On 3 March, 2015 – European markets fell on profit taking despite surprisingly strong German retail sales

Most stock indices were down during the Tuesday global market day. The declines were due in part to profit taking after recent gains.
United States
Stocks moved mostly lower, partly offsetting the strong gains of the previous session. Nasdaq lost 0.6% and dipped back below the 5,000 level achieved the day before. The Dow Jones industrials and the S&P both declined 0.5%. The weakness was partly due to profit taking following recent gains.
Traders cashed in on the recent gains amid concerns about the sustainability of the uptrend in light of expectations of higher interest rates in the relatively near future. Negative sentiment was also generated by news of disappointing auto sales from Ford, General Motors and Chrysler, which were hurt by the harsh winter weather. Traders were also waiting for a slew of economic data later in the week, culminating with the monthly employment report.
Mylan moved lower on the day even though the drug maker reported better than expected fourth quarter results. AK Steel and US Steel declined on broker downgrades. Best Buy advanced after the consumer electronics retailer reported fourth quarter earnings that beat analysts’ estimates. Microsoft and Cisco Systems declined. Micron Technology and Applied Materials retreated. Navistar International climbed after it said cost cutting initiatives and increased demand for its medium trucks and school buses helped narrow the company’s loss. Kate Spade was down after it posted a downbeat guidance Tuesday, anticipating slowing growth as gross margin continues to fall despite strong revenue. Springleaf Holdings said Tuesday it has agreed to buy Citigroup Inc.’s OneMain Financial for about US$4.25 billion in cash. The combined company would be the biggest subprime lender in the US. Springleaf and Citigroup both jumped on the day.
Gold at the afternoon London fixing was up 25 US cents to US$1,212.75. Copper futures were down 1.7% to US$2.65. WTI spot crude was up 78 US cents to US$50.37. Dated Brent spot crude was up US$1.51 to US$61.05. The US dollar was up against the euro and Swiss franc. It was virtually unchanged against the pound. However, it declined against the yen and the Canadian and Australian dollars. The Dollar Index was down 0.1%. The yield on US Treasury 30 year bond was up 2 basis points to 2.71% while the yield on the 10 year note was up 3 basis points to 2.12%.
Europe
Stock indices declined on profit taking despite surprisingly strong German retail sales. The FTSE declined 0.7%, the CAC lost 1.0% and both the DAX and SMI dropped 1.1%. Some investors were unsettled by Ukraine’s central bank. In a shock announcement said that it was increasing its refinancing rate to 30% from 19.5% on Wednesday as part of a package of measures aimed at stabilizing the country’s financial system.
Germany’s January retail sales growth accelerated unexpectedly to log its fastest gain in four-and-a-half years. The data boosted hopes of consumer spending cushioning economic growth. Retail sales improved for the second straight month to 5.3% on the year after increasing 4.8% in December. In the fourth quarter of 2014, Switzerland grew by 0.6% on the quarter with momentum underpinned by domestic spending and foreign demand for goods. On the year, GDP was up 1.9%.
Heidelberger Druckmaschinen climbed after the printing machine maker announced an agreement with investment company CoBe Capital to acquire the Netherlands based Printing Systems Group. Auto makers BMW, Volkswagen, Daimler, Renault and Peugeot declined. Banks including Deutsche Bank, Commerzbank, BNP Paribas, Société Générale and Crédit Agricole also retreated on the day. Barclays declined after it announced financial results. Glencore was down even though it posted a better than expected full year earnings report. Travis Perkins dropped after full year results were announced. Moneysupermarket.com sank. The price comparison website for financial products said that although it has traded strongly in the first two months of 2015, the comparatives would become tougher from the second quarter. Hargreaves Lansdown gained. Stagecoach climbed after it issued a trading update.
Asia Pacific
Share indices were mixed Tuesday as worries over the continued slowdown in China offset optimism fueled by Monday’s gains in US stocks. Chinese shares tumbled on economic as well as liquidity concerns while Australian shares reversed early gains after the Reserve Bank of Australia’s decision to leave interest rates unchanged.
The Nikkei slipped 0.1% as the yen advanced on comments by an economic adviser to Japanese Prime Minister Shinzo Abe. He said that the Bank of Japan should avoid extra stimulus measures for some time to ensure the economy does not overheat. Sharp tumbled on a Nikkei report that the struggling electronics giant plans to request capital infusion from its two main creditors, including a ¥150 billion debt for equity swap as it prepares for a much needed restructuring. Banks ended broadly lower, with Mitsubishi UFJ Financial Group and Mizuho Financial Group both retreating. Nippon Telegraph and Telephone was down after the company said it has agreed to buy German data center operator e-Shelter. Chughai Pharmaceutical advanced. The company and US-based Athersys have announced a partnership and license agreement to exclusively develop and commercialize MultiStem cell therapy for ischemic stroke in Japan. NTT DoCoMo rallied. The mobile service provider and Finland’s Nokia said they will partner to explore and harness the potential of Nokia Networks mmWave technology in the 70 GHz spectrum band.
Both the S&P/ASX and All Ordinaries declined 0.4% after the Reserve Bank of Australia surprised markets and kept its key interest rate unchanged, belying expectations for a rate cut. The RBA left its cash rate unchanged at its March meeting after lowering it by 25 basis points to 2.25% in February. Repeating that growth in Australia is continuing at a below trend pace with overall domestic demand growth quite weak, the Board said that it would assess the need for further easing at forthcoming meetings to foster sustainable growth in demand and to reach the inflation target. Banks were down as were miners.
The Shanghai Composite dropped 2.2% on worries the economic slowdown is deepening and a glut of new share offers will cause a temporary squeeze in the secondary market. The Hang Seng surrendered early gains to end down 0.7%. The Kospi added 0.2% with automakers and financial stocks pacing the gains.
The Sensex was up 0.5% as underlying sentiment remained positive after the introduction of the new budget over the weekend. The Reserve Bank of India and the finance ministry have agreed to introduce inflation targets to counter a long history of volatile prices. They set a consumer inflation target of 4%, with a band of plus or minus 2 percentage points, by the financial year that ends in March 2017. The Reserve Bank of India will first aim to get consumer inflation below 6% by January.
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*
February composite PMIs will be released for the Eurozone, France and Germany. Services PMIs will be reported for India, UK and US. The Eurozone will release February retail sales. The Bank of Canada announces its monetary policy decision. The Federal Reserve publishes its Beige Book in preparation for its March 17 and 18 FOMC meeting.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday