On 14 March, 2016 – Waiting for the central banks
Most shares advanced Monday with little economic data to help decision making.
United States
Shares were mixed Monday as lower oil and gas prices dragged down energy companies. But stocks of hotels and other travel related companies advanced after a consortium led by China’s Anbang Insurance Group offered to buy Starwood Hotels. The Dow Jones industrials were up 0.1 percent, the S&P slipped 0.1 percent and the Nasdaq was virtually unchanged.
Energy was by far the biggest declining sector in the S&P. Oil and natural gas prices slumped after Iran’s oil minister dismissed the idea of a freeze in production over the weekend, saying Iran would keep increasing production until it reached four million barrels a day. Southwestern Energy and Chesapeake Energy retreated. Financial stocks also tumbled.
Starwood Hotels rose after the Anbang Insurance consortium offered to buy the hotel chain for $14 billion. Last year Marriott International agreed to buy Starwood for $12.2 billion. Starwood said it would examine the offer. Anbang bought New York’s Waldorf Astoria for almost $2 billion in 2014 and on Saturday it agreed to buy Strategic Hotels & Resorts for $6.5 billion. Marriott’s stock rose. It will get a $400 million payment if Starwood backs out of their agreement. Shares of other travel related companies also advanced. TripAdvisor shares and Host Hotels & Resorts advanced. Shares of the drug developer GW Pharmaceuticals more than doubled after the company reported positive results from a late-stage study of its drug Epidiolex, an experimental seizure disorder treatment derived from a marijuana extract.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$22.00 to US$1,242.75. Copper futures were virtually unchanged at US$2.24. WTI spot crude was down US$1.23 to US$37.27. Dated Brent spot crude was down 82 US cents to US$39.57. The US dollar was up against all of its counterparts including the euro, pound, yen, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was down 1 basis point to 2.74 percent while the yield on the 10 year note was also down 1 basis point to 1.97 percent.
Europe
Stocks advanced Monday but investors remained risk shy prior to several important central bank meetings and policy announcements — the Banks of Japan and England along with the Federal Reserve. Economic data were on the light side keeping some investors on the sidelines. The FTSE was up 0.6 percent, the CAC gained 0.3 percent, the DAX added 1.6 percent and the SMI was 0.2 percent higher.
E.ON and RWE advanced. Volkswagen, BMW and Daimler finished higher as did Peugeot and Renault. In Paris, Vivendi gained after the company raised its stake in Italian telecom giant Telecom Italia group to 24.9 percent. Safran dropped after it announced that it is reviewing its remaining security businesses, as it attempts to sell its airport explosives detection business. In London, utility SSE gained after it agreed to sell a 49.9 percent stake in the 349.6MW Clyde Wind Farm for £355 million. Mining stocks were solid despite some underwhelming Chinese data. Anglo American, Glencore and Antofagasta gained were up.
January Eurozone industrial production rebounded at the fastest pace in more than six years. Industrial production grew 2.1 percent on the month, partly reversing a revised 0.5 percent fall in December.
Asia Pacific
Asian shares rallied Monday thanks to firmer oil prices and solid gains Friday helped investors shrug off disappointing data from China. Even though policies are expected to remain the same, investors were being cautious ahead of the Bank of Japan and FOMC meeting announcements.
The Shanghai Composite rose 1.8 percent as investors digested mixed economic data and securities regulator Liu Shiyu told reporters that a shift toward a registration system for initial public offerings would be launched only when market conditions and the legal environment are appropriate. The Hang Seng added 1.2 percent. In data released over the weekend, January/February industrial production was up a less than anticipated 5.4 percent from a year ago while retail sales, also for the two months gained 10.2 percent.
The Nikkei added 1.7 percent thanks to firmer oil prices and positive core machinery orders data buoying sentiment. Core machinery orders in Japan surged 15.0 percent in January from the previous month and were up 13.3 percent from a year ago. Mitsubishi UFJ financial, Mitsui Fudosan and Sumitomo Realty advanced.
The S&P/ASX was up 0.4 percent while the All Ordinaries added 0.3 percent. Santos and Origin Energy gained as oil prices were virtually stabile in Asia. The big four banks rose while miners were mixed. Telecom major Telstra advanced. Flight Centre Travel Group was up after announcing the acquisition of a Dutch corporate travel agency.
The Kospi was virtually unchanged. The Sensex added 0.3 percent as investors here waited for CPI data due out later in the day after the wholesale price index inflation for February declined 0.91 percent.
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*
The Bank of Japan announces its monetary policy decision. The Reserve Bank of Australia publishes the minutes of its last policy meeting. France and Italy post February CPIs. In the US, February retail sales and producer price indices are released. January business inventories are posted.
*Note — all releases are listed in local time.
Source: Fidelity
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