On 28 April, 2015 – Stocks mixed as investors await Fed announcement

Stocks were mixed globally as investors waited for the Federal Reserve announcement in the Wednesday global market day.
United States
The Dow Jones industrials (up 0.4%) and S&P (up 0.3%) advanced Tuesday, erasing losses from earlier in the day as investors worked through the latest round of earnings reports. The Nasdaq however, slipped 0.1%. Pharmaceutical stocks advanced after Merck reported better than expected results.
Twitter dropped sharply after the company’s earnings, which were due to be released after the stock market closed, came out ahead of time. Trading in the stock was halted Tuesday afternoon after word spread. When trading resumed, the stock fell more than 25%. Its adjusted earnings per share topped expectations but revenue fell short. Merck advanced. While the company’s profits fell 44% from a year ago, the results still easily beat analysts’ estimates. Apple reported a record quarterly profit of US$13.6 billion on Monday, but Apple’s outlook was not as rosy as some analysts had predicted. On Tuesday, Apple retreated. Apple had a record US$193.5 billion in cash on its balance sheet and plans on increasing its dividend and share buyback. Whirlpool dropped after the company had to slash its 2015 annual forecast because of the rising dollar and low demand for appliances in Brazil.
The Conference Board said that consumer confidence declined in April to the lowest level in four months, knocked down by a slowdown in hiring. The consumer confidence index declined to 95.2 in April from 101.4 in March. Consumers’ assessment of both current economic conditions and expectations were down.
Gold at the afternoon London fixing was up US$9.00 to US$1,209.00. Copper futures were up 0.4% to US$2.79. WTI spot crude was down 2 US cents to US$56.97. Dated Brent spot crude was down 20 US cents to US$64.63. The US dollar was down against the euro, yen, pound and the Canadian and Australian dollars. However, it advanced against the Swiss franc. The Dollar Index was down 0.9%. Yields on both the US Treasury 30 year bond and 10 year note were up 7 basis points to 2.68% and 1.99% respectively.
Europe
Stocks retreated Tuesday after UK first quarter gross domestic product was weaker than anticipated. Profit taking also played a role in the pull back after gains in Monday’s session. The weakness accelerated in the afternoon following reports that a US cargo vessel had been seized by Iran. However, the markets stabilized after American officials denied the report. The FTSE and SMI declined 1.0% while the CAC and DAX lost 1.8% and 1.9% respectively. Investors were cautious ahead of the US FOMC announcement on Wednesday.
The Greek government rearranged its negotiating team yesterday and Prime Minister Alexis Tsipras stated today that he expects to reach a deal with international creditors by May 9.
Commerzbank dropped on stock dilution worries. After posting a better than expected preliminary profit for the first quarter, the lender said it has placed about 114 million new shares with institutional investors by way of a so-called accelerated book building process. Deutsche Bank also declined.
GDF Suez was down after the power utility confirmed its 2015 financial targets despite reporting a 10% drop in first quarter core profit. Orange tumbled after reporting first quarter results that came in largely in line with expectations. Total climbed while BP slipped after both companies reported higher than expected profits. Standard Chartered decreased after reporting a 22% decline in first quarter pre-tax profit. Whitbread retreated after announcing that CEO Andy Harrison will retire by February 2016.
UK first quarter GDP expanded at the slowest pace since the fourth quarter of 2012, reflecting contraction in construction and industrial activity according to preliminary estimates. Gross domestic product expanded 0.3% on the quarter. Traders said the FTSE could struggle to make headway before Britain’s election on May 7 which is expected to be closely contested. Sectors such as utilities and banks could come under regulatory pressure if the opposition Labour party takes office. No party is expected to win an outright majority.
Asia Pacific
Stocks here were mixed with shares in Australia, China, South Korea and Singapore declining while those in Japan and India advanced. The Shanghai Composite dropped after the country’s securities regulator issued a fresh, albeit mild, warning to investors on the market’s risks.
The benchmark Shanghai Composite index closed 1.1% lower. Selling pressure intensified after the China securities watchdog urged caution among retail investors: “We remind investors, especially those new to this market, about doing their homework and investing rationally.” Despite Tuesday’s losses, analysts remain upbeat on China’s medium-term outlook because of continuing stimulus measures from Beijing. After markets closed, the Wall Street Journal reported that the People’s Bank of China plans to ease credit by supporting commercial lenders’ efforts to purchase local government bonds. The Hang Seng was virtually unchanged (up 9.16 points).
The Nikkei added 0.4% on hopes of better shareholder returns after Fanuc lifted its dividend payout ratio and laid down terms for share buybacks as part of efforts to return more cash to shareholders. Honda Motor closed higher before releasing its quarterly earnings after the market close. The carmaker’s profit for the fiscal fourth quarter dropped 43% as costs related to air bag recalls offset the benefits from a weak yen. Mitsubishi UFJ Financial Group advanced on a Nikkei report that it will likely record a net profit of ¥1 trillion in fiscal 2014. Mitsubishi Electric advanced after the company said its fiscal 2015 attributable profit climbed 53% from last year to ¥234.6 billion. Shares of Tokyo Electron dropped after the company called off its merger deal with Applied Materials, citing regulatory concerns. Japanese retail sales plunged 9.7% from a year ago. Fitch Ratings downgraded Japan’s sovereign rating by one notch from ‘A plus’ to ‘A’, citing uncertainty over the degree of political commitment to reduce the country’s debt and deficit.
Both the S&P/ASX and All Ordinaries were down 0.6% thanks to weakness in mining shares. A closely followed morning speech by Reserve Bank of Australia Governor Glenn Stevens shed no new light on the Bank’s thinking ahead of next week’s policy meeting. Doubts have grown whether bank will cut in May following some stronger than expected economic data and with the increases in iron ore prices. The Sensex was 0.8% higher as banks rebounded from recent losses on short covering amid optimism about the domestic economy. The Kospi declined 0.5% thanks to foreign fund selling.
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*
The Eurozone releases March M3 money supply data and April EC economic sentiment. The UK posts April’s CBI distributive trades survey. The Federal Reserve Open Market Committee (FOMC) announces its latest monetary policy decision. The US posts its first estimate of first quarter gross domestic product. April pending home sales also will be released.
*Note — all releases are listed in local time.