On 12 May, 2016 – Global stock mixed

Earnings are still the focus as the season winds down.
United States
US markets erased earlier gains Thursday after a surprising increase in the number of unemployed Americans. Technology and health care stocks took the largest losses. The Dow Jones industrials were up 0.1 percent, the S&P was virtually unchanged (down 0.35 point) and the Nasdaq retreated 0.5 percent.
Retailers received more bad news as the department store Kohl’s reported disappointing first quarter results. Kohl’s said its sales dropped and its income was weighed down by high costs. The company’s results suffered as it discounted some items to clear out inventory. Phone companies, chemicals makers and consumer stocks advanced. Monsanto jumped on reports the agribusiness giant may be acquired. It was reported that the German chemical and pharmaceutical company Bayer might make an offer for Monsanto. There has been a wave of consolidation in the chemicals industry with DuPont and Dow Chemical agreeing to combine last year and ChemChina agreeing to buy Syngenta of Switzerland in March.
Consumer companies Kraft Heinz was up and Coca-Cola gained. Infoblox surged after a report that a private equity firm had offered to buy it. Apple tumbled to its lowest price in almost two years. The hamburger chain Jack in the Box reported strong results including better sales at its Qdoba Mexican restaurants. The payment card company the CPI Card Group reported disappointing results as shipments of chip-enabled cards were lower than expected. The company said the market was struggling in the United States. It cut its guidance because credit card companies were not buying and issuing as many of the cards as expected.
Jobless claims applications for unemployment benefits rose last week to the highest level since February 2015. Applications rose by 20,000 to 294,000. Despite the increase, they have remained below 300,000 for more than a year. Analysts blamed the increase in part on the strike at Verizon.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.40 to US$1,279.25. Copper futures were down 1.4 percent to US$2.07. WTI spot crude was up 24 US cents to US$46.47. Dated Brent spot crude was up 31 US cents to US$47.91. The US dollar was up against the yen, euro, and the Australian dollar. However, it declined against the pound and was virtually unchanged against the Swiss franc. The Dollar Index was up 0.4 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 2 basis points to 2.60 percent and 1.75 percent respectively.
Europe
All the major stock indices tumbled Thursday thanks to earnings reports and weak economic data. The FTSE lost 0.9 percent, the CAC was down 0.5 percent, the DAX retreated 1.1 percent and the SMI was 0.7 percent lower.
As anticipated, the Bank of England kept its policy interest rate at 0.5 percent where it has been since March 2009. The BoE downgraded its growth projections on heightened uncertainty over the Brexit referendum. The Bank cautioned that any decision to exit the EU would lead to a materially lower growth path and a notably higher path for inflation.
Vivendi was higher in Paris after reporting first-quarter results in line with expectations. Crédit Agricole was down after its first quarter net income fell 71 percent, hit by weakness in investment banking and retail operations. RWE advanced after the utility affirmed its FY16 outlook after a satisfactory first quarter. SMA Solar Technology gave back early gains. The solar energy equipment supplier reported EBITDA of €42.1 million for the first quarter of 2016, up from €13.4 million in the year-ago period.
Zurich Insurance gained after it reported a smaller than expected drop in first-quarter profit, helped by improvements in its flagship general insurance business. Italian insurer Generali Group fell after its first quarter net profit dropped 13.8 percent from last year. Dutch insurance firm Aegon tumbled after its first quarter earnings fell short of expectations. Mining companies including Anglo American, Antofagasta, BHP Billiton, Rio Tinto and Glencore were lower. Companies trading ex-dividend including Centrica, Sainsbury’s, GlaxoSmithKline and Morrisons all declined. Caterer Compass Group rallied on brokers’ upgrades.
Asia Pacific
Share indices were mixed in Asia Thursday. While a weaker yen helped Japanese shares end higher for the fourth day, weak earnings reports from US retailers weighed on investor sentiment.
The Shanghai Composite was virtually unchanged (down 1.18 points) after recouping early losses after an article posted on the transport ministry’s website revealed the government plans to invest around 4.7 trillion yuan in transport infrastructure projects over the next three years. Shares fell sharply earlier in the day after commentary in the official People’s Daily said there is no need to stimulate growth by excessive credit expansion and loose monetary policies. The Hang Seng was 0.7 percent lower as investors waited for the latest Chinese data to be released over the next few days.
The Nikkei was up 0.4 percent as the yen weakened slightly and official data showed Japan posted a current account surplus of ¥2.980 trillion in March, the largest monthly surplus in nine years thanks to an improved trade balance and strong returns from overseas investments. The yen fell against the US dollar on speculation that the BoJ may expand its monetary stimulus program as soon as next month. Mitsubishi Motors rallied on a Nikkei report that Nissan Motor would buy a 30 percent stake in the scandal-hit firm for about ¥200 billion. Nissan Motor shares retreated. Takata jumped on saying it expects a return to profit for the fiscal year through March 2017. Toyota Motor after warning its profits would fall sharply in the fiscal year 2017 ending next March. Casio Computer tumbled after it forecast operating profit below analysts’ estimates.
Both the S&P/ASX and All Ordinaries retreated 0.2 percent after the Melbourne Institute showed that weakening consumer inflationary expectations added to speculation the Reserve Bank could be forced to cut interest rates to 1 percent from its current rate of 1.75 percent. Westpac shares were down on going ex-dividend. ANZ slid while Commonwealth and NAB. AMP slumped after reporting an almost 40 percent drop in cash flows during the first quarter at its Australian wealth management unit. Miners were mixed.
The Kospi slipped 0.1 percent prior to the Bank of Korea’s policy meeting on Friday. The Sensex added 0.8 percent. Banks advanced after the Rajya Sabha (Council of States is the upper house of the Parliament of India) passed the country’s first national bankruptcy law, a vital reform that can help improve doing business in India and ensure timely resolution of financial distress of companies.
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*
Germany, Italy and the Eurozone post flash first quarter gross domestic product. The US releases April retail sales, producer prices and preliminary consumer sentiment. March business inventories will also be reported. Over the weekend, China April industrial production and retail sales will be reported.
*Note — all releases are listed in local time.

Source: Fidelity

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