On 8 April, 2015 – European markets declined on unexpected drop in German factory orders

Stocks were mixed during the Wednesday global market day. In the Asia Pacific, shares mostly advanced while in Europe, they retreated. US shares gained modestly.
United States
Stocks were slightly higher Wednesday as investors parsed the minutes from the latest Federal Reserve meeting. They were also waiting for companies to start reporting their first-quarter earnings. The Dow Jones industrials were up 0.2%, the S&P advanced 0.3% and the Nasdaq added 0.8% in choppy trading.
Mylan, a UK based pharmaceutical company that is listed in the US jumped after the company offered US$29 billion in stock and cash for Perrigo. If they combine the two companies will be one of the world’s largest makers of generic and over the counter medicines. Perrigo, which is also listed in the US, also advanced.
Alcoa kicked off the first quarter earnings season and reported that it swung to a quarterly profit on a jump in revenue, primarily in its value added automotive and aerospace businesses. The company posted first-quarter net income of US$195 million or 14 US cents per share compared with a loss of US$178 million or 16 US cents per share a year earlier. Excluding restructuring costs, Alcoa earned US$363 million, or 28 US cents a share.
The Federal Reserve published the minutes from its March 17 and 18 meeting. At that time they maintained the fed funds rate range at zero to 0.25%. They also deleted the word ‘patience’ from its guidance. The FOMC was split in several directions over the right moment to start lifting rates with some advocating a move as soon as June while others advocated waiting until later this year or into 2016. Minutes noted that several FOMC members expected a move to be merited in June given the improved economic outlook. However others expected falling energy prices and the higher US dollar to keep weighing on inflation, pushing them towards a first move later this year. Two members advocated waiting until 2016.
The divisions point to uncertainty on the committee over how to interpret conflicting evidence about the strength of the recovery and the inflation outlook, amid softer first quarter growth and low inflation coupled with robust job market gains. The meeting was held prior to the release of the weak March employment data.
Gold at the afternoon London fixing was down US$3.75 to US$1,207.25. Copper futures were down 1.1% to US$2.73. WTI spot crude was down US$3.09 to US$50.89. Dated Brent spot crude was down US$3.03 to US$56.07. The US dollar was up against the euro and the Canadian dollar. However, it declined against the yen, pound, Swiss franc and Australian dollar. The Dollar Index was up 0.1%. The yield on US Treasury 30 year bond was unchanged at 2.52% while the yield on the 10 year note was up 2 basis points to 1.90%.
Europe
Stocks here retreated after yesterday’s gains as the decline in Eurozone retail sales and the unexpected drop in German factory orders weighed on sentiment. The surge in energy stocks, following the acquisition of BG Group by Royal Dutch Shell proved unable to spark a sustainable rally. The FTSE and CAC both lost 0.3%, the DAX was down 0.7% and the SMI slipped 0.1%. Investors were cautious before the release of the Federal Reserve’s latest monetary policy meeting minutes after markets closed for the day. The lack of US economic data also kept some investors on the sidelines.
Traders continue to monitor the situation in Greece as it nears Thursday’s deadline for the repayment of €450 million loan to the International Monetary Fund. Greek Prime Minister Alexis Tsipras visited Moscow for talks with Russian President Vladimir Putin. Europe considers Tsipras’ visit as a warning shot and fears that the deepening bond with Russia could alienate Greece from the European Union. There were reports that Tsipras is seeing Russia as source of financial aid to meet Greece’s commitments to European Union. Russia in return is expecting business tie-ups and to use Greece for political mileage, in view of the Ukraine conflict.
BMW and Daimler declined after a broker downgrade. Peugeot also declined but Renault advanced. RWE and E.ON both retreated. Deutsche Lufthansa climbed while in Paris, Air France-KLM, which reported traffic data for the month of March, finished lower. Technip was up but Total declined. BG Group surged after it agreed to be acquired by Royal Dutch Shell in a cash and stock deal valued at about £47 billion. Royal Dutch Shell however, dropped. Tullow Oil and BP advanced. Mining shares were under pressure after gold prices pulled back.
February Eurozone retail sales declined 0.2% on the month after increasing 0.9% the month before. February manufacturing orders unexpectedly dropped for a second straight month due to stagnation in domestic demand and a decline in foreign bookings.
Asia Pacific
Stocks mostly were higher led by Hong Kong on fund flows via the so-called Shanghai-HK Stock Connect scheme. While Tokyo, Hong Kong and Chinese markets hit fresh multi-year highs, the safe-haven Japanese yen rose from near a two week low against the dollar after the Bank of Japan maintained its expansively easy monetary policy as expected.
The Nikkei was up 0.8% to reach a 15-year high after the Bank of Japan voted to keep current monetary policy steady, with one board member expressing dissent. As expected, the Bank of Japan left unchanged its decision to increase monetary base at an annual base of ¥80 trillion by an 8-1 vote. The BoJ maintained its view on export growth, business fixed investment, public investment, private consumption and housing investment, reiterating that the economy is continuing moderate recovery. Inpex and JX Holdings gained, driven by a rebound in crude oil price. Pharmaceutical firm Eisai was up after it was granted an additional patent for its Belviq drug. Fast Retailing ended flat before releasing its first half results on Thursday. Dentsu soared after posting increased March sales. Kawasaki Heavy Industries jumped on a Nikkei report that it will log a second straight record operating profit in fiscal 2015.
Both the S&P/ASX and All Ordinaries added 0.6% thanks to a rebound in iron ore and crude prices that boosted resource stocks. BHP Billiton, Rio Tinto and Fortescue Metals Group advanced after iron ore prices recovered slightly. Atlas Iron has announced a halt to stock market trading as it conducts a “comprehensive review” of its business. Evolution Mining gained after the company said it would make a voluntary debt repayment of A$35 million. Banks were mixed, a day after the Reserve Bank kept its policy rate unchanged.
The Shanghai Composite added 0.8% while the Hang Seng, after a three day holiday closure soared 3.8% to its highest level since May 9, 2008. Sentiment was also boosted after the Chinese regulators approved a merger between train makers China CNR and CSR. The Kospi was up 0.6%, led by brokerage and oil refiners. The Sensex advanced for a fourth day, this time up 0.7%.
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 posts February industrial production and merchandise trade balance. The UK reports February merchandise trade. The Bank of England announces its monetary policy decision. The US releases February wholesale trade and weekly jobless claims, money supply and Fed balance sheet.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday