On 26 May, 2016 – Investors display caution

Most stock indices advanced modestly with remarks by Fed Chair Janet Yellen looming late Friday US EDT.
United States
Stocks hovered around the no change mark Thursday with the S&P virtually unchanged (down 0.44 point), the Dow Jones industrials down 0.1 percent while the Nasdaq added 0.1 percent. Chemical companies retreated while retailers advanced on some strong earnings reports. Investors are waiting to hear Federal Reserve Chair Janet L. Yellen’s remarks at Harvard Friday afternoon.
Monsanto, which had risen on talks about a potential sale to Bayer, was down. Dow Chemical also retreated. Citigroup and Citizens Financial stock declined. Sears rose after the company said it was looking at options for its Kenmore, Craftsman, DieHard and Sears Home Services businesses. Dollar Tree gained after it raised its forecasts for the year. PVH was up after the owner of the Calvin Klein and Tommy Hilfiger brands raised its profit forecast for the year after it reported strong quarterly results. PVH also said the strong dollar would not hurt its results quite as much as it had expected. Costco rose after the company posted its quarterly report. Personal computer and printer maker HP was up after it reported a bigger profit than expected and it gave a solid outlook for the year. Signet Jewelers declined after the company posted weaker than expected sales and lowered its projections for sales at older stores.
First time unemployment claims declined for the second straight week in the week. Jobless claims were down 10,000 to 268,000. April durable goods orders surged 3.4 percent after climbing an upwardly revised 1.9 percent in March. April pending home sales jumped 5.1 percent. The South and West recorded sharp increases.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.25 to US$1,223.85. Copper futures were down 0.1 percent to US$2.10. WTI spot crude was down 25 US cents to US$49.31. Dated Brent spot crude was down 34 US cents to US$49.40. The US dollar was down against the euro, yen, Swiss franc and the Canadian and Australian dollars. However, it advanced against the pound. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.64 percent while the yield on the 10 year note was down 4 basis points to 1.83 percent.
Europe
Most stock indices advanced modestly after two days of robust gains. Trading action was choppy as markets fluctuated between gains and losses. The FTSE was virtually unchanged (up 2.80 points) while the CAC and DAX each added 0.7 percent and the SMI was 0.8 percent higher.
ThyssenKrupp and Salzgitter climbed. Automakers including BMW, Daimler, Volkswagen, Renault and Peugeot advanced. AXA Group finished higher after the insurer said it would sell all its equity holdings in tobacco immediately, representing just over €180 million. In London, food ingredients maker Tate & Lyle gained after reporting a rise in fiscal 2016 pretax profit. Water utility United Utilities Group was lower after reporting a substantial drop in full-year underlying profits.
Daily Mail and General Trust tumbled. The company reported a decline in first-half profit and warned that a weak print advertising market will squeeze margins in the media business. Telecom Italia climbed in Milan after its shareholders voted in favor of a special award plan for its CEO and other top managers. Banco Popular plunged in Madrid on worries over earnings after the bank announced plans to raise up to €2.5 billion through a share issue to strengthen its balance sheet. This dampened sentiment towards other banks. Standard Chartered, Lloyds and Royal Bank of Scotland declined.
The second estimate of UK first quarter gross domestic product was up 0.4 percent on the quarter and was up 2.0 percent from the same quarter a year ago. A second estimate of Spanish first quarter GDP was up 0.8 percent on the quarter and 3.4 percent on the year.
Asia Pacific
Stocks were mixed in choppy trading Thursday. Gains in oil prices along with rallies in Europe and the US tended to outweigh concerns about a slowdown in Chinese growth and prospects of higher interest rates in the US. The yen spiked on the eve of G7 summit talks being held this year in Japan. Investors were cautious prior to Fed Chair Janet Yellen’s speech after markets here were closed for the week.
The Shanghai Composite managed to increase 0.3 percent after retreating earlier in the session on growing worries that the economy is losing momentum. The Hang Seng inched up 0.1 percent. The combined profits of China’s non-financial state-owned enterprises declined 8.4 percent in the first four months of this year from a year ago.
The Nikkei edged up 0.1 percent. Automakers Toyota, Honda, Suzuki Motor and Mitsubishi Motors advanced. Energy explorer Inpex, JX Holdings and Japan Petroleum climbed after oil extended overnight gains to hit the $50-a-barrel mark for the first time since early November. Takata soared after the Nikkei said US private equity group KKR wants to take control of the car parts maker. SoftBank declined after the company disclosed in a regulatory filing that it is being investigated by US regulators over whether its accounting practices had violated federal securities laws.
Both the S&P/ASX and All Ordinaries added 0.3 percent. Investors shrugged off sluggish CAPEX data, which showed that Australian business investment declined by a more than forecast 5.2 percent in the March quarter. Miners advanced. Wesfarmers tumbled on concerns the retailer may slash its dividends in the coming months. Woolworths also declined.
The Kospi retreated 0.2 percent after South Korean consumer sentiment dipped slightly to hit a three-month low in May. The Sensex jumped 1.9 percent as expectations of a good monsoon and the government’s decision to approve the first-ever policy for the capital goods sector to boost the manufacturing sector in the country.
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 April consumer price index. The US releases second estimate of first quarter gross domestic product and first quarter corporate profits. May final consumer sentiment will be reported. Weekly Baker-Hughes rig count will be released. Markets in the US (Memorial Day) and the UK (Spring Banking Holiday) will be closed on Monday, May 30.

Source: Fidelity

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