On 17 March, 2015 – Most European markets declined on profit taking

Stocks were mixed as traders and investors waited for the Federal Reserve’s monetary policy decision during the Wednesday global market day.
United States
Both the Dow Jones industrials and the S&P declined thanks to soft commodity related shares and nervousness before the Federal Reserve announcement helped by and Facebook. Oracle was up after releasing its results after markets closed.
Investors were anxious as the Federal Open Market Committee kicked off its two day meeting to be followed by Chair Janet Yellen’s press conference Wednesday afternoon. Drawing investor focus is the likelihood that the Fed will remove its promise to be “patient” before raising interest rates from its post meeting policy statement. Investors expect the removal of the word to pave the way for potential rate increases later this year.
Johnson & Johnson declined. American Airlines advanced after an announcement that it would join the S&P. Burlington Stores was up after reporting that earnings jumped 49% in the January quarter, lifted by strong sales during the holiday season. Weight Watchers sank after a broker downgrade. Adobe Systems slipped in afterhours trading after the company forecast lower than expected second quarter sales and profits and said subscription sales for its Creative Cloud products was 10% below forecasts in its first quarter.
Construction of new homes plummeted in February, as fierce winter weather froze housing starts in the Northeast and Midwest. Builders began construction at a seasonally adjusted annual rate of 897,000 homes, a steep 17% plunge from January.
Gold at the afternoon London fixing was unchanged at US$1,150.75. Copper futures were down 1.1% to US$2.64. WTI spot crude was down 77 US cents to US$43.11. Dated Brent spot crude was down US$1.23 to US$53.44. The US dollar was up against the pound and the Canadian and Australian dollars. It was virtually unchanged against the yen. However, it declined against the euro and the Swiss franc. The Dollar Index was down 0.1%. The yield on US Treasury 30 year bond was down 4 basis points to 2.61% while the yield on the 10 year note declined 3 basis points to 2.05%.
Europe
Stock markets were mostly lower Tuesday. The exception was the FTSE. The pullback was partially attributed to profit taking after Monday’s rally. The markets were mixed in early trading, after German investor sentiment came in below expectations and Eurozone employment growth slowed in the fourth quarter. The markets weakened further after the much weaker than expected US housing starts report. The FTSE advanced 0.5% while the CAC, DAX and SMI lost 0.6%, 1.5% and 0.4% respectively. Investors also were cautious ahead of the Federal Reserve’s policy announcement on Wednesday. Analysts expect the FOMC to remove the word “patient” from its monetary policy statement without any strong signal on the timing of an interest rate rise.
Linde retreated after a broker downgrade. Automakers Daimler, BMW, Volkswagen, Peugeot and Renault declined. Commerzbank and Deutsche Bank were down. Orange dropped after the telecom firm announced new strategic plan. J Sainsbury was down after the company issued its quarterly trading statement. Wm Morrison and Tesco also retreated. BHP Billiton climbed after the company’s Board recommended that its shareholders vote to spin off a new company, which will be called South32. Antofagasta was down after the Chile-focused miner said its production forecast this year remains uncertain due to issues at a major mine. In the UK, traders said that an appetite was returning for some of the worst performing shares with traders also speculating that Wednesday’s budget message may provide tax relief for the oil sector.
Asia Pacific
Stock indices were mixed Tuesday. While Chinese shares extended recent gains on heightened expectations of further stimulus measures, Japanese shares rallied on optimism that deflation will end. The Shanghai Composite was up for a fifth day, this time by 1.6%. Banks and brokerages advanced on reports China is drafting rules to allow securities firms expand their wealth management business. China Railway Construction and China Railway Group jumped on a report the government is considering a merger of the two in order to eliminate competition. The Hang Seng slipped 0.2%, erasing early gains ahead of key earning reports from Tencent Holdings, Ping An Insurance Group and China Mobile.
The Nikkei was up 1.0%. Sentiment was lifted by the US rally on Monday. Hitachi and Mitsubishi Heavy Industries advanced on a Nikkei report that they aim to lift return on equity above 10%. Panasonic shares gained after it said it would buy Houston based satellite communication service provider ITC Global for an undisclosed amount. Tech stocks including Fanuc and Advantest gained as did brokerage Daiwa Securities Group, Nippon Yusen and Sony.
The Bank of Japan kept its monetary policy and the asset purchase program unchanged, saying that the price outlook will improve later in the year without the need for additional action. While revising down its near term inflation outlook, the BoJ said the slowdown in inflation was due to temporary declines in oil prices.
Australian shares gained after minutes of the Reserve Bank of Australia’s March policy meeting showed the central bank remains open to further interest rate cuts this year to foster sustainable growth in demand and to reach the inflation target. The S&P/ASX 200 was up 0.8% while the All Ordinaries was 0.7% higher. The four big banks advanced as did BHP Billiton, Rio Tinto and Newcrest. Fortescue Metals declined after it launched an A$2.5 billion bond offer to refinance its heavy debt burden. The Kospi rallied 2.1% and the Sensex 1.1%.
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*
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. The UK Chancellor delivers the budget message. 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.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday