On 15 May, 2015 – Sell-off in European bonds and disappointing US data weighed on European stocks

Stocks were mixed Friday but mostly were up on the week. Once again disappointing economic data in the United States weighed on investor sentiment.
United States
Stock indices spent Friday drifting between small gains and losses, but the moves were enough to nudge the S&P to its second closing high in two days. . In contrast to Thursday’s rally, it was a mostly listless trading day. Both the Dow Jones industrials and S&P inched up 0.1% while the Nasdaq was virtually unchanged (down 2.51 points). On the week, the Dow gained 0.4%, the S&P was up 0.3% and the Nasdaq added 0.9%. Utilities advanced as investors weighed a mix economic data and corporate earnings news
Investors are trying to gauge how well the US economy is doing as they try to anticipate when the Federal Reserve will raise short term interest rates for the first time in more than six years. The Empire State index increased slightly in May, suggesting that manufacturers are beginning to adapt to the challenges caused by a stronger dollar, lower oil prices and restrained consumer spending. April industrial production dropped for the fifth straight month. The trend suggests that weakness in manufacturing and mining are weighing heavily on the economy. A preliminary report from the University of Michigan showed a substantial decrease in US consumer sentiment in the month of May.
Netflix climbed following a report saying that it is in talks to begin doing business in China. Dillard’s declined after it reported weak first quarter financial results. Keurig Green Mountain sank as investors worried that the company’s new cold drink machine is priced too high. Applied Materials said its profit rose 39% as revenue increased 4% in the April quarter. Google retreated after saying its driverless car will be tested on public roads this summer. Yum Brands advanced after receiving a broker upgrade.
Gold at the afternoon London fixing was down US$4.50 to US$1,220.50. Copper futures were virtually unchanged at US$2.92. WTI spot crude was down 14 US cents to US$59.69. Dated Brent spot crude was up 11 US cents to US$66.81. The US dollar was up against the yen, pound, Swiss franc and the Canadian and Australian dollars. It was down against the euro. The Dollar Index was down 0.2%. The yield on US Treasury 30 year bond was down 14 basis points to 2.93% while the yield on the 10 year note declined 10 basis points to 2.14%. 
Europe
Most stock indices declined Friday. The markets were up in early trade, after comments made by ECB President Mario Draghi. However, they reversed after a late session sell-off in European bonds. Disappointing US economic data also contributed to the afternoon weakness. The FTSE lost 0.2%, the CAC was down 0.7% and the DAX retreated 1.0%. The SMI however, gained 0.7%. For the week, the FTSE lost 1.2%, the CAC dropped 1.9% and the DAX declined 2.2%. The SMI edged up 0.2%.
European Central Bank President Mario Draghi said in a speech in Washington on Thursday that the stimulus efforts would remain in place until inflation picks up and companies and consumers gain confidence. Draghi reiterated commitment to “implement in full” the bank’s massive bond buying program, saying that the monetary stimulus will continue as long as it is needed.
Automakers including Volkswagen, BMW, Daimler, Renault and Peugeot declined. Commerzbank and Deutsche Bank also were down. RWE and E.ON retreated as did Technip and Total. In London, SABMiller gained after the brewer announced the acquisition of Meantime Brewing Company. Roche climbed after a study showed that the company’s investigational immunotherapy MPDL3280A doubled the likelihood of survival compared with chemotherapy in people with a specific type of lung cancer. Anglo American, Glencore and Fresnillo declined.
Asia Pacific
Stocks in this region were mixed Friday but still ended the week solidly higher as mixed signals on the US economy served to push back expectations of the first Fed interest rate increase since 2006. Some calm returned to global bond markets and ECB President Mario Draghi reiterated his pledge to keep economic stimulus policies in place “as long as needed” to stabilize prices, helping to limit the downside in the markets.
The Chinese market came under selling pressure as worries over an impending withdrawal of liquidity and concerns about slowing growth encouraged traders to lock in some profits at higher levels after recent sharp gains. The Shanghai Composite dropped 1.6% while the Hang Seng added 2.0%. On the week, the indices were up 2.4% and 0.9% respectively. Sentiment was also dampened after the People’s Bank of China played down market expectations that it would inject liquidity into the banking system under a program that lets commercial banks secure loans with local government debt.
The Nikkei added 0.8% (and 1.8% on the week) on optimism about increased shareholder returns and in the wake of advances in US and European markets during the Thursday market day. Dentsu soared after announcing a share buyback and raising its dividend payout forecast. Marui Group climbed after it announced a share buyback. Nikon tumbled after the camera maker slashed its operating profit target and said it expects to halve the annual dividend. Sharp slumped — the struggling electronics maker said it had secured a ¥225 billion bailout from banks in return for a massive restructuring that will see the company reducing its global workforce by 10%. Honda Motor edged down after saying that it had recalled an additional 4.89 million vehicles around the world due to faulty air bags from Takata. Nintendo gained after the company said it is bringing back the ‘Nintendo World Championships’ after a 25-year hiatus.
Both the S&P/ASX and All Ordinaries added 0.7%. Westpac ended little changed and NAB declined on going ex-dividend while ANZ and Commonwealth advanced. Macquarie Group closed higher. A consortium headed by Macquarie Infrastructure and Real Assets has agreed to buy the wireless communications infrastructure business of Crown Castle Australia for A$2 billion. Miners were mixed. On the week, the indices were up 1.8 percent and 1.7 percent respectively.
The Kospi was down 0.7% Friday but added 1.0% on the week. The Bank of Korea kept its policy interest rate at 1.75% for a second month. The Sensex was up 0.4% on the day and 0.8% on the week. India and China signed 24 deals worth over US$10 billion in key sectors, including in railways and education and agreed to work together for peaceful, cooperative and common development.
 
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*
Monday ─ Japan posts March machine orders and Tertiary index. Italy releases March merchandise trade data. In the US, May housing market index will be posted.
Tuesday ─ The Bank of Australia publishes minutes from its policy meeting held earlier this month. The UK releases April consumer and producer price indices. The Eurozone reports final harmonized index of consumer prices for April and March merchandise trade balance. Germany posts May ZEW survey. In the US, April housing starts are on tap.
Wednesday ─ Japan posts its first estimate of first quarter gross domestic product. Germany releases April producer prices. In the US, the Federal Reserve publishes minutes of its most recent FOMC meeting.
Thursday ─ May flash PMIs will be released for China, Japan, Eurozone, France, Germany and the US. The UK posts April retail sales and May CBI industrial trends. The European Central Bank publishes minutes from its recent meeting. In the US, the May Philadelphia Fed and Kansas City Fed indices, April existing home sales and leading indicator index and weekly jobless claims, money supply and Fed balance sheet will be released.
Friday ─ The Bank of Japan announces its monetary policy decision. Germany Ifo survey for May will be posted. In the US, April consumer price index will be reported.
*Note — all releases are listed in local time.