Most stock advanced Friday and for the week prior to remarks by Fed chair Janet Yellen.
United States
Stocks advanced Friday after first quarter gross domestic product was revised upward and Fed chair Janet Yellen said that a fed funds rate increase would be appropriate, data willing, in the next several months. Since the minutes of the April FOMC meeting were published, both the June and July meetings are now considered ‘live’ for a possible rate increase. The Dow Jones industrials were up 0.3 percent, the S&P gained 0.4 percent and the Nasdaq advanced 0.6 percent. For the week, the indices were up 2.1 percent, 2.3 percent and 3.4 percent respectively. Trading was light in advance of the three day holiday weekend. Markets will be closed in the US on Monday.
Stocks turned higher over the last few hours of trading to finish at their highest levels of the day. Banks made the largest gains, as they stand to make bigger profits on lending if interest rates rise. Phone companies were higher after Verizon reportedly agreed in principle to a new contract with striking employees. Labor Secretary Thomas Perez said Verizon and its unions had agreed in principle to a new four year contract. About 39,000 landline and cable employees in the Eastern US went on strike in April.
Bank stocks were led higher by Bank of America and Citigroup. Alphabet rose after a federal jury said the company did not need permission to use tools made by Oracle when it built its Android software. Oracle had sought $9 billion in damages, and said it planned to appeal the ruling. Machinery maker Terex dropped after Chinese heavy equipment maker Zoomlion abandoned its effort to buy the company. Zoomlion offered to buy Terex at the start of the year after Terex accepted an offer from Finland’s Konecranes. Terex backed out of that deal and will instead sell its crane business to Konecranes. Thermo Fisher said it will buy electron microscope maker FEI for $107.50 per share in cash, or about $4.2 billion. The deal comes about two months after Thermo Fisher paid $1.3 billion to buy Affymetrix, a company that makes equipment to analyze genetic codes. Violin Memory soared.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$7.60 to US$1,216.25. Copper futures were up 0.6 percent to US$2.11. WTI spot crude was down 15 US cents to US$49.33. Dated Brent spot crude was down 27 US cents to US$49.32. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.6 percent. The yield on US Treasury 30 year bond was up 1 basis point to 2.65 percent while the yield on the 10 year note was up 2 basis points to 1.85 percent.
Europe
Stocks were mostly higher Friday after fluctuating between modest gains and losses over the course of the trading day. Investors were hesitant to make major moves prior to Federal Reserve chair Janet Yellen’s remarks scheduled for after markets here were closed for the week. The FTSE and DAX each edged up 0.1 percent while the CAC was virtually unchanged (up 2.10 points). The SMI added 0.8 percent. On the week, all indices advanced.
Adidas declined after it agreed to sell Mitchell & Ness. Deutsche Bank increased while Commerzbank retreated. In Paris, Crédit Agricole, Société Générale and BNP Paribas declined. Renault declined and Peugeot closed lower. Capita dropped on a broker downgrade. Miners including Anglo American, Antofagasta, BHP Billiton, Glencore and Fresnillo declined. Roche jumped in Zurich after announcing positive results from an interim analysis of its Gazyva drug.
France’s consumer confidence unexpectedly strengthened in May to its highest level in more than fifteen years, as households were less pessimistic regarding their future financial situation and saving intentions for the next 12 months. British consumer confidence improved in May but remained pessimistic according to GfK.
Asia Pacific
Most stock indices advanced even though oil prices dipped and data showed growth in profits at Chinese industrial firms slowed in April compared to the previous month. The yen weakened against the US dollar as disappointing inflation data put additional pressure to delay a sales tax increase and deploy additional stimulus.
The Shanghai Composite was virtually unchanged (down 1.39 points) after a government report showed China’s industrial profits increased at a slower pace in April. Industrial profits increased 4.2 percent on the year, down from 11.1 percent in March. The index lost 0.2 percent on the week. The Hang Seng was up 0.9 percent on the day and 3.6 percent on the week.
The Nikkei added 0.4 percent and was up 0.6 percent for the week. April consumer prices excluding fresh food declined 0.3 percent from a year ago. Inpex and Mitsubishi UFJ Financial Group gained. Takata slumped after climbing on Thursday amid reports that private equity firm KKR is preparing to take control of the troubled airbag maker.
Both the S&P/ASX and All Ordinaries added 0.3 percent Friday. Both were up 1.0 percent for the week. Banks Commonwealth, Westpac and ANZ gained on expectations that the Reserve Bank of Australia will cut interest rates again this year. Woodside Petroleum Santos and Oil Search were up on the day. However, miners BHP Billiton and Rio Tinto dropped after iron ore prices fell overnight.
The Kospi was up 0.6 percent on the day and 1.1 percent on the week. The Sensex was up 1.1 percent Friday and 5.3 percent on the week thanks to encouraging earnings and the Cabinet’s approval of a policy aimed at boosting output of capital goods.
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*

Central Bank activities

June 1

United States

Federal Reserve Beige Book Published

June 2

Eurozone

European Central Bank Monetary Policy Announcement

The following indicators will be released this week…

Europe

May 30

Eurozone

EC Business and Consumer Sentiment (May)

France

Consumption of Manufactured Goods (April)

Gross Domestic Product (Q1.2016)

May 31

Eurozone

M3 Money Supply (April)

Harmonized Index of Consumer Prices (May flash)

Unemployment (April)

Italy

Gross Domestic Product (Q1.2016)

June 1

Eurozone

Manufacturing PMI (May)

Germany

Manufacturing PMI (May)

France

Manufacturing PMI (May)

UK

Manufacturing PMI (May)

June 2

Eurozone

Producer Price Index (April)

June 3

Eurozone

Services & Composite PMI (May)

Germany

Services & Composite PMI (May)

France

Services & Composite PMI (May)

UK

Services PMI (May)

Asia/Pacific

May 30

Japan

Retail Sales (April)

May 31

Japan

Unemployment (April)

Household Spending (April)

Industrial Production (April)

June 1

Japan

Manufacturing PMI (May)

Australia

Gross Domestic Product (Q1.2016)

China

Manufacturing PMI (May)

CFLP Manufacturing PMI (May)

India

Manufacturing PMI (May)

June 2

Australia

Retail Sales (April)

Merchandise Trade (April)

Americas

May 30

Canada

Industrial Product Price Index (April)

May 31

Canada

Gross Domestic Product (Q1.2016)

Monthly Gross Domestic Product (March)

United States

Personal Income and Spending (April)

Chicago PMI (May)

Consumer Confidence (May)

June 1

United States

Manufacturing PMI (May)

ISM Manufacturing Index (May)

Construction Spending (April)

June 2

United States

Initial Unemployment Claims (week ending prior Saturday)

June 3

Canada

International Trade (April)

United States

International Trade (April)

Employment Situation (May)

Factory Orders (April)

ISM Nonmanufacturing Index (May)

Services PMI (May)

Source: Fidelity

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