On 16 March, 2015 – European markets rallied despite poor US economic data and weak energy stocks

Most global markets rallied ahead of Wednesday’s Federal Reserve announcement. The dollar retreated but so did oil prices.
United States
Stocks advanced Monday after three weeks of declines as traders waited for the Federal Reserve meeting Wednesday for insight into when the Fed announces its decision. Recent dollar strength has increased expectations the Fed could be more cautious about raising rates this year. The Dow Jones industrials were up 1.3%, The S&P gained 1.4% and the Nasdaq added 1.2%.
News on the economy was mixed with industrial production edging up slightly in February, as a big surge by utilities because of a cold winter offset a third straight decline in factory output. The Federal Reserve said overall industrial production rose 0.1% in February following a 0.3% fall in January. A different report showed that American home builders were feeling slightly less confident in their sales prospects, even as their overall sales outlook remained favorable.
Amgen climbed following promising data in studies of a new class of cholesterol-reducing drugs. Energy shares also bounced, adding to gains late in the session despite further losses in oil prices. Exxon Mobil gained. Salix Pharmaceuticals was up after it agreed to an increased US$173 per share offer from Valeant Pharmaceuticals. Avon Products dropped after S&P Dow Jones Indices announced late Friday the stock would be moved out of the S&P this month.
Gold at the afternoon London fixing was down US$1.25 to US$1,150.75. Copper futures virtually unchanged at US$2.66. WTI spot crude was down US$1.02 to US$43.82. Dated Brent spot crude was up US$1.23 to US$53.44. The US dollar down against the euro, pound and the Canadian and Australian dollars. It was virtually unchanged against the yen. However, it advanced against the Swiss franc. The Dollar Index was down 0.5%. The yield on US Treasury 30 year bond was down 5 basis points to 2.65% while the yield on the 10 year note declined 3 basis points to 2.08%.
Europe
European markets rallied Monday. Every component of the DAX advanced, as the index rose above 12,000 for the first time ever. Investors shrugged off a batch of largely disappointing US economic data. Energy stocks were among the weakest performers, as the price of oil dropped to six year lows. The FTSE and SMI added 0.9% while the DAX and CAC were 2.2% and 1.0% higher.
Investors are looking forward to the Federal Reserve’s monetary policy announcement Wednesday. While the Fed is not expected to change its monetary policy, Fed watchers will be paying close attention to the accompanying statement ─ particularly on any changes in guidance.
Siemens climbed after the company announced over the weekend that it reached a deal worth US$4.2 billion with the Egyptian government. Linde gained after it reported its full year results. Both Deutsche Bank and Commerzbank were up. Automakers Volkswagen, BMW and Daimler also finished higher. Rheinmetall retreated on a broker downgrade. Banks Credit Agricole, BNP Paribas and Société Générale also gained. Lafarge dropped after Swiss peer Holcim decided not to pursue the execution of the combination agreement. CRH, which had agreed to buy some assets from these two cement giants, declined. Balfour Beatty gained after a broker upgrade. Tesco gained on news that Britain’s WPP has bid for a majority stake in Dunnhumby, the customer data business put up for sale by Tesco.
Asia Pacific
Shares were mixed Monday. While Chinese shares hit a 67-month high following reassuring comments from Premier Li Keqiang on the economy, markets elsewhere saw muted gains ahead of the FOMC meeting and Chinese manufacturing data due out later in the week.
The Shanghai Composite climbed 2.3% to its highest level since August 2009, after Premier Li Keqiang pledged efforts to make China’s growth more sustainable. China still has more tools to bolster its economic growth, Li Keqiang said Sunday at a press conference after the conclusion of the annual parliamentary session. The government has more policy measures at its disposal that would be looked into if the slowdown in growth affects employment and incomes. The Hang Seng reversed early losses to end 0.5% higher, buoyed by strong gains in mainland markets.
The Nikkei was virtually unchanged (down 8.19 points) ahead of Tuesday’s Bank of Japan policy announcement and the FOMC policy announcement due on Wednesday. Exporter shares ended mostly lower, with Nissan Motor, Sharp and Sony declining. Fanuc retreated on profit taking after soaring on Friday. Toshiba was down even as the company secured an order to supply 688 MW super-critical steam turbine and generator for a power plant in Vietnam.
Both the S&P ASX and All Ordinaries were down 0.3%. Woodside Petroleum declined after it halted production at its Pluto LNG plant in Western Australia after problems with a submersible drilling rig. Santos declined as did Oil Search after oil prices tumbled to a six-week low Friday, hit by a renewed rally in the dollar and a warning by the International Energy Agency that the stability seen in oil prices over the last month or so was not likely to last. The Kospi edged down 0.1% and the Sensex lost 0.2%.
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*
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.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday