On 18 June, 2015 – Most European markets rose on the strong rally in US equities

Stocks were mixed globally as attention returned to Greece after yesterday’s diversion to the US Federal Reserve’s monetary policy meeting. Shares in the Asia Pacific and Europe reacted to the Fed’s decision on Thursday — they were already closed for the day at the time of the announcement.
United States
Stock markets were up sharply Thursday with the Nasdaq setting a new record high. The rally came a day after the Federal Reserve suggested that it wasn’t planning to raise interest rates right away. Investors were also focusing on the latest corporate deal and earnings news. The Dow Jones industrials and S&P both added 1.0% while Nasdaq was 1.3% higher. The Nasdaq’s climb was fueled by gains in the biotechnology sector.
The broad gains in stocks came one session after the Fed said job growth was firming but not by a great deal and that it would take an even more measured approach to rate increases. Although the Fed concluded its meeting Wednesday, traders said the Bank’s comments continued to lure stock buyers for a second session.
Harley Davidson was among the biggest gainers on a broker upgrade following the announcement of a big stock buyback plan. Fitbit surged in the first day of trading. Oracle sank after the software company reported earnings that fell short of expectations. Oracle said that the stronger dollar continued to hurt its earnings. Bankrate declined after the financial content company reported disappointing first quarter financial results and weaker than expected fiscal outlook. Kroger advanced after the supermarket chain posted better than expected earnings in the first quarter and lifted a key sales target for the year.
Weekly jobless claims dropped 12,000 to 267,000 and near 15 year lows. May consumer prices remained benign.
In Europe, Greece and its international lenders continued to be deadlocked in bailout talks. Greece needs more loans from its creditors before June 30, when its current bailout program expires and a €1.6 billion debt repayment is due. Greece and its creditors blame one another for the impasse in the talks.
Gold at the afternoon London fixing was up US$23.85 to US$1,201.85. Copper futures were up 0.1% to US$2.61. WTI spot crude was up 24 US cents to US$60.38. Dated Brent spot crude was up 29 US cents to US$64.16. The US dollar was down against the euro, yen, pound, Swiss franc and the Australian dollar. It was virtually unchanged against the Canadian dollar. The Dollar Index declined 0.4%. The yield on US Treasury 30 year bond was up 3 basis points to 3.12% while the yield on the 10 year note added 2 basis points to 2.33%.
Europe
Stocks were mixed Thursday as traders continued to be concerned over the situation in Greece. Eurozone finance ministers were meeting in Luxemburg to discuss the situation. The markets managed to rebound and turn positive in the afternoon, thanks to the strong rally in US stock markets. The FTSE was up 6.4%, the DAX added 1.1% and the CAC advanced 0.3%. However, the SMI retreated 0.3%.
The Federal Reserve offered no explicit guidance indicating that it will soon raise interest rates. Many market watchers thought the Fed would lay further groundwork for a rate increase as soon as September, but policy makers remain reluctant to tip their hand even though economic activity seems to be picking up after a second consecutive rough winter. The central bank’s forecasts reinforced the view that the eventual increase in rates will be gradual. Tame consumer price inflation data also generated some optimism about the outlook for rates in light of the Fed’s insistence that it will be data dependent.
The Swiss National Bank left its key interest rates unchanged in the negative zone and asserted its intention to remain active in the currency market to weaken the franc. The interest rate on deposits at the SNB was maintained at minus 0.75% and the target range for the three month LIBOR between minus 1.25% and minus 0.25%. Negative interest rates make holding investments in the Swiss franc less attractive and help to weaken the currency. The Executive Board of the Norges Bank lowered the key policy rate by 25 basis points to 1.0% as expected.
Bayer, Merck, Fresenius and Fresenius Medical Care gained. Commerzbank advanced but Deutsche Bank retreated. Car parts maker Valeo and auto makers Renault and Peugeot declined. Technip and Total were down. Severn Trent was down after it began trading on an ex-dividend basis. Mining stocks were among the best performing stocks due to a surge in gold prices. Anglo American and Randgold Resources climbed as did BHP Billiton and Fresnillo.
Eurozone’s labor costs grew sharply in the first quarter at the fastest pace in more than three years. UK retail sales increased in May as low inflation and strong pay growth underpinned consumer spending.
Asia Pacific
Stocks were mostly lower Thursday thanks to lower commodity prices, the Federal Reserve’s downbeat tone on the US economy and lingering concerns that Greece might be edging closer to a debt default.
The Shanghai Composite dropped 3.7% as worries over a fresh spate of new share listings and valuation concerns sapped investors’ appetite for risk. The Hang Seng slipped 0.2%. China attracted US$9.33 billion worth of foreign direct investment in May, up 7.8% from a year earlier but slightly lower than the 8% growth expected. Another report showed that nationwide home prices were down 5.7% in May on the year after a 6.1% drop in April.
The Nikkei lost 1.1% as the yen strengthened against the US dollar amid bets that any increases in US interest rates would be slow. The Nikkei ended below the 20,000 level for the first time since May 18. Mitsubishi UFJ Financial and Mizuho Financial Group retreated. The Nikkei Business Daily reported that Bank of Tokyo-Mitsubishi UFJ, a unit of Mitsubishi UFJ, will seek to raise 350 million yuan this month in the first Japanese offering of bonds denominated in the Chinese currency. Among exporters, Nikon, Hitachi, Panasonic, Toyota Motor, Honda Motor, Fanuc, Kyocera, Sharp and Mazda Motor declined.
The All Ordinaries lost 1.2% and the S&P/ASX 1.3% as lower metal and oil prices weighed on resource stocks. The big four banks closed down after sharp gains on Wednesday. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group tumbled after iron ore prices fell for the fourth straight day Wednesday amid concerns steel production will be soft through the Chinese summer. Gold miner Newcrest Mining advanced as gold extended overnight gains in Asia on a weaker dollar. The Kospi added 0.3% in response to the dovish FOMC statement that gave little clues on the timing of a US rate increase. The Sensex gained 1.1% as a dovish tone to the Fed policy statement eased fears over possible capital outflows.
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 Bank of Japan announces its monetary policy decision. Canada posts May consumer price index and April retail sales. The US releases the Atlanta Fed business inflation expectations data.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday