On 19 May, 2015 – European markets rallied on European Central Bank’s bond comments

Stocks in the Asia Pacific were mixed while those in Europe rallied. US shares drifted after the Dow and S&P achieved records the day before.
United States
Stocks drifted ending the day little changed after the Dow Jones industrials and S&P closed at record highs Monday. The Dow edged up 0.1% while the S&P retreated 0.1%. Nasdaq declined 0.2%.
Builders started work on new houses at the fastest pace in seven years. April housing starts jumped 20.2% to an annual rate of 1.14 million homes, the fastest clip since November 2007. The housing report helped lift shares in D.R. Horton, PulteGroup and other builders. Some investors interpreted that as a promising sign that the slow economy may be gaining steam instead of as a reason for the Federal Reserve to raise interest rates sooner than expected.
Before the market opened, Walmart reported sluggish sales and a drop in quarterly earnings as raises for workers and a rising dollar put pressure on its profits. Wal-Mart’s stock declined on the news. Take-Two Interactive, the company behind the Grand Theft Auto video games, surged after posting earnings that beat estimates. TJX raised its annual guidance and reported that earnings rose 4.5% on better than expected sales and improved margins during the quarter ended in April.
Gold at the afternoon London fixing declined US$9.20 to US$1,214.30. Copper futures were down 2.6% to US$2.83. WTI spot crude was down US$2.17 to US$57.26. Dated Brent spot crude was down US$2.08 to US$64.19. The US dollar rallied Tuesday and was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 1.5%. The yield on US Treasury 30 year bond was up 6 basis points to 3.08% while the yield on the 10 year note added 7 basis points to 2.29%. 
Europe
Stocks advanced Tuesday. The rally was sparked by comments from Benoît Cœuré, who said the ECB would moderately frontload its purchase activity in May and June.
ECB executive board member Benoît Cœuré said at a conference Monday, “…we are also aware of seasonal patterns in fixed-income market activity with the traditional holiday period from mid-July to August characterized by notably lower market liquidity. The Eurosystem is taking this into account in the implementation of its expanded asset purchase programme by moderately frontloading its purchase activity in May and June, which will allow us to maintain our monthly average of €60 billion, while having to buy less in the holiday period.” ECB governing council member Christian Noyer also suggested that the ECB may extend quantitative easing if necessary.
Merck declined after the drug-maker reported a lower profit for the first quarter. Vinci gained on a broker upgrade. Vodafone was down after reporting full-year results. Land Securities advanced — the real estate investment trust reported a surge in annual profit before tax. However, mining stocks were weak after Fitch commented that it believes iron ore prices will remain low for several years. Rio Tinto, BHP Billiton, Glencore and Anglo American retreated.
Europe’s car sales increased for the 20th consecutive month in April, albeit at a slower pace, to log the strongest outcome since 2009, data from the European Automobile Manufacturers Association showed Tuesday. All major markets contributed to growth during the month. Demand for new passenger cars grew 6.9% on the year in April, which was slower than the 10.6% increase in the preceding month. Automakers Volkswagen, Daimler and BMW gained on the news as did Renault and Peugeot.
German economic sentiment declined to a five month low in May, as lackluster first quarter growth weighed on the economic outlook according to the Mannheim-based Centre for European Economic Research, or ZEW. Economic sentiment fell sharply to 41.9 from 53.3 — the lowest reading since December 2014. April final harmonized index of consumer prices was unchanged on the year. UK consumer price index was down (0.1%) on the year for the first time since 1960 on falling food and transport costs. Factory gate prices continued their downward trend reflecting lower crude prices.
Asia Pacific
Shares were mixed Tuesday. Market support stemmed from the new record closing highs of the US Dow and S&P. Expectations are growing that the Federal Reserve will refrain from raising short term interest rates this year. Chinese shares posted their biggest single day gain in four months and Japanese shares were buoyed by a weaker yen, while Australian stocks narrowed losses following the publication of the Reserve Bank of Australia’s May board meeting minutes.
The Shanghai Composite jumped 3.1% as investors welcomed Beijing’s 2015 guidelines on reform priorities this year. Announcing a range of new pro-growth measures, the State Council, China’s cabinet, late on Monday vowed to cut red tape, streamline administration and promote the yuan’s convertibility under the capital account to stimulate the market and seek new growth potential. The Hang Seng increased 0.4%.
The Nikkei added 0.7% and in the process lifted the index above 20,000 for the first time in nearly three weeks. A weaker yen and the record close in the US propelled the index upward. Panasonic was up after it announced that it would expand its solar cell and module production lines at its two domestic plants. ANA Holdings closed higher on a Nikkei report that the Development Bank of Japan and Sumitomo Mitsui Banking are partnering with ANA to buy a combined 33.4% stake in the rehabilitation of budget carrier Skymark Airlines. Fast Retailing and Fanuc advanced while SoftBank retreated. Banks ended mixed after rising sharply the day before.
The S&P/ASX slid 0.8% and the All Ordinaries was 0.7% lower as weakness in iron ore prices weighed on mining stocks. Stocks pared some early losses after minutes of the Reserve Bank of Australia’s May 5 meeting showed that the Bank has left open the door to cut interest rates further if warranted. The members also felt that further depreciation of the Australian dollar is likely and essential for balanced growth, given the significant declines in commodity prices.
The Kospi added 0.3% as caution prevailed ahead of the Federal Open Market Committee’s (FOMC) April meeting minutes slated for release on Wednesday. The Sensex ended 0.2% lower in choppy trading as traders took profits after two days of gains.
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*
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.
*Note — all releases are listed in local time.