On 27 February, 2015 – European markets were mixed ahead of the release of key economic data in the US

Stock indices were mixed Friday and on the week but advanced for the month of February. Investors were disappointed with the downward revision to US fourth quarter growth.
United States
The stock market closed lower after news that US economic growth slowed more sharply than previously estimated in the final three months of 2014. The Dow Jones industrials retreated 0.4%, the S&P was down 0.3% and the Nasdaq lost 0.5%. On the week, the Dow was virtually unchanged while the S&P lost 0.3% but the Nasdaq added 0.2%. The indices were up 5.6%, 5.5% and 7.1% respectively for the month of February.
Fourth quarter gross domestic product was revised down to an annualized pace of 2.2% from the first estimate of 2.6%. The National Association of Realtors’ seasonally adjusted pending home sales index increased 1.7% to 104.2 in January. December’s figure was also revised higher to show a smaller decline. The report is a sign that home sales are poised to accelerate after a slow start to the year. However, consumer sentiment slipped this month, though it remains at the highest level in eight years.
JC Penney slumped after the company reported a surprise loss. Weight Watchers dropped after it issued an outlook late Thursday for this year’s profits that fell far below expectations. Monster Beverage was sharply higher a day after the energy drink seller reported higher fourth quarter earnings and improved sales. Apple retreated. Investors may have been taking profits ahead of Apple’s expected unveiling of its smartwatch on March 9. Bank of America was down after the company said two members of its board of directors and its chief accounting officer will be leaving the company in coming weeks.
Gold at the afternoon London fixing was up US$5.75 to US$1,214.00. Copper futures were down 0.1% to US$2.69. WTI spot crude was down US$1.59 to US$49.76. Dated Brent spot crude was up US$2.53to US$62.58. The US dollar was up against the euro and yen. However, it declined against the pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was virtually unchanged. The yield on US Treasury 30 year bond was down 4 basis points to 2.59% while the yield on the 10 year note declined 5 basis points to 1.99%.
Europe
Markets in Europe were mixed Friday. Investors were cautious in early trading prior to the release of key US economic data. The data proved mixed, but investors were able to shrug off a downward revision to the nation’s fourth quarter GDP. The FTSE was virtually unchanged (down 3.1 points) and the SMI lost 0.4%. The CAC and DAX were up 0.8% and 0.7%, respectively. All indices advanced both on the week and for the month of February. The FTSE was up 0.5% on the week while the CAC gained 2.5%, the DAX advanced 3.2% and the SMI added 1.5%. On the month, the FTSE advanced 2.9%, the DAX gained 6.6% and both the CAC and SMI added 7.5%.
The German parliament approved a four month extension of Greek bailout program Friday. Despite widespread skepticism in the country, the German legislators voted for the bailout extension with an overwhelming majority. The Eurogroup last week agreed to a request by the Greek Government to extend the €240 billion bailout program until June in exchange for a series of economic reforms. The extension will have legal validity only if it is ratified by all Eurozone member states.
BASF declined after the company said it expects profit for 2015 to likely match the previous year’s level and sees only a slight increase in sales. Salzgitter dropped after the steel maker reported full year results. Fresenius and Fresenius Medical Care gained on the day as did E.ON and RWE. Airbus advanced after the company increased its dividend and said it sees higher results in fiscal 2015. Total advanced but Technip dipped. Veolia Environnment and Michelin were up on the day. International Consolidated Airlines gained after its profit soared. Lloyds Banking finished higher after reporting financial results. However both Royal Bank of Scotland and Barclays retreated. Royal Bank of Scotland announced on Thursday further cutbacks in investment banking and a £3.5 billion loss dropped after broker downgrades. Standard Chartered advanced on a broker upgrade. Intu Properties retreated after the shopping centre owner posted its third consecutive yearly decline in net rental income.
Asia Pacific
Shares were mixed in a lackluster trading session Friday as falling oil prices and disappointing Japanese economic data pressured investors. Higher than expected US core consumer prices which excludes food and energy and durable goods orders revived confidence in the US economy, but at the same time, bolstered the case for the Federal Reserve to raise interest rates this summer.
Chinese shares reversed early declines to close higher ahead of the annual meeting of the National People’s Congress. The Shanghai Composite was up 0.4% while the Hang Seng slipped 0.3%. The Shanghai Composite was up 2.0% in the holiday shortened week and added 3.1% for the month of February. The Hang Seng was virtually unchanged on the week and up a modest 1.3% in February. Over the weekend, the People’s Bank of China lowered its key interest rates by 25 basis points. The one year bank lending rate is now 5.35% while the deposit rate is 2.50%.
The Nikkei hit a fresh 15-year high, as the yen weakened and investors took disappointing January economic data in their stride. The Nikkei inched up 0.1% and added 2.5% for the week and 6.4% in February. The good news was that January industrial production was up a more than expected 4.0% on the month. However, consumer prices continued to weaken, the unemployment rate increased and both retail sales and household spending contracted.
The S&P/ASX added 0.3% and the All Ordinaries 0.4% Friday. For the week, the indices were up 0.8% and 0.9% respectively. In February, the ASX added 6.1% while the All Ordinaries was 6.2% higher. Woolworths declined after it cut its full year profit guidance after reporting a 3% decline in first half net profit. Fellow retailer Harvey Norman Holdings advanced after it posted a 27% jump in half yearly profit, benefiting from improving consumer confidence. Miners were mixed.
The Kospi retreated 0.3% Friday but advanced both on the week and in February by 1.2% and 1.9% respectively. The Sensex added 1.6% on the day but was virtually unchanged on the week. In February, the Sensex edged up 0.1%.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
Monday — March manufacturing PMIs will be reported for China, Japan, India, the Eurozone, France, Germany, the UK and US. The Eurozone releases flash harmonized index of consumer prices for February. The US posts January personal income and spending. January construction spending and February ISM manufacturing survey also will be reported.
Tuesday — The Reserve Bank of Australia announces its monetary policy decision. Germany reports January retail sales. The UK releases February construction PMI while the Eurozone posts January producer price index.
Wednesday — Australia reports fourth quarter gross domestic product. February composite PMIs will be released for China, Japan, the Eurozone, France and Germany while services PMIs will be reported for India, the UK and US. The Eurozone posts January retail sales. In the US, ADP posts its February private employment report. The Bank of Canada announces its monetary policy decision. Canada also posts December monthly GDP and fourth quarter GDP.
Thursday — Australia reports January merchandise trade and retail sales. The Bank of England and European Central Bank both announce their monetary policy decisions. France posts fourth quarter unemployment. Germany releases January manufacturers’ orders and Italy posts its second estimate of fourth quarter GDP.
Friday — Germany posts January industrial production while France posts January merchandise trade. The Eurozone posts revised fourth quarter GDP. US and Canada release January international trade. The US reports February employment situation.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday