On 13 March, 2015 – Global markets were mixed as the US dollar continued to climb while oil prices slid

US markets retreated, while European and Asian markets were mixed on weak oil prices.
United States
US stock markets retreated Friday sending the Dow Jones industrials and the S&P lower for a third consecutive week. Investors reacted negatively to a steep drop in oil prices and a jump in the value of the dollar. The Dow declined 0.8 percent, the S&P was down 0.6 percent and the Nasdaq lost 0.4 percent. For the week, the three indices were down 0.6 percent. 0.9 percent and 1.1 percent respectively.
Utilities, companies that make basic materials such as steel and major exporters had the biggest declines. The sell-off came at the end of a volatile week and it sets the stage for a Federal Reserve policy meeting next week. Investors will be watching closely for clues about the Fed’s views on the economy and interest rates. Oil dropped sharply after the International Energy Agency said prices had further to fall because supplies were continuing to rise. Several energy stocks followed the price of oil lower including Transocean and Denbury Resources.
Traders pointed to the rising dollar as driving the bulk of market action Friday, renewing fears among investors that its long climb against other currencies is tripping up efforts by US corporations to compete overseas. A strong dollar hurts profits overseas, both by dampening demand as US exports become more expensive and by reducing the value of profit earned in other currencies. Shares of small companies have fared better amid the dollar rally. Small firms tend to be more US focused and less exposed to currency fluctuations.
General Electric, Caterpillar and Deere dropped more than the rest of the market. US Steel, whose products competes with cheap imports, dropped after the company announced it would idle of its operations and lay off workers. Ann advanced after it posted a surprise profit in its holiday quarter on stronger than expected sales growth. The company also outlined an effort to deliver an additional $35 million in cost savings by 2016. Intel gained after it cut its revenue outlook for the first quarter by nearly a billion dollars, a sign that demand for personal computers is weakening amid sharp currency fluctuations and other factors. Rowan Core Laboratories and Tidewater turned in some of the oil service sector’s worst performances. Carmike Cinemas gained. People familiar with the matter said it has hired an investment bank to help it explore strategic alternatives.
Gold at the afternoon London fixing slipped 25 US cents to US$1,152.00. Copper futures were up 0.6% to US$2.67. WTI spot crude was down US$2.07 to US$44.98. Dated Brent spot crude was down US$2.50 to US$54.58.The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. It was virtually unchanged against the yen. The Dollar Index was up 1.2%. The yield on US Treasury 30 year bond was up 1 basis point to 2.70% while the yield on the 10 year note was unchanged at 2.11%.
Europe
The European markets were mixed at week’s end. The markets were up in early trading thanks to Thursday’s rally in the United States and the positive performance in Asian markets. However, those early gains eroded when oil prices dropped after the International Energy Agency warned that oil prices had further to fall. The CAC was up 0.5 percent, the DAX added 0.9 percent and the SMI was 0.4 percent higher. The FTSE retreated 0.3 percent. On the week, the CAC, DAX and SMI added 0.9 percent, 3.0 percent and 0.8 percent respectively. However, the FTSE lost 2.5 percent.
Commerzbank advanced after the lender agreed to pay U.S. authorities $1.45 billion to settle allegations of sanctions and money laundering violations. Deutsche Bank also gained. Both E.ON and RWE were down. Technip and Total also retreated. Whitbread advanced on a broker upgrade. Tullow Oil, BG Group, BP and Royal Dutch Shell declined. Miners were weak with BHP Billiton, Anglo American and Rio Tinto retreating. SSE and British Gas owner Centrica were lower. Both Centrica and SSE have been laggards since the start of the year on concerns that they will become subject to greater regulation and price caps, in one of the first signs of election related stress in the markets.
Asia Pacific
Shares were mixed on Friday. The Nikkei rallied 1.4 percent to a fresh 15 year closing high. The index was up for a fifth consecutive week, this time increasing 1.5 percent. The yen’s weakness against the dollar as well as companies returning cash via dividends and share buybacks, are supporting the stock market. The index closed above the 19,000 mark for the first time since April 2000.
Industrial robot maker Fanuc soared after the company said it would set up a shareholder relations department. Also advancing were Advantest, Casio Computer and Hitachi along with Fast Retailing and Softbank. Kansai Electric Power rallied as the utility said it would consider building a 1.3 gigawatt coal-fired power plant in northern Japan with trading house Marubeni. Mitsubishi UFJ Financial Group, Mitsui Fudosan and Sumitomo Realty & Development soared. Pharma stocks drifted lower with Eisai and Ono Pharmaceutical retreating.
Chinese shares advanced led by financials after People’s Bank of China Governor Zhou Xiaochuan said the Bank will maintain its prudent monetary policy allaying investor concerns on the economy. Zhou called the money supply growth “appropriate” and indicated that the PBoC plans to implement a deposit insurance scheme in the first half of the year. Zhou also said that the probability is “very high” China will fully liberalize rates later this year. The Shanghai Composite added 0.7 percent on the day and 4.0 percent for the week.
After rising sharply the day before, the S&P/ASX dropped 0.6 percent and the All Ordinaries lost 0.5 percent after both climbed 1 percent on Thursday. Poor commodity prices weighed on mining stocks, with BHP Billiton and Rio Tinto declining. Lynas tumbled after the rare earths miner widened its interim loss. Gold miner Newcrest Mining was up after gold prices edged higher Friday. Banks were down. On the week, both indices lost 1.4 percent.
The Kospi was up 0.8 percent Friday after the Bank of Korea’s surprise rate cut on expectations it will boost domestic spending and aid economic growth. On the week, the index lost 1.3 percent. The Sensex lost 1.5 percent and retreated 3.2 percent on the week. Investors were fearful that the Reserve Bank of India would go slow on cutting interest rates.
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 — India releases its February WPI. In the US, March Empire State manufacturing survey, February industrial production and housing market index along with January Treasury international capital will be reported.
Tuesday — the Reserve Bank of Australia publishes minutes from its most recent meeting. The Bank of Japan announces its latest monetary policy decision. The Eurozone releases February final harmonized index of consumer prices. The US posts February housing starts.
Wednesday — Japan posts February merchandise trade balance. Italy and the Eurozone release January merchandise trade. The Bank of England publishes minutes from its monetary policy committee meeting held earlier this month. The UK reports February labour market data. In the US, the Federal Reserve publishes its monetary policy decision and the FOMC’s latest forecasts. Chair Janet Yellen holds her quarterly press conference.
Thursday — the Swiss National Bank announces its monetary policy assessment. In the US, fourth quarter current account, March Philadelphia Fed Survey, February leading indicators and weekly jobless claims, money supply and Fed balance sheet will be released.
Friday — Germany posts February producer price index. The UK reports February public sector finances. Canada releases February consumer price index and January retail sales.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday