On 24 March, 2015 – European markets were mixed on better than anticipated economic data

Stocks were mixed in Europe and the Asia Pacific. However, US shares tumbled given the absence of fresh market moving data.
United States
Stocks declined Tuesday responding to currency fluctuations as traders focused on the US dollar’s strength and its possible effect on corporate earnings. The Dow Jones industrials and S&P both lost 0.6% while Nasdaq was down 0.3%. Declines on the Nasdaq were held in check by a boost from Google after it was announced that Morgan Stanley’s chief financial officer is leaving the bank to join Google.
Data from home sales to inflation and manufacturing indicated the US economy remains relatively strong. However the data did not alter expectations of a faster or steeper monetary policy tightening path at the Federal Reserve. Traders have honed in on how the Fed will react to economic data, as a June interest rate increase remains a possibility. Stocks have been inversely correlated to the US dollar and several multinational companies have given earnings guidance that cited a negative impact from a strong currency.
US consumer prices were up 0.2% in February from a month earlier, the first increase since October 2014 and the biggest since June. Prices excluding volatile food and energy costs also were up 0.2%. February new home sales climbed to the highest level in seven years. Sales of newly built single family homes increased 7.8% from a month earlier to an annual rate of 539,000 and above the pace of 460,000 that was expected.
Freeport-McMoRan retreated after the miner slashed its quarterly dividend by 84%, to 5 US cents a share from 31.25 US cents, citing lower commodity prices. Whiting Petroleum plunged — North Dakota’s largest oil producer announced an offering of 35 million shares and a US$1.75 billion mix of notes and convertible notes to help cut its near-US$6 billion debt load. Whiting Petroleum tumbled after it sold 35 million shares of its common stock at a 22% discount to Monday’s closing price and it priced US$1 billion of convertible senior notes. McCormick shares advanced after it said its earnings fell 15%, adding that a stronger US dollar weighed on sales growth in the quarter ended February. However, the company’s adjusted results beat expectations.
Gold at the afternoon London fixing was up US$5.25 to US$1,191.50. Copper futures were up 0.2% to US$2.80. WTI spot crude was up 1 US cent to US$47.46. Dated Brent spot crude was down 82 US cents to US$55.10. The US dollar was up against the euro, pound and the Australian dollar. It was virtually unchanged against the Canadian dollar. However, it declined against the yen and the Swiss franc. The Dollar Index was up 0.2%. The yield on US Treasury 30 year bond was down 5 basis points to 2.46% while the yield on the 10 year note declined 4 basis points to 1.87%.
Europe
Stock indices were mixed Tuesday thanks to some better than anticipated economic data. The CAC gained 0.7% and the DAX added 0.9%. However, the FTSE slipped 0.3% and the SMI retreated 0.8%. The SMI pulled back on profit taking and the strength of the Swiss franc. Uncertainty about the Greek debt crisis caused investors to flee to the safety of the Swiss franc.
According to the March flash PMI, Germany’s private sector expanded at the strongest pace in eight months and Eurozone private sector grew at the fastest pace in almost four years. However, disappointing Chinese manufacturing data stirred up new worries over the state of its economy. The manufacturing sector contracted according to the flash manufacturing PMI with a reading of 49.2 — well below forecasts for 50.5, and down sharply from 50.7 in February.
In Frankfurt, Deutsche Lufthansa dropped after a plane crash in southern France. Banks including Commerzbank, Deutsche Bank, Société Générale, BNP Paribas and Crédit Agricole advanced. Volkswagen, BMW and Renault gained while Peugeot declined. Centrica declined on a broker downgrade. Wolseley dropped after it reported its financial results. Both Nestlé and Novartis declined as did Roche. Syngenta dropped — Monday’s weakness US competitor Monsanto weighed its shares. The WHO declared Monday that it believes a Monsanto product is carcinogenic.
UK inflation fell to zero for the first time on record in February on sharp declines in fuel and food prices. Factory gate prices continued its negative trend.
Asia Pacific
Stock indices here also were mixed Tuesday as disappointing Chinese manufacturing data stirred up new worries over the state of the economy. While Chinese shares recouped early losses, Japanese shares slipped following an unimpressive lead from US shares during the Monday global market day.
Chinese shares extended gains to the tenth consecutive session as weak data fueled hopes for more policy easing. The Shanghai Composite declined over 1% early in the session before reversing direction to close up 0.1%. The Hang Seng however dropped 0.4%. The HSBC’s flash manufacturing PMI for March surprisingly slid to an 11-month low of 49.2 — down sharply from 50.7 in February and well shy of forecasts for a score of 50.5. A reading below 50 signifies contraction. Analysts said the data was distorted by the Lunar New Year holidays.
The Nikkei was down 0.2% in choppy trading on the weaker than expected Chinese PMI. The flash manufacturing PMI for Japan also was lower in March but remained above the breakeven point with a reading of 50.4, down from 51.6 in February. Fast Retailing, Fanuc and SoftBank were down as were Mitsubishi UFJ Financial Group, Panasonic, Honda Motor and Sony. Sharp gained, extending Monday’s rally, on news that Taiwan’s contract electronics maker Hon Hai Precision Industry might make another offer to buy a stake in the Japanese electronics firm.
Both the S&P/ASX and All Ordinaries added 0.2%. BHP Billiton and Fortescue Metals Group gained on expectations the worst may be over for iron ore prices. Gold miner Newcrest Mining rallied after gold prices rose for a fourth consecutive session to a two-week high on Monday. Qantas Airways declined after the competition regulator threatened to reject a proposed coordination agreement between Qantas and China Eastern on flights to China, saying it would hurt competition. The Kospi also added 0.2% as foreign funds extended their buying streak for an eighth consecutive session amid ample liquidity from the Eurozone.
The Sensex slipped 0.1%. The Asian Development Bank (ADB) said it expects India’s growth rate to surpass China and improve to 7.8% in the next fiscal year and further to 8.2% in 2016-17 on the back of government’s structural reform agenda and improved external demand.
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*
Germany reports March Ifo index. The US releases February durable goods orders.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday