On 07 July, 2016 – Global shares mixed
European stocks rallied while those in Asia and the US were mixed as investors waited for Friday’s US employment report.
United States
United States markets were little changed Thursday even as investors sold safe assets including the utility and phone company stocks they favored after Britain’s vote to leave the European Union. Shares of energy companies fell as the price of oil plunged. Both the Dow Jones industrials and S&P slipped 0.1 percent while the Nasdaq added 0.4 percent.
Investors sold some of the safest groups of stocks. Duke Energy, Xcel Energy and AT&T retreated. Shares of chemical and other materials companies including LyondelBasell Industries, DuPont and Monsanto advanced. PepsiCo’s quarterly profit surpassed forecasts. The company said customers were buying more of its new products, including drink options marketed as healthier or “craft.” It also posted stronger sales of Frito-Lay snacks. WhiteWave Foods jumped after the French yogurt giant Danone agreed to buy the company for $56.25 a share or about $10 billion. Western Digital forecast stronger results for its fiscal fourth quarter after it acquired the flash memory chip maker SanDisk in May. Western Digital and Seagate Technology gained.
A survey by ADP said companies added 172,000 jobs in June, a sign that hiring may have picked up again after slowing in April and May. ADP’s estimate is based on private companies. Also, weekly jobless claims dropped 16,000 to 254,000 last week, in a sign that employers continued to hire more workers. Crude oil inventories were down 2.2 million barrels last week, below expectations of a drop of 2.6 million barrels. Oil prices sank after the report. Exxon Mobil and Chevron stock retreated.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$9.55 to US$1,356.70. Copper futures were down 1.4 percent to US$2.12. WTI spot crude was down US$2.26 to US$45.17. Dated Brent spot crude was down US$2.33 to US$46.47. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.3 percent. The yield on US Treasury 30 year bond was unchanged at 2.14 percent while the yield on the 10 year note was up 2 basis points to 1.39 percent.
Europe
Stocks rallied Thursday as bargain hunters stepped in to buy at low prices. Investors exited safe havens in favor of riskier investments. The FTSE was up 1.1 percent and the DAX added 0.5 percent. Both the CAC and SMI were 0.8 percent higher.
The European Central Bank published minutes of its June 1 and 2 meeting. Members described the “Brexit” referendum as a major source of uncertainty for the euro area economic outlook and warned that the impact from a decision by the UK to leave the European Union would be significant.
Volkswagen slipped on news it is recalling 5,900 gas-powered Touran MPVs worldwide. RWE and E.ON advanced. In Paris, Danone jumped after it agreed to buy organic foods producer WhiteWave Foods for about $10 billion. AXA Group gained after announcing an agreement with Vienna Insurance Group to sell both its Life & Savings and Property & Casualty operations in Serbia and exit the Serbian market. Technip and Total increased. Associated British Foods was higher after issuing a positive trading update for the 40 weeks to June 18.
Marks & Spencer gained after the company said its total UK sales were down 1.1 percent, and like-for-like UK sales declined 4.3 percent. Total group sales, however, increased 1.3 percent in the 13 weeks to July 2 with strong food sales and international strength. Insurers Aviva, Standard Life and Prudential were up and asset managers Henderson Group and Aberdeen Asset Management climbed after recent steep losses on concerns about their exposure to the UK commercial real estate market. Property-related stocks such as Land Securities Group, British Land and Persimmon also jumped.
Germany’s May industrial production dropped 1.3 percent on the month and more than reversing a revised 0.5 percent rise in April. French foreign trade deficit decreased unexpectedly in May from a month ago, as exports rose and imports fell. UK industrial production declined less than expected in May prior to the ‘Brexit’ results.
Asia Pacific
Asian stocks were mixed as gains in overnight oil prices, data indicating a strengthening US economy and a dovish tone to the Federal Reserve’s June meeting minutes helped outweigh continuing uncertainty from the Brexit vote. The yen continued to strengthen while the British pound regained some lost ground after tumbling to a three-decade low during the past two days.
The Shanghai Composite was virtually unchanged (down 0.44 point) while the Hang Seng added 1.0 percent. China directed foreign banks to set aside reserves equal to 20 percent of the forward-trade position from August 15.
The Nikkei retreated 0.7 percent. Aeon declined after posting a quarterly loss. Kawasaki Heavy Industries, Mitsubishi Electric and Mitsui Chemicals also retreated. Yamato Holdings climbed after a rating upgrade. Suzuki Motor, Mitsui Mining & Smelting and Komatsu all advanced.
The S&P/ASX and All Ordinaries were up 0.6 percent and 0.5 percent respectively. Higher commodity prices and a positive reading on Australian construction activity in June helped investors shrug off Standard & Poor’s warning of a downgrade to the country’s coveted triple-A credit rating. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group were up along with energy stocks Oil Search, Origin Energy and Santos after oil prices rose overnight. Banks ANZ, Commonwealth and Westpac gained as Prime Minister Malcolm Turnbull edged closer to forming a government.
The Kospi added 1.1 percent after Samsung Electronics said its second quarter operating profit hit its highest level in more than two years, reflecting continued strong demand for the company’s Galaxy S7 smartphone series. The Sensex edged up 0.1 percent.
Global Stock Markets
Looking forward
Germany and the UK post May merchandise trade data. France releases May industrial production. Canada reports its June labour force survey. The US releases its June employment situation report.
*Note — all releases are listed in local time.
Source: Fidelity
Fidelity disclaimer:
The objective of this page is to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by any Fidelity entity or any third-party.
Jesmond Mizzi Financial Advisors Disclaimer:
This article, does not intend to give investment advice and the contents therein should not be construed as such. Jesmond Mizzi Financial Advisors Limited is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Jesmond Mizzi Financial Advisors Limited at 67, Level 3, South Street, Valletta, or on Tel: 21224410, or email [email protected]