On 02 June, 2015 – Global markets declined on fears of an interest rate rise in the US

Stocks were mostly lower Tuesday as investors continued to watch the Greek situation unfold. Some positive US data sent Asian markets into reverse on fears that the US Federal Reserve will increase interest rates. 
United States
Stocks slipped Tuesday as a jump in bond yields weighed on utilities. However gains in energy shares and optimism that Greece may be close to a deal with its creditors limited losses. The Dow Jones industrials lost 0.2% while the S&P and Nasdaq retreated 0.1%. News that Greece’s creditors are close to finishing a draft agreement to send to the Greek government helped push the US dollar to its biggest one day loss against the euro since mid-March.
General Motors advanced after it forecast industry US sales to finish May at the strongest pace since January 2006. Macy’s gained after Reuters reported that several hedge funds have asked the US department store company to consider options for its real estate, including selling some major sites and then leasing them back. PVH, the company behind Calvin Klein and Tommy Hilfiger, jumped after the company reported earnings that beat the expectations.
Factory orders tumbled 0.4% in April, a sign that manufacturers are struggling with the strong dollar. It was the eighth decline in nine months.
A day after an emergency meeting of Greece’s international creditors, the country submitted a proposal it hopes will seal a deal to secure funds from its lenders. Prime Minister Alexis Tsipras said it was now up to Europe’s leaders to accept a deal or risk potentially disastrous consequences for the region. For four months, Greece and its creditors have been locked in a standoff over what reforms the country needs to make to get more loans.
Gold at the afternoon London fixing was down US$7.10 to US$1,192.80. Copper futures were up 0.6% to US$2.74. WTI spot crude was up US$1.12 to US$61.32. Dated Brent spot crude was up 72 US cents to US$65.60. The US dollar was down against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The dollar Index dropped 1.9%. The yield on US Treasury 30 year bond was up 9 basis points to 3.02% while the yield on the 10 year note added 8 basis points to 2.26%.
Europe
European markets mostly were lower Tuesday. The situation in Greece remained in focus as the country approaches its debt repayment deadline of June 5th. The FTSE and CAC each were down 0.4% while the DAX and SMI lost 0.9% and 0.7%, respectively.
Concerns over the situation in Greece continued to weigh on investor sentiment. Greece is approaching its debt-repayment deadline of June 5 and is running out of time to reach a deal with its international creditors. Investors will be watching for further developments at Wednesday’s European Central Bank meeting.
Merck, Fresenius and Fresenius Medical Care were down. Auto makers Daimler, Volkswagen and BMW retreated. However, both Deutsche Bank and Commerzbank gained. Pernod-Ricard, which held its Capital Markets Day, declined. LVMH gained on a broker upgrade. In Paris, Crédit Agricole, BNP Paribas and Société Générale were up on the day. Technip and Total gained. British American Tobacco declined after a Canadian court ordered three Canadian tobacco manufacturers, including British American, to pay a total of C$15.6 billion in damages to resolve two Canadian class action lawsuits brought on behalf of two smoker groups. Wolseley climbed after reporting increased trading profit and revenue for the third quarter. Miners including Anglo American, Antofagasta, Rio Tinto and Glencore advanced.
Inflation returned to the Eurozone — the harmonized index of consumer prices increased for the first time in six months in May. The HICP was up 0.3% on the year. This was the first annual increase since last November and also the fastest since October 2014 when prices rose 0.4%. Germany’s unemployment rate was 4.7% for a second month in April.
Asia Pacific
Asian stocks fell broadly Tuesday as upbeat data on US manufacturing activity and construction spending reignited interest rate increase worries ahead of the release of US non-farm payroll data Friday and the next Federal Reserve meeting scheduled for June 16 and 17. Investors also digested decisions from the Reserve Banks of Australia and India.
The Nikkei slipped 0.1% after 12 straight days of gains even as the yen fell to a new 12-year low of Y125 against the dollar on speculation the Federal Reserve will raise interest rates later this year. Sumitomo Mitsui Trust Holdings, Daiwa Securities, Advantest, Mizuho Financial Group and Bridgestone retreated while J Front Retailing and NTT DOCOMO climbed. Utility stocks including Chubu Electric Power and Tokyo Electric Power rallied.
The S&P/ASX dropped 1.7% and the All Ordinaries declined 1.6%. Banks retreated after the Reserve Bank of Australia left the official cash rate on hold, as widely expected by economists, after lowering it by 25 basis points to 2.0% last month. BHP Billiton and Rio Tinto dropped. The big four banks retreated. In the energy sector, Woodside Petroleum, Santos and Oil Search also were down. Retail Food Group declined after reaffirming its outlook for full-year net profit. Telstra declined as it apologized for an outage that left thousands of NSW mobile phone customers unable to send or receive calls.
The Shanghai Composite however, was up 1.7% as investors shrugged off earlier fears of a deepening correction. The Hang Seng however, dropped 0.5% despite the strong gains on the Mainland. The Kospi lost 1.1% as renewed weakness in the yen battered automakers and an outbreak of Middle East Respiratory Syndrome (MERS) in South Korea that has affected 25 people in two weeks sent travel stocks lower. The Sensex tumbled 2.4% as worries about how Fed rate increases might affect capital flows overshadowed the Reserve Bank of India’s 25 basis point rate cut to 7.25%. It was the RBI’s third rate cut since the beginning of the year. Weak core sector output data, worries that rainfall will be deficient this year and the rupee’s weakness coming in the wake of a batch of largely upbeat US data released overnight also kept investors on edge.
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*
Australia posts first quarter gross domestic product. May composite PMIs will be released for China, Japan, India, Eurozone, France and Germany. Services PMIs will be reported for the UK and US. In the Eurozone, April unemployment and retail sales will be released. The European Central Bank publishes its monetary policy decision. Both the US and Canada report their respective international trade balances for April. In the US, May nonmanufacturing ISM will be posted and ADP reports its estimate of May private employment. The Federal Reserve publishes its Beige Book in preparation for its FOMC meeting to be held on June 16 and 17.
*Note — all releases are listed in local time.