors decided to turn to the Federal Reserve meeting on September 17, which may reveal the possible terms, when the Fed will finally start raising rates. As the cheap money policy, which boosted stock markets in recent years, is coming to the end, the volatility of market movements may increase in the nearest future.

The main S&P 500 gauge dropped 0.8% last week to trade at 1.985.54 points on Friday, slipping below the important psychological level of 2,000. All the sectors of the index decreased in value, with utilities and energy losing the most, namely 2.6% and 2.2%. Among main market makers, Discovery Communications plummeted 8.7% to $39.66, as U.S. regulators denied to approve the deal for the company to merge with Time Warner Cable. The merged corporation would control up to 70% of the U.S. broadband connections. On the other hand, a number of companies increased in value during the last week, including Sprint Corp. and Yahoo Inc., as they gained 18.9% and 8.3% to close at $7.00 and $42.88, capping the overall decline of the telecommunications industry.

Meanwhile, the Dow Jones Industrial Average shrunk 0.7% to drop below the 17,000 level and closed at 16,987.51 points on Friday, while NASDAQ traded down 0.5% to 4,567.59 points.

Japanese stocks posted biggest weekly gain in five weeks

Opposite to other world’s biggest stock markets, the Japanese one showed a strong positive tendency in course of the last trading week, as weekly gains turned to be the biggest in a month. Important events included the speech by the Governor of the Bank of Japan, Haruhiko Kuroda, who assured markets in the BoJ commitment to support economic growth and push more money into the system to reach the inflation target of 2% by 2016. Moreover, if necessary, the QE program can be expanded in case of continuous stagnation in the economy.

As a result, equity markets in the country reacted positively on these news, with the benchmark Topix Index rising as much as 1.6% to 1,313.72 points. The best performing industries included insurance and transportation equipment, as they rose 3.3% and 3%, respectively. Ichikoh Industries Ltd, a representative of the latter sector, jumped 37.6% to close at a 271 yen mark on Friday’s evening. The producer of LED-lightning for cars climbed on the forecast that the market for company’s products will continue to expand in the medium-term. Imasen Electric Industrial, a manufacturer of automobile parts, followed with a surge of 28.6% to 2,489 yen. Meanwhile, some sectors traded down during the last week, as construction lost 3.3% and nonferrous metals dipped 1.1%.

The second-largest equity index of Japan, the Nikkei 225, reported a slower pace of increase than its domestic counterpart, as it added 1.2% to hover at 15,948.29 points at market closing time on Friday.

Asia-Pacific markets declined with Chinese stocks losing 3%

Markets in the Asia-Pacific region traded to the downside during the September 8-12 week, as slowing inflation in China and falling consumer sentiment in Australia forced investors to sell shares of biggest companies. While equities in Australia and New Zealand moved in a mild bearish trend, Chinese stocks dropped significantly, after the Premier Li Keqiang announced that the money supply in China increased on a slower pace than expected in August of this year.

The main gauge of the region, the S&P/ASX 200, lost 0.8% to 5,531.10 points from Monday to Friday. Four out of ten sectors rose in value, while others plunged. Losses were led by consumer staples and telecommunications industries, as they fell 1.8% and 1.7%. Myer Holdings Ltd, an operator of department stores in Australia, crashed 16.5% to A$2.02, as net profit of the company deteriorated by 23% for the year ended July 26. However, Deutsche Bank confirmed the “buy” rating for Myer’s shares. Coalspur Mines Ltd ended the last week with a decrease of 16.4% to A$0.051, capping the increase of basic materials sector, which only added marginal 0.1%. Among gainers, St Barbara Ltd advanced 15.4% to A$0.15, prolonging the movement in the green zone, which started on August 27. Since then, the company’s shares rose more than 50% in total value.

Stock market in New Zealand moved mostly in line with its Australian counterpart, as it declined 0.7% to 5,223.96 in five trading days. Hang Seng, in turn, shrunk 2.9% to close at 24,595.32 points on Friday. In total, the main Chinese gauge lost almost 600 points during the time period between September 8-12.

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