Tensions emanating from the Catalonia crisis and stalled Brexit negotiations failed to impede gains in Europe’s stocks last week. Instead, company-specific news took center stage to boost stocks across the region. In Asia, stocks were boosted by strong performance on Wall Street and encouraging Chinese trade data. This report from the world’s second-largest economy also powered gains for Brazil’s stocks. Meanwhile, stocks in Chile suffered a three-day long bout of profit taking.

Europe’s Stocks Notch Up Weekly Gains Despite Spain, Brexit Tensions

Stocks across Europe largely closed with gains on Monday, guided primarily by company-specific developments. However, investors continued to keep an eye on political and economic developments across the region. The STOXX 600 lost out on some of its early gains but still closed 0.2% higher with nearly all sectors finishing in the green. The FTSE 100 declined 0.2% but the CAC 40 gained 0.1%. The DAX gained 0.2% after hitting a record high earlier during the trading day. Utilities emerged as the best performing sector across the region, gaining 1.4%.

The STOXX 600 closed nearly flat on Tuesday even as optimism from company-specific developments and oil was negated by political tensions in Spain. Most sectors ended mixed with the FTSE 100 gaining 0.4% to emerge as the leading performer among the indexes. However, the CAC 40 declined marginally and the DAX closed 0.2% lower. Spain’s benchmark IBEX index managed to recoup some its early losses to close 0.9% lower even as investors adopted a wait and watch attitude ahead of crucial developments on the Catalan crisis.

Political uncertainty continued to worry Europe’s investors even as stocks across the region closed mixed on Wednesday. The STOXX 600 ended the day nearly unchanged even as most sectors closed in the red. Guidance cuts weighed on basic resources stocks with the sector closing 1% lower. Meanwhile, Spain’s prime minister Mariano Rajoy said the government has decided to ask Catalonia’s regional government whether it has declared itself as an independent state. The IBEX recouped early losses to close 1.2% higher.

The STOXX 600 closed marginally higher on Thursday even as investors remained focused on Brexit related developments. Investors also remained watchful of comments from central bank heads made in Washington. Nearly all industrial sectors finished in the green. Mining stocks and a fall in the sterling helped the FTSE 100 gain 0.3%. Meanwhile, the DAX gained 0.1% crossing the 13,000 barrier for the first time since it started operations. However, soft data on consumer prices led to the CAC 40 closing in the red.  

Gains by commodities stocks helped stocks across Europe close with gains on Friday. The STOXX 600 increased 0.3%, gaining 0.5% over last week. The FTSE 100 and the CAC 40 lost 0.3% and 0.2%, respectively. However, the DAX gained 0.1%. Most sectors closed in the green except for healthcare, banks and automotive stocks. The region’s basic resources index gained 2.7%, boosted by encouraging imports data from China and an increase in nickel prices.

Strong Showing on Wall Street, China Trade Data Boost Asia’s Stocks

Markets across Asia, specifically China, closed higher despite disappointing Caixin services PMI data for that country. Australia’s S&P/ASX 200 gained 0.5% even as all its sub indexes closed the day with gains. Markets across Taiwan, Japan and South Korea were closed for public holidays. Investors, therefore, focused on developments in China’s markets. The Shanghai Composite gained 0.8% while the Shenzhen Composite increased 1.35. The CSI 300 moved up 1.2% to close at its highest levels in two years.

Stocks across Asia ended with gains on Tuesday as investors chose to ignore losses on Wall Street. The Nikkei 225 gained 0.6%, touching its highest level in two years earlier in the trading session. Blue-chip tech stocks helped South Korea’s Kospi increase 1.6%. Losses in energy stocks led to the S&P/ASX 200 closing with minor losses. The Shanghai Composite and the Shenzhen Composite gained 0.3% and 0.8%, respectively.

The MSCI Asia Pacific Ex-Japan index hit a 10-year high on Wednesday, gaining from optimism in the UNITED STATES The Nikkei 225 recouped early losses to end 0.3% higher, closing at its highest level in twenty years. The Kospi increased 1% after large tech stocks maintained gains secured in the last session. The S&P/ASX 200 increased 0.6% after hitting a one-month high earlier in the trading day. Both the Shanghai Composite and the Shenzhen Composite increased by 0.2%. However, the Hang Seng lost 0.4%.

A strong showing by stocks in the United States following the release of Fed minutes also lifted their Asian counterparts on Thursday. The Nikkei 225 increased 0.4%, touching a 21-year high earlier during the trading day. The Kospi gained 0.7% while the S&P/ASX 200 closed higher despite losses suffered by mining stocks. The Shanghai Composite ended the day marginally lower while the Shenzhen Composite lost 0.2%. 

Encouraging trade data from China helped Asia’s stocks close with gains on Friday. The Nikkei 225 gained 1% even as the Kospi lost 0.1%. September exports from China logged an 8.1% year-over-year increase while the increase in imports exceeded most economists’ estimates. Consequently, the Shanghai Composite and the Shenzhen Composite gained 0.2% and 0.7%, respectively.

Strong China Trade Data Boosts Bovespa, Chile’s Stocks Suffer

On Monday, Brazil’s benchmark Bovespa lost 1%, dragged down by losses made by Vale SA (VALE) which were a consequence of a decline in iron ore futures. Markets across Chile were closed for a public holiday. The Bovespa rebounded on Tuesday, gaining 1.2% with financials emerging as the leading gainers. Investors in Brazil indulged in booking profits on Wednesday and the Bovespa ended the day 0.5% lower.

Brazil’s markets were closed on Thursday for a public holiday. Stocks in Chile suffered losses for the third consecutive day as investors continued to indulge in profit booking. Argentina’s benchmark index, the Merval, increased 0.7% buoyed by expectations of a strong showing by the ruling party in elections scheduled toward the end of the month. The Bovespa gained 0.4% on Friday, nearing the 77,000 level after commodity prices increased following strong China trade data.

Stocks in the News

Roche Holdings AG (RHHBY Quick QuoteRHHBY - Free Report) announced that it has obtained the FDA’s approval for the cobas Zika test for use on the cobas 6800/8800 Systems. The approval makes it the first commercially available test for the detection of the Zika virus RNA in human plasma intended for use in screening blood donations. This test can be now used alongside other routine tests for the screening of blood and plasma donations in the United States.

A strong uptake in the use of Zika test is likely given the need to prevent the spread of the virus. The cobas Zika also expands Zacks Rank #3 (Hold) Roche’s industry-leading donor screening portfolio for blood-borne diseases. (Read: Roche Receives FDA Approval For Cobas Zika Test)

AstraZeneca (AZN Quick QuoteAZN - Free Report) announced that the FDA has granted Breakthrough Therapy Designation (BTD) for Tagrisso (osimertinib) for the first-line treatment of patients with metastatic epidermal growth factor receptor (EGFR) mutation-positive non-small cell lung cancer (NSCLC).

In a separate release Zacks Rank #3 AstraZeneca also announced that European Medicines Agency (EMA) has accepted a Marketing Authorisation Application (MAA) for Imfinzi (durvalumab) for the treatment of patients with locally-advanced (Stage III), unresectable NSCLC whose disease has not progressed following platinum-based chemoradiation therapy. (Read: AstraZeneca's Tagrisso Gets Breakthrough Therapy Designation)

Petroleo Brasileiro S.A.or Petrobras (PBR Quick QuotePBR - Free Report) suffered a major setback over its divestment agreement with France-based TOTAL S.A. (TOT). The Brazilian federal court has put a partial hold on the $2.2-billion deal signed in March.

Per the deal, Zacks Rank #5 (Strong Sell) Petrobras was to sell some of its upstream and downstream assets to TOTAL. However, a federal court in Brazil has blocked the sale of Petrobras’ stakes in the Lapa and Lara oilfields. The judge granted a ruling in favor of members of a local oil workers union who raised anti-competitive concerns pertaining to the sale. (Read: Petrobras' $2.2B Asset Sale to TOTAL Shelved on Court Order)

Alibaba Group Holding Limited (BABA Quick QuoteBABA - Free Report) recently launched a global research program — Alibaba DAMO Academy — aimed at technology advancement. It also unveiled its plan to invest more than $15 billion in research and development over the next three years. DAMO stands for Discovery, Adventure, Momentum and Outlook.

Alibaba is looking to improve its technological prowess and build business as an ecosystem of retail, cloud and artificial intelligence. To achieve this aim, it is targeting cutting-edge technology through extensive research. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here . 

Unilever Plc (UL Quick QuoteUL - Free Report) recently confirmed the buyback of its outstanding Dutch preference shares, through a public offer worth 450 million euros. The company is aiming to simplify its corporate structure through this buyback initiative. Unilever Plc has a Zacks Rank #4 (Sell).

The public offering is in connection with Unilever’s agreement to purchase 6% and 7% preference shares in Unilever N.V. held by NN Investment Partners and insurer ASR Netherlands. The offer, which initiated on Oct 11, 2017, will cease on Oct 25. (Read: Unilever to Buy Back Dutch Shares, Streamline Operations)

Royal Dutch Shell plc recently inked a deal to acquire NewMotion which is Europe's one of the largest electric vehicles (EV) charging networks. With this deal, Zacks Rank #3 Shell wants to cash in on the wide acceptance of the electric cars and thereby increase its customer base and revenues.

Per the deal, NewMotion will retain its brand and operate as a wholly-owned subsidiary of Shell. NewMotion has around 30,000 private electric charge points in the Netherlands, Germany, France and UK. It also runs around 50,000 public charge points in various countries in Europe for over 100,000 customers. (Read: Shell Clinches Maiden EV Deal, Acquires NewMotion)

 Performance of Leading Foreign Stocks

The table given below shows the price movements of 10 of the largest stocks listed on indexes worldwide, over the last five days and during the last six months.

Next Week’s Outlook

Foreign markets remained undeterred by a raft of discouraging developments, notching up gains over last week. This was particularly true for Europe’s stocks which remained unimpeded by the situation in Catalonia. Asian stocks were lifted by strong trade data and a good showing on Wall Street. Brazil’s stocks also gained from China’s encouraging trade report.

Stocks in the United States notched moderate gains last week, with Trump’s new tax code and the Fed’s most recent minutes adding to overall optimism. These gains are likely to power gains across Europe even as Asia’s stocks surge along, unimpeded by the occasional negative development. Given such a backdrop, foreign stocks are likely to maintain their winning run over the week ahead.

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