On 07 March, 2016 – Global stocks mixed

After formidable gains last week, shares took a breather on Monday. 

United States

Stocks were mixed Monday after fluctuating in a relatively narrow range despite the jump in the price of crude oil and natural gas. The Dow Jones industrials were up 0.4 percent while the S&P managed to edge up 0.1 percent. Nasdaq however, retreated 0.2 percent.

Drillers and other energy-related companies rallied. Murphy Oil soared. DuPont gained after it was reported that BASF was offering to buy the company. DuPont had agreed to merge with Dow Chemical. Chip maker Micron Technology retreated. Netflix slipped on a report its subscriber growth has slowed. Exxon Mobil increased to a four-month high. Monsanto advanced as the raw-materials group erased 2016 losses. Microsoft and Apple slipped.

Iron ore posted its biggest one-day gain on record on news over the weekend that China planned to run up its deficit to stimulate its economy. The country also lowered the official growth target this year to 6.5 to 7 percent, a 25-year low and promised more market-opening reforms.

The Bank for International Settlements — the central bank’s central bank — warned of a “gathering storm” as central banks run out of room to stimulate their respective economies. The bank’s chief economist, Claudio Borio, said investor confidence in central banks was “faltering.”

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$9.60 to US$1,267.90. Copper futures were up 0.2 percent to US$2.28. WTI spot crude was up US$2.05 to US$37.97. Dated Brent spot crude was up US$2.07 to US$40.79. The US dollar was down against the yen, euro, pound and the Canadian and Australian dollars. However, it gained against the Swiss franc. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was up 1 basis point to 2.70 percent while the yield on the 10 year note was up 4 basis points to 1.91 percent. 

Europe

Stocks retreated Monday on profit taking and weak German manufacturing orders data. Investors were cautious before Thursday’s European Central Bank announcement. The FTSE and CAC were down 0.3 percent while the DAX lost 0.5 percent. However, the SMI added 0.5 percent.

BASF gained on a Bloomberg report that it is working with banks to make a counter bid for rival DuPont. Deutsche Börse declined on speculation that American CME and ICE, which owns the New York Stock Exchange, may step in with unsolicited offers for LSE. Automakers Volkswagen, BMW Daimler finished lower on the day. EDF retreated after its Finance Director Thomas Piquemal resigned ahead of an expected final investment decision next month on the Hinkley Point nuclear reactor project in the UK. Accor weakened on a broker downgrade.

Old Mutual jumped after the insurance giant said it is considering all options for strategic review but no decision has yet been made. InterContinental Hotels Group declined on a broker downgrade as did Randgold Resources. Clarkson declined after the shipping services group reported higher profit and revenue in 2015, but warned it doesn't anticipate any changes across the global shipping markets in the near term. Glencore, Anglo American and Rio Tinto advanced. Wealth manager St. James's Place and Standard Life rallied after British finance minister George Osborne dropped plans for a pensions overhaul. Banca Monte dei Paschi di Siena and Banco Popolare were down on concern over their bad loans.

Germany's factory orders dropped for the second straight month in January, reflecting weak domestic demand. Orders slipped 0.1 percent on the month following a revised 0.2 percent drop in December.

Asia Pacific

Asian shares were mixed Monday. China announced new economic targets at the country's parliamentary meeting held over the weekend and a robust February US jobs report suggested that fears of recession were overdone.

The Shanghai Composite added 0.8 percent after China's top economic planner said the economy continues to be a source of demand and vitality. China budgeted a moderate increase in the 2016 deficit to 3 percent of GDP while lowering its GDP target to 6.5 percent to 7 percent this year. Premier Li Keqiang said the country is aiming for average economic growth of at least 6.5 percent over the next five years while pushing hard to create more jobs and restructure inefficient industries. The Hang Seng reversed early gains to end 0.1 percent lower.

The Nikkei retreated 0.6 percent. The yen strengthened against the dollar as BoJ Governor Haruhiko Kuroda once again dispelled speculation on immediate policy easing. Exporters Canon, Nikon and Toyota Motor were lower as were Inpex and JX Holdings. Sharp Corp soared on a Nikkei report that Taiwan's Hon Hai Precision Industry will sign an agreement to acquire the embattled electronics maker, the earliest by Wednesday. Toshiba, which is seeking additional loans for its restructuring efforts, also climbed.

Both the S&P/ASX and All Ordinaries added 1.0 percent. Investors shrugged off the results of a survey which showed that activity in Australia's construction sector contracted at a faster pace in February. A gauge of job advertisements in newspapers and on the internet also fell to the lowest level in four months, indicating a slowdown in hiring. BHP Billiton, Rio Tinto and Fortescue Metals Group advanced after iron ore prices jumped 5 percent on Friday. The big four banks rose along with Woodside Petroleum, Oil Search and Origin Energy.

The Kospi edged up 0.1 percent as profit taking after recent gains tempered investor optimism. The Sensex was closed for a holiday.

Global Stock Markets

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 second estimate of fourth quarter growth. Germany reports January industrial production. France releases January merchandise trade. The Eurozone releases a revised estimate of gross domestic product. In the US, February NFIB will be reported.