The following table summarizes recently published information regarding corporate insider purchases or sales for securities you hold in your account. This data is presented for informational purposes only and does not reflect any activity related to your account.
SymbolShares Purchased Purchase DateShares SoldSales Date Account(s) Holding Security TRWH 94,06602-MAY-2019 0 NA U****03Note: Information provided by Reuters. To unsubscribe, please modify settings in TWS using the FYI button in Mosaic or the FYI menu in Client Portal.
This communication is provided for information purposes only and is not intended as a recommendation or a solicitation to buy, sell or hold any investment product. Customers are solely responsible for their own trading decisions.Interactive Brokers LLC, member NYSE, FINRA, SIPCHomeContact
If you grew up in the 1960s, ’70s or ’80s, you may want to forget everything you know about inflation.
It’s very possible that the financial and economic conditions of your youth were an aberration in American history. Of course, this is important to how you manage your portfolio, especially a retirement portfolio.
Shown in the black line is the Core Personal Consumption Expenditure Deflator (PCED), the inflation benchmark used by the Federal Reserve in setting interest-rate policy. The PCED is not as well-known as the Consumer Price Index, which is the inflation measure most often quoted in the media.
Core PCED, which excludes from the inflation calculation of volatile monthly household expenses, like energy, peaked in February 1975. It plunged for a couple of years before peaking again in January 1981. Since then, inflation has been in a steady decline.
For many decades before the aberrant period of the 1970s and ’80s, the rate of inflation was about the same as today, according to data from independent economist Fritz Meyer, and investors don’t think it’s going higher.
This chart gives you an idea of the dramatic change in the psychology of investors with regard to inflation.
The red line shows the difference in yield between a 10-year Treasury bond and a 10-year TIPS bond (Treasury Inflation Protected Securities). The black dotted line shows the slope of the decline in inflation expectations over the last 15 years.
As recently as March 2013, the yield on the 10-year TIPS was 2.6%, and investors in March 2013 expected an inflation rate of 2.6% over the coming 10 years. Six years later, investors recently expected annual inflation of 1.9%.
The 10-year TIPS yield, at 1.93%, tells us that investors expect inflation to average 1.93% annually for the next 10 years.
Over the long-run, economic fundamentals, like inflation, are a key underlying factor in corporate earnings, which drives stock prices. In the context of the lowest inflation rate in many decades and low inflation expected by investors for the decade ahead, economic fundamentals were strong recently. Confirmation of the strength came on Friday; the Index of U.S. Leading Economic Indicators, reported by the Conference Board, ticked up from its already historic recent highs.
The Standard & Poor’s 500 closed lower for the week. At 2,859.53, the S&P 500 index was 3% from its all-time high on April 30th.
No one can reliably predict the market’s next big move and past performance is not indicative of your future results. Stocks are only one asset class in a long-term strategically-designed portfolio and stock prices don’t always reflect fundamental economic trends. However, over the long-run, economics and facts matter.
· Why the trade war tensions are a short-term problem.
· How we’ll profit when a trade deal is struck.
· The next wave of MSCI cash moves into China in 11 days.
· What the renewed trade war means for the Melt Up.
Exactly When to Buy Into the World’s Most Hated Asset Today
“The biggest thing that Americans fail to grasp is that most young people in Beijing make more moneyin a week than their parents did in a year in the fields,” William Lindesay said to me over lunch this week.
William is from England – but he’s spent much of the last 30 years in China. He traversed 1,500 miles of the Great Wall of China on a solo adventure mission back in 1987. Today, he is a Great Wall historian and conservationist based in Beijing.
William is right that Americans fail to grasp a lot about China. Americans think of Chinese communism like North Korea – but a far better description for China would be “one-party capitalism.”
We were eating lunch together – along with a few busloads of True Wealth subscribers – after a gorgeous, sunny day at the Great Wall of China – where visibility might have been 20 miles. On the bus ride, William shared the fascinating history of the Great Wall over the tour-bus microphone. He knows a lot about China’s past… and its present.
Here’s a picture of me and the gang – and the view from the Wall…
I asked William at lunch about the U.S.-China trade war. He lit up again…
“Look, there are 1.4 billion Chinese people… Do you really want to get in a war of any kind with them?” He then explained that U.S. trade doesn’t matter nearly as much to China as it used to.
Most people would be shocked to learn that China’s economy today is a domestic serviceeconomy (like the U.S.) rather than an international export economy like it used to be. That might be hard to believe. But it’s 100% true.
Said another way… Yes, the U.S. and China trade more goods than any other pair of countries in the world – nearly $700 billion last year. But no, China doesn’t need us like it used to even five years ago.
Every time I visit China, I am stunned at the progress. It’s just relentless…
Beijing is more modern than any big city back home – by far. No kidding. And it’s not just the center of the city that is modern. It’s everywhere. You can go through multiple rings of the ring roads (the beltways) outside the city center, and it’s still extraordinarily futuristic compared with what we are used to.
And as far as I can tell, you can walk the streets of Beijing alone, basically anywhere, at any time of day, and not fear for your safety. I wouldn’t dare you to do that in Baltimore – where our company is based – because I’d be too fearful of the outcome.
Lastly – while this might not count for much – it’s also a “pretty” city…
For example, no city in America has anywhere near the number of flowers that Beijing has. I would go as far as saying this: If a U.S. city tried for just one weekend to plant flowers everywhere, that number of flowers would still not compete with the number in Beijing – perfectly manicured – every single day in the spring and summer.
Don’t get me wrong… Beijing ain’t perfect, for sure. But it sure ain’t what you’d expect.
You didn’t come here for a travel diary, though. You’re here to make some money. So let’s get to the point…
In the long run, my China investing script is playing out exactly as intended. You want to be in this trade.
In the short run, the trade war is certainly clouding up that long-term picture. But these heightened trade war fears have driven one asset to become the world’s most hated. And you know I love to see a hated asset!
So in this month’s issue of True Wealth, I’ll cover both the short-term and the long-term picture in China. We’ll start with the short-run opportunity the trade war has created. Then, I’ll explain how one of the biggest predictions I’ve made about investing in China is developing this year.
I’ll even share the timeline, with the exact dates that the key events will happen. After that, we’ll cover how the trade war affects our U.S. Melt Up thesis.
Today, we’re taking advantage of the market’s misperceptions… starting with China. Let’s begin with our short-term opportunity…
Why Trump Will Do Anything to End the Trade War
The trade war that the world thought was near its end is now back on.
Last week, the U.S. and China were set to sign a major trade deal. But China backed out at the last minute. It said the terms of the deal were no longer acceptable.
As a result, the U.S. raised tariffs on $200 billion Chinese goods last Friday. And on Monday, the U.S. government released a list of another $300 billion in Chinese goods that could see new tariffs.
The Chinese have already announced plans to retaliate with tariffs on U.S. goods in June – $60 billion worth. So it seems we’re back to square one. And since the entire world thought the deal was as good as final, both U.S. and Chinese stock markets have taken a beating.
The question everyone’s asking now is, “What happens next?”
To me, the answer is simple. But to explain what’s likely to happen, we need to answer a few other simple questions…
1. What does President Donald Trump want most in this world?
The answer is simple: He wants to maintain his perch at the top – to get re-elected.
2. What states does he need to win to get re-elected?
This answer is simple, too: What he needs are the states that could go either way… which is basically the farming states in the Midwest.
3. What could the Chinese do to really punish Trump and keep him from getting what he wants?
Yet again, this answer is simple: Punish the voters in the states that Trump needs to win the 2020 election.
This idea has major implications. Most of all, it means that as we near the election, Trump moves from a position of power to a position of weakness in trade negotiations.
Chinese President Xi Jinping has no term limit. He’s in power for life, theoretically. And that means he can stomach short-term pain to win the long-term war.
As time moves on, Trump should do anything necessary to end the trade war and help the voters he needs most.
We don’t know how long it will take, but a resolution to these tensions seems almost certain to me. And it sets up a great trade for us, thanks to the recent trade-war fears…
The World’s Most Hated Asset Right Now Might Surprise You
Again, Trump needs votes from farming states in the Midwest. That’s where the Chinese can really hurt him and his major objective of re-election.
How will they do it? Let me share a couple basic facts…
1. In 2017, China bought $12.3 billion in soybeans from the U.S.
2. In 2018, China bought $3.1 billion in soybeans from the U.S.
3. In the last 12 months, China has bought $1.7 billion in soybeans from the U.S.
Said another way, China has spent 86% less on U.S. soybeans in the last 12 months than it did as recently as 2017.
Drilling down to the states… China bought 80% of Iowa’s soybean crop in 2017. What’s the situation in Iowa today?
“We’re planting a crop that is substantially below our break-even rate,” President Lindsay Greiner of the Iowa Soybean Association said recently. “There’s just no hope of making any money.”
With the trade war ramping up lately, the price of soybeans has crashed. Take a look…
Prices have been falling for most of the last decade… They’re down more than 50% in just a few years. But the recent slump pushed prices to one of the lowest inflation-adjusted levels we’ve seen in decades.
It’s bad news for American farmers… at least for now. But it also means a turnaround – and a huge investing opportunity – could be just around the corner.
The terrible price action has caused traders to completely give up on soybeans. Based on the latest Commitment of Traders report – a real-money indicator that shows the bets of futures traders – soybeans are as hated as it gets. Take a look…
THIS is what I look for as an investor…
For maximum possible gains, the ultimate setup is to find an asset about to go from “bad” to “less bad.” This kind of setup is hard to find – especially after many years of a global bull market. It doesn’t happen often. But we have one here today – in soybeans.
You know what I look for in a trade… I want to buy what’s CHEAP, HATED, and in the start of an UPTREND.
Soybeans are the cheapest they have been in years. They are the most hated they have been in years. The only thing missing is the uptrend. The trouble is this – the uptrend is the most important piece of the puzzle.
Ah, but what’s this? Is it a glimmer of hope? The simplest way to trade soybeans jumped more than 3% on Tuesday – after hitting its all-time low the day before on May 13. Does this mean the uptrend is here?
The truth is, it’s too early to tell if this means the turnaround is here. But I do know – down in my toes – that the biggest gains happen when things go from “bad” to “less bad.” And it can happen quickly.
The simplest way for us to make a bad-to-less-bad trade on soybeans is through the Teucrium Soybean Fund (NYSE: SOYB).
But before we go on, you need to know two important points here:
1. We are not buying today. This fund just hit an all-time low this week. As the trade war wages on, it could fall much further. So we will wait for the return of the uptrend before we buy in.
2. We are not buying for the long run. This is a short-term, speculative trade. We are not experts in soybeans – heck, I couldn’t tell a soybean from a lima bean if you put it in my hand.
We are buying an asset that is hated, and selling it when it is less hated. That’s it.
We know that Trump wants to get re-elected. We know that he needs the Midwest. We know that Midwest farmers are getting crushed by the trade war. We know that REALLY hurts Trump’s chances of re-election.
The trade war story will go from “bad” to “less bad” at some point – soon. And soybeans will be THE most direct way to profit from it when it happens.
So here’s what we’ll do: Buy the Teucrium Soybean Fund (NYSE: SOYB) when the uptrend returns. Specifically, if SOYB closes above $16.50, then buy the next day.
Use the all-time low from this week as your stop loss – if SOYB closes below $14.35 per share, then it means we were wrong on our timing. Sell the next day.
We’ll be watching SOYB closely, and we’ll send out an alert when it’s time to buy. But keep a close eye on it yourself, too. Once it gets moving, it could rocket higher… So if shares close above $16.50, make sure you get in the trade.
And as of this week, we officially know when the next wave of money will shift into Chinese A-shares.
This is big news. The fears of the continued trade war might hurt Chinese stocks in the short term. But these stories are long term… And they’re powerful.
The money moving into Chinese stocks is a tailwind that will outlast any short-term fears. The amount of money is too big not to drive major price increases over the long-term. It should create a floor for the market as cash floods in, over and over again.
We know this is true. We covered the systematic reasons Chinese stocks will soar in last month’s issue. And we now have more certainty on how much money should shift into Chinese stocks this year…
You see, on Monday, MSCI released its May 2019 Index Review. This is where it states official plans for index changes. In it, MSCI reaffirmed the planned changes to Chinese A-shares in its emerging markets index that it first announced in February.
That means that the next shift of cash into Chinese A-shares will happen on May 28, as of market close. And the change happening in 11 days represents a major move forward…
Right now, Chinese A-shares represent just 5% of their eventual weighting percentage in the MSCI Emerging Markets Index. The inclusion began last year, and it took two rounds to get to today’s weighting.
On May 28, that weighting will double in one immediate shift. That means Chinese A-shares will move to a weighting of 1.8%, according to MSCI – up from the current weighting of 0.9%.
This shift will cause billions of dollars to move into Chinese stocks, overnight.
Remember, around $1.8 trillion is benchmarked to the MSCI Emerging Markets Index. That means that an increased allocation of 0.9% forces around $16 billion to shift into Chinese stocks based on this single move.
This shift will happen on May 28. But the total amount of money will likely be much larger than $16 billion…
You see, this is only one index. MSCI is upping Chinese A-shares in other indexes – like its main China index – too. And active managers will likely be adding more Chinese A-shares to their portfolios because of this shift.
MSCI also noted in its press release that this is the first step of a three-step process. It plans to do a similar inclusion in August, and then again in November. Those inclusions should be the same size as this one. And that would mean another $32 billion flowing into Chinese A-shares of this single index.
Now, I know what you’re probably thinking…
“Steve, it all sounds great. But Chinese stocks are falling. The trade war is back on. How can you be so confident?”
You’ve got to remember what I mentioned earlier. The trade war is a short-term concern. No one was worried about it two weeks ago. Trump needs to solve it to reach his goal of re-election…
And even if things don’t get settled for months, it’s still a short-term problem compared with the multiyear upside potential we see in China.
These major money shifts into China are long-term… and they are absolutely huge. They dwarf the importance of a trade war over the next five years.
I don’t plan to hold Chinese stocks indefinitely, of course. We’ve sold them and bought in again in the past. And we’ll do that again if we hit our stop losses. But a couple weeks of rough markets isn’t enough to push us out.
MSCI’s next wave of cash moves into Chinese A-shares in 11 days. And we want to have our money there first.
Fortunately, if you’ve followed my advice, you do have your money there first… because the absolute best way to take advantage of this opportunity is the KraneShares Bosera MSCI China A Fund (NYSE: KBA).
KBA is the perfect fund for the upcoming MSCI inclusion. It tracks a very special China A-share index… the MSCI China A Inclusion Index.
This index holds the exact stocks that will see the $16 billion shift happening later this month. And that means that owning KBA is the absolute best way to get our money in ahead of the next flood of cash.
We bought back into KBA in March, and we are showing a small loss due to the recent fall in prices. But again, the long-term opportunity far outweighs any short-term effects of the trade war or other China fears.
As always, if our stop loss is triggered, we will sell the next day. But we’re not there yet. I expect things to get better… and for dramatically higher prices to follow.
The next wave of cash is just 11 days away. I urge you to own KBA now to take advantage of it.
What the Trade War Means for the Melt Up
So, what about the U.S.? What about the Melt Up?
The deteriorating trade war has had a major impact on the U.S. market, too. Stocks hit new all-time highs last month. And they’re now down around 2% from those levels.
Folks are already getting worried. But let me repeat that last part again…
U.S. stocks are just 2% below all-time highs!
To me, that doesn’t seem like reason to panic. It’s completely normal market action.
Folks weren’t expecting the trade deal to fall apart. When it did, investors fled and volatility spiked. The CBOE Volatility Index – known as the “VIX” – jumped 60% in less than two weeks. And it hit a multimonth high in the process.
Clearly, investors are scared about what’s happening. A trade deal had been priced into stocks. As soon as things changed, the money fled.
Even professional investors are scared lately. That’s according to the most recent Bank of America Merrill Lynch Global Fund Managers Survey.
This survey asks a few hundred professional money managers what they’re doing with their money, what they’re worried about, and what they’re excited about. It’s a fantastic indicator of what the pros think. And this month’s edition – out this week – gave more great insights into current investor fear.
The professional investors are scared. And that has caused them to hedge their portfolios at one of the highest levels we’ve seen since the Great Recession. Roughly a third of respondents say they’ve taken out protection against a sharp fall in the stock market over the next three months.
In other words, the renewed trade war has spooked mom-and-pop investors and professionals alike. No one knows what to think or what to expect next. But my view is simple…
Trump wants to stay in power. He wants to be re-elected. And that means he’ll be willing to go to the table and renegotiate. This will be good for soybean prices, as I’ve explained… And it’ll be good for the overall U.S. market, too.
I see the recent fall in prices – just 2%! – as a minor pause in the final push of this Melt Up. This is a temporary setback… nothing more.
We’ll continue to watch our stops closely. If the trade war turns into something more than I expect, our stops will protect us. But there’s no reason to panic today.
The Melt Up is still on. It’s just on hold for the moment. I expect prices to rebound to newer and higher highs soon. So my advice remains the same on the U.S. market… Stay long.
Where to Be Invested Now
I believe these renewed trade tensions won’t last. But we still need to keep up with how they’re affecting our portfolio.
It’s no surprise that our worst performers come from China. The biggest drawdown comes in the KraneShares Bosera MSCI China A Fund (NYSE: KBA). This is the best and most direct way to take advantage of MSCI’s inclusion of Chinese A-shares, as I explained earlier.
KBA is down 11% since our last issue. But let me be clear… The recent fall isn’t a reason to panic and sell.
KBA is still a fantastic long-term opportunity. It will directly benefit from billions of dollars flowing into Chinese stocks this year. And we want to be on board for those major money shifts as they continue.
That’s why our plan is to continue holding KBA while watching our trailing stop closely. Don’t let the short-term chop scare you away from this amazing long-term opportunity.
Our other two Chinese investments struggling this month are search-engine-giant Baidu (Nasdaq: BIDU) and our bet on Chinese financial stocks, the Global X MSCI China Financials Fund (NYSE: CHIX).
The recent falls here are a little different. These investments are down 10% and 11%, respectively, since our last issue. And both stocks are close to triggering their trailing stops as I write.
Baidu is still a company on the cutting edge of technology. And I still believe it could easily soar triple digits when Chinese stocks turn around. It’s always disappointing to stop out of a recent position, but we must follow our discipline as investors. If BIDU has closed below its trailing stop, sell the next day. The current stop price is $132.44.
The situation is the same for Chinese financials. If CHIX closes below its trailing stop, sell the next day. The current stop price is $15.26. (Remember, you can always find the most up-to-date stop prices by checking our website portfolio page right here.)
While the Chinese market took the biggest hit from trade-war tensions, the U.S. didn’t get away unscathed. Our leveraged plays on both the S&P 500 and U.S. tech stocks fell as well.
The ProShares Ultra S&P 500 Fund (NYSE: SSO) is down 2% since our last issue, while the ProShares Ultra Technology Fund (NYSE: ROM) is down 5%.
And one of our broad U.S. funds, the Cambria Value and Momentum Fund (BATS: VAMO), has inched closer to its stop price, too. VAMO is now roughly 2% from triggering our trailing stop. The current stop price is $19.89. If the fund closes below its stop, sell the next day.
Switching gears, we have a couple bright spots in the portfolio this month…
One of our gold investments has jumped since our last issue. The MS64 Saint-Gaudens coinsare up 7% from last month.
I expect we could see much higher gold prices in the months ahead. If I’m right, we will likely see much higher prices for our gold coins.
We also saw a solid move higher in our homebuilder stock, NVR (NYSE: NVR). The company is up 8% over the last month.
The U.S. housing market is better than most investors realize. And I expect NVR to continue higher thanks to this misperception.
Lastly, the bleak picture in the soybean market has only gotten worse in 2019…
Soybeans have slumped for the past decade as commodity prices tanked. Now, the recent fears have pushed soybean prices to a decade low. Farmers have been struggling to stay afloat.
While this is a grim picture in the short term, a bad-to-less-bad opportunity is setting up here.
Any good news regarding the trade war could send prices higher. But importantly, we don’t have a confirmed uptrend yet. We want to see prices start to rise before getting into this trade. So please, follow my specific advice…
Keep a close eye on shares of SOYB. If the fund closes above $16.50, buy the next day. That will ensure a safe entry… And it’ll give us the best opportunity to profit from a trade-war resolution.
BitcoinDAXDow JonesNasdaqThe major U.S. index futures are currently pointing to a lower opening on Friday, with stocks likely to give back ground after moving significantly higher over the past few sessions.
Lingering concerns about the escalating trade dispute between the U.S. and China are likely to weigh on the markets early in the session.
President Donald Trump has sought to blame China for backing out of a nearly completed trade deal, although a spokesperson for China?s Ministry of Commerce claims the U.S. is responsible for serious setbacks in the trade talks.
Commerce Ministry spokesperson Gao Feng accused the Trump administration of ?bullying behavior? with a recent increase in tariffs, according to state-run Chinese news agency Xinhua.
?It is regrettable that the U.S. side unilaterally escalated trade disputes, which resulted in severe negotiating setbacks,? Gao said.
He added, ?We urge the U.S. side to correct wrongdoings as soon as possible to avoid causing heavier damages to businesses and consumers in both countries and dragging down the global economy.?
Stocks moved mostly higher during the trading day on Thursday, extending the upward move seen over the course of the two previous sessions. With the continued advance, the major averages have largely offset the steep drop seen on Monday.
The major averages gave back some ground in afternoon trading but remained firmly positive. The Dow climbed 214.66 points or 0.8 percent to 25,862.68, the Nasdaq jumped 75.90 points or 1 percent to 7,898.05 and the S&P 500 advanced 25.36 points or 0.9 percent to 2,876.32.
The strength on Wall Street partly reflected a positive reaction to earnings news from Walmart (WMT), with the retail giant climbing by 1.4 percent.
The advance by Walmart comes after the company reported fiscal first quarter earnings that exceeded analyst estimates on better than expected comparable store sales growth.
Networking giant Cisco Systems (CSCO) also surged up by 6.7 percent after reporting fiscal third quarter results that exceeded analyst estimates on both the top and bottom lines.
The markets also benefited from the release of a batch of upbeat economic data, including report from the Labor Department showing initial jobless claims dropped more than expected in the week ended May 11th.
The report said initial jobless claims slid to 212,000, a decrease of 16,000 from the previous week’s unrevised level of 228,000. Economists had expected jobless claims to dip to 220,000.
A separate report from the Commerce Department showed a substantial increase in new residential construction in the month of April.
The Commerce Department said housing starts surged up by 5.7 percent to an annual rate of 1.235 million in April after climbing by 1.7 percent to a revised rate of 1.168 million in March.
Building permits, an indicator of future housing demand, also rose by 0.6 percent to a rate of 1.296 million in April after edging down by 0.2 percent to a revised rate of 1.288 million in March.
The Philadelphia Federal Reserve also released a report a significant acceleration in the pace of growth in regional manufacturing activity in May.
The upbeat news has offset trade concerns after President Donald Trump signed an executive order declaring a national emergency with respect to the threats against information and communications technology and services.
Software stocks turned in some of the market’s best performances on the day, resulting in a 2.1 percent jump by the Dow Jones U.S. Software Index. The index continued to rebound after ending Monday’s trading at its lowest closing level in over a month.
Significant strength also emerged among chemical stocks, as reflected by the 1.8 percent gain posted by the S&P Chemical Sector Index. With the advance, the index climbed further off the three-month closing low set on Monday.
Transportation, banking, and retail stocks also saw considerable strength on the day, while semiconductor and gold stocks bucked the uptrend.
U.S. Economic ReportsCADUSDOilGoldEURUSD
At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of May. The consumer sentiment index is expected to inch up to 97.5 in May from 97.2 in April.
The Conference Board is also due to release its report on leading economic indicators in the month of April at 10 am ET. Economists expect the leading economic index to rise by 0.3 percent.
At 1:40 pm ET, Federal Reserve Vice Chairman Richard Clarida is scheduled to give a speech at a Fed Listens: Education, Employment, and Monetary Policy in the Third District event in Philadelphia, Pennsylvania.
New York Fed President John Williams is due to speak at the “Equitable Growth Meeting in Chinatown” event in New York at 2 pm ET.
Stocks in Focus
Shares of Pinterest (PINS) are moving sharply lower in pre-market trading after the social media company reported a much wider than expected first quarter loss and provided disappointing full-year revenue guidance.
Chinese search engine operator Baidu (BIDU) is also likely to come under pressure after reporting weaker than expected first quarter results.
Shares of Deere & Co. (DE) may also see initial weakness after the agricultural equipment maker reported fiscal second quarter earnings that missed estimates and cut its full-year forecast.
On the other hand, shares of Applied Materials (AMAT) are likely to move to the upside after the semiconductor equipment maker reported fiscal second quarter results that exceeded expectations and provided upbeat guidance.Europe
European markets continue to exhibit weakness after a negative start Friday, with traders choosing to exit counters amid fresh worries about U.S.-China trade issues and Brexit uncertainty. Traders also appear a bit keen on taking some profits after recent gains.
U.S.-China trade tensions have escalated this week following the U.S. government’s decision to declare a national emergency to protect U.S. networks from foreign espionage threats against U.S. technology and the move to blacklist Chinese technology major Huawei, blocking it from buying American technology.
Reacting to U.S. move on Huawei, China’s People’s Daily newspaper came out with a front page write-up that said the trade war would never bring the country down.
While the German DAX Index has slumped by 1.2 percent, the French CAC 40 Index is down by 0.7 percent and the U.K.?s FTSE 100 Index is down by 0.5 percent.
Shares of tour operator Thomas Cook have plunged to their lowest level since mid 2012 after analysts downgraded the stock following the company’s profit warning.
Hikma Pharma, Babcock International, Glencore, Standard Chartered, Informa and ITV are also posting notable losses on the day.
On the other hand, EasyJet has jumped after the company said it would meet its target this year despite a likely fall in revenue per seat due to tough trading environment in the second half.
A report from European Automobile Manufacturers’ Association showed new car sales dropped for an eighth consecutive month, declining by 0.4 percent in the EU in April compared to a year ago. While demand for cars increased in Italy, France and Spain, sales were down in the U.K. and Germany.
Data released by Eurostat showed Eurozone core inflation, which excludes prices for energy, food, alcohol and tobacco, accelerated in April to its highest level in two years. Core inflation climbed to 1.3 percent in April, higher than the initial estimate of 1.2 percent.
Another report from the statistical office said Eurozone construction output declined a calendar and seasonally adjusted 0.3 percent month-on-month in March after a 3 percent spike in February.
Meanwhile, on the Brexit front, talks between Labour and the government aimed at breaking the Brexit impasse ended without an agreement today. Prime Minister Theresa May blamed the Labour Party’s pro-second referendum faction for the failure of talks.
Asian stock markets turned in a mixed performance on Friday despite overnight gains on Wall Street for a third straight session following upbeat corporate earnings results and U.S. economic data.
Worries about U.S.-China trade tensions continued to weigh on investor sentiment after the Trump administration banned Chinese telecom giant Huawei Technologies from buying U.S. technology without prior approval from the U.S. government.
China’s Shanghai Composite Index plunged 73.41 points or 2.5 percent to 2,882.30 amid worries about the ongoing trade tensions between the U.S. and China following U.S. President Donald Trump’s move to block Huawei. Hong Kong’s Hang Seng Index tumbled 328.61 points or 1.2 percent to close at 27,946.46.
Meanwhile, Japanese stocks closed higher as the safe-haven yen weakened, lifting exporters’ stocks. The benchmark Nikkei 225 Index added 187.11 points or 0.9 percent to settle at 21,250.09.
Shares of Sony Corp. gained 9.9 percent after the company said Thursday that it will buy back shares worth up to 200 billion yen, or $1.82 billion, and also announced a new partnership with Microsoft. In February, the electronics conglomerate had announced its first ever stock repurchase of 100 billion yen.
Other major exporters also closed higher. Canon advanced more than 2 percent, Panasonic rose 1 percent and Mitsubishi Electric added 0.5 percent.
Among tech stocks, Tokyo Electron rose 0.4 percent, while Advantest declined more than 2 percent. In the oil sector, Inpex advanced 1.6 percent and Japan Petroleum gained 2.6 percent after crude oil prices rose to a two-week high.
Australian stocks also closed higher after touching an eleven-year high in morning trading, with higher iron ore and oil prices boosting resources stocks. Rising optimism about a possible interest rate cut by the Reserve Bank of Australia also boosted sentiment.
The benchmark S&P/ASX 200 Index rose 37.50 points or 0.6 percent to 6,365.30, after rising to a high of 6,398.30 earlier. The broader All Ordinaries Index climbed 42.70 points or 0.7 percent to 6,460.20.
Mining heavyweights Rio Tinto and BHP Group both rose more than 2 percent, while smaller rival Fortescue Metals surged up 6.6 percent.
Oil stocks advanced after crude oil prices rose to a two-week high overnight. Oil Search and Woodside Petroleum added more than 1 percent, while Santos rose 0.1 percent.
In the tech sector, WiseTech Global rose more than 4 percent, Afterpay Touch edged up 0.5 percent and Altium advanced almost 1 percent. In the consumer staples sector, Coles advanced 2.9 percent and Woolworths gained 2.2 percent.
Meanwhile, the big four banks closed lower. ANZ Banking lost 3 percent, Westpac fell almost 2 percent, National Australia Bank declined more than 1 percent and Commonwealth Bank declined 0.7 percent.
Virgin Australia said it expects to report a full-year underlying earning loss of at least A$35.6 million. The airline’s shares fell more than 5 percent.
South Korean stocks gave up early gains and closed lower, while the Korean won hit its lowest level in more than 28 months against the U.S. dollar. The benchmark Kopsi declined 11.89 points or 0.6 percent to settle at 2,055.80.
New Zealand-based infrastructure investment company Infratil reported a loss for the full year and its shares entered a trading halt as the company initiated a NZ$400 million capital raising to fund its joint acquisition of mobile operator Vodafone NZ, along with Canada’s Brookfield Asset Management.
Citadel Group’s shares plunged 39.8 percent after the information management company issued a profit warning.
Shares of Neuren Pharmaceuticals gained 14.6 percent after the biotech company said one of its drug candidates to treat neurodevelopmental disorders showed early promise in two preliminary studies.
Crude oil futures are rising $0.40 to $63.27 a barrel after climbing $0.85 to $62.87 a barrel on Thursday. Meanwhile, after tumbling $11.60 to $1,286.20 an ounce in the previous session, gold futures are slipping $0.50 to $1,285.70 an ounce.
On the currency front, the U.S. dollar is trading at 109.60 yen versus the 109.85 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1172 compared to yesterday?s $1.1174.