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US indexes recover as S&P lingering below record highs

The S&P 500 was near flat, hovering below record highs, on Friday as data showed the US economy was still hurting from the COVID-19 pandemic, adding to uncertainty over the recovery.

Aggressive stimulus measures have helped the three main US stock indexes bounce back from a coronavirus-driven crash in March, and the S&P 500 briefly traded above its Feb. 19 record close for a second straight day on Thursday. But the index has been unable to finish above the record, partly as prospects of more fiscal aid have faded with the Senate and House of Representatives in recess and no fresh talks scheduled.

Data on Friday showed US retail sales increased less than expected last month and could slow further due to spiraling COVID-19 cases and a reduction in unemployment benefit checks.

Separately, readings showed that US factory output increased more than expected in July, but remained below pre-pandemic levels while consumer sentiment was largely steady in the first half of August.

The upcoming US presidential election is adding another layer of caution, along with continued outbreaks of the virus in parts of the United States.

The Dow Jones Industrial Average rose 20.38 points, or 0.07%, to 27,917.1, the S&P 500 lost 1.52 points, or 0.05%, to 3,371.91 and the Nasdaq Composite dropped 33.64 points, or 0.3%, to 11,008.87.

The benchmark S&P 500 was still set to rise for a third straight week.

Advancing issues outnumbered declining ones on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favored decliners. The S&P 500 posted 16 new 52-week highs and no new lows; the Nasdaq Composite recorded 45 new highs and eight new lows.

China stocks CLIMB as consumer shares lend support

China stocks ended higher on Friday, bolstered by gains for consumer firms, as weak consumption data reinforced expectations that Beijing will take more measures to boost domestic demand.

The blue-chip CSI300 index rose 1.5%, to 4,704.63, while the Shanghai Composite Index closed up 1.2% at 3,360.10. The tech-heavy start-up board ChiNext added 1.8%, while the newly launched STAR50 index climbed 1.1%. Leading the gains, the CSI300 consumer staples index ended up 1.9%, having gained 43% this year.

China’s retail sales slipped in July, dashing expectations for a modest rise, as consumers in the world’s second-largest economy failed to shake off wariness about the coronavirus, while the factory sector’s recovery struggled to pick up pace.

European stocks slip in thin summer trading

European shares slid in thin summer trading on Friday as travel stocks slumped after Britain added more countries to its quarantine list, while weak data from across the globe raised doubts over the pace of economic recovery from the coronavirus crisis.

The pan-European STOXX 600 index fell 1.2%, with travel and leisure stocks down 2.3% to lead sectoral losses.

UK-based airlines and tour operators TUI, Easyjet, British Airways-owner IAG fell between 4.8% and 8.4% after the British government said it would impose a 14-day quarantine on arrivals from France, beginning on Saturday. It also added the Netherlands, Malta and three other countries to the list.

France, the second-most popular overseas destination after Spain for Britons, warned that it would reciprocate. Paris-listed shares fell 1.6%, with Air France KLM dropping 5.8%.

Worries over upcoming US-China trade talks amid souring diplomatic relations between the two countries and a lack of progress in negotiations over US economic stimulus, a major factor that has pushed US stocks near all-time highs, also weighed on the mood.

Despite Friday’s pullback, the STOXX 600 recorded its second straight week of gains as huge quantities of stimulus coursing through the financial system and optimism over the development of a COVID-19 vaccine made investors buyers of equities.

Among individual movers, German container shipping line Hapag-Lloyd surged 13.3% as it nearly doubled net profit in the first half of 2020 and kept its full-year outlook intact.

 

Britain’s FTSE 100 ends lower

The FTSE 100 closed 1.5 percent lower on Friday, with the final trading session nearly eroding all of its earlier gains, with investors concerned about the UK economy after it crashed into a recession following a major quarterly slump. Earlier in the week, investors appeared to shrug off the news that UK GDP shrank by 20.4 percent between April-June (Q2) 2020, with the index moving higher rather than faltering. Instead, traders appeared to focus on the prospect of a potential vaccine being developed, with the race heating up among drug makers like AstraZeneca, GlaxoSmithKline, Pfizer and Moderna, as well as other smaller biotech firms.

German DAX index to keep marching

The DAX index closed 0.5 percent lower on Thursday to 12,993.71 points. However, the German benchmark is expected to continue its march upward despite Wirecard being removed from the index after collapsing into insolvency in June. German blue-chip stocks struggled on Thursday, after four days of consecutive gains, with the US government’s announcement that it will keep 15 percent tariffs on planes and 25 percent tariffs on other EU goods hitting Europe’s largest exporter hard. But overall, German equities remain resilient, with the DAX managing to shrug off news of Britain’s worst recession since records began earlier this week. It is worth nothing that DAX futures are down marginally at the time of publication, suggesting that the index could open lower on Friday morning.

The DAX pullback seen overnight has been shallow in nature, pointing towards another move higher looking likely before long.

Tokyo’s Nikkei up for fourth straight session

Tokyo’s benchmark Nikkei index rose for a fourth consecutive session Friday on a weak yen, but early gains were largely erased by profit-taking. The Nikkei 225 index edged up 0.17 percent, or 39.75 points, to close at 23,289.36. Over the holiday-shortened week, it gained 4.3 percent. The broader Topix index inched down 0.05 percent, or 0.77 points, to 1,623.38, but was up 5.0 percent from a week earlier.

Among winners in Tokyo, Sony jumped 2.02 percent to 8,876 yen with Nintendo up 0.23 percent at 51,320 yen. Nissan rose 0.09 percent to 416.5 yen but Toyota fell 1.42 percent to 7,181 yen on profit-taking. Mitsui OSK Lines lost 0.63 percent to 1,877 yen following recent volatile trade as a ship operated by the firm ran aground and leaked oil off Mauritius.

India’s Sensex losses 433 points

The domestic stock market ended over 1 percent lower on Friday amid selling in financial counters ahead of the hearing of adjusted gross revenue (AGR) case in the Supreme Court. Further, weak global cues such as lacklustre Chinese economic data and confusion over US fiscal stimulus, too, weighed on investor sentiment.

The S&P BSE Sensex shed 433 points or 1.13 percent to settle at 37,877 levels on Friday. NSE’s Nifty ended at 11,178, down 122 points or 1.08 percent. On a weekly basis, Sensex slipped 0.4 percent while Nifty lost 0.3 percent. In the broader market, the S&P BSE MidCap index fell over 1 percent to 14,434 levels while the S&P BSE SmallCap index declined 0.6 percent to 13,855.18 points. Among sectoral indices on the NSE, Nifty Auto slipped 2.56 percent while Nifty Bank fell over 2 percent. European shares were also dragged lower by a hit to travel stocks after Britain added more European countries to its quarantine list.

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