On 12 July, 2016 – Global stock rally continues
Dow closes at record high a day after the S&P thanks to easing Brexit concerns and hopes of central bank stimulus.
United States
Stocks continued to rise Tuesday with the Dow Jones industrials closing at a record high just a day after the S&P did while Nasdaq erased losses for the year. The Dow, S&P and Nasdaq all added 0.7 percent on the day.
The gains were led by energy companies, materials companies and banks. However safe haven stocks such as utilities and phone companies declined. Company earnings reports got off to a good start. Alcoa jumped after reporting results that beat forecasts. Amazon.com hit a record high before slipping. The retailer said it resolved a glitch some customers experienced at its “Prime Day” shopping event.
Hard-disk drive maker Seagate rallied on strong preliminary results. Western Digital also advanced. The strength among airline stocks came after broker upgrades on American Airlines, Delta Air Lines and United Continental. United Continental said its quarterly passenger unit revenue would drop less than expected. Steel, financial, chemical, and tobacco stocks also saw considerable strength, while gold and utilities stocks bucked the uptrend.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$14.70 to US$1,342.40. Copper futures were up 3.1 percent to US$2.21. WTI spot crude was up US$2.03 to US$46.79. Dated Brent spot crude was up US$2.12 to US$48.37. The US dollar was up against the yen and Swiss franc. However it declined against the euro, pound and the Canadian and Australian dollars. The Dollar Index was down 0.1 percent. The yield on US Treasury 30 year bond was up 9 basis points to 2.24 percent while the yield on the 10 year note was up 8 basis points to 1.51 percent.
Europe
Most share markets continued to rally Tuesday. However, the FTSE fluctuated between modest gains and losses, ultimately ending virtually unchanged (down 2.17 points). The CAC, DAX and SMI were up 1.6 percent, 1.3 percent and 0.3 percent respectively. Optimism for further stimulus measures from Japan and China had investors in an optimistic mood. They are also hoping that the Bank of England will lower rates Thursday to help the UK’s economy avoid the pitfalls of Brexit. A rebound in crude oil prices contributed to the positive mood among investors, as well as the news that Theresa May will become the new prime minister of Great Britain on Wednesday.
Criticism leveled at the Bank of England in the run-up to the EU referendum had been “extraordinary in all senses of the word”, Governor Mark Carney said Tuesday. Before June 23, the bank cautioned Britons about the risk of leaving the EU. Carney had warned that the “Brexit” would spark a technical recession.
The euro area economy is expected to grow this year driven by consumption according to the economic forecast jointly published by the French statistical office INSEE, Italy’s statistical agency Istat and the research institute Ifo. Gross domestic product was estimated to increase by 0.3 percent in the second quarter, slightly accelerate to 0.4 percent in the third quarter and then slowdown to 0.3 percent in the fourth quarter. The agencies forecast the overall growth to be 1.6 percent in 2016. This was faster than the 1.4 percent growth projected in April.
Daimler advanced after its second quarter profit beat market expectations. The automaker also retained its guidance for a small increase in annual profit. BMW and Volkswagen also gained. Deutsche Bank and Commerzbank were higher. In Paris, Peugeot and Renault climbed. Banks BNP Paribas, Société Générale and Crédit Agricole advanced. In London, Shire gained after winning US approval for its Xiidra eye drops to treat dry-eye disease. Vodafone slipped on a broker downgrade.
Asia Pacific
Stocks in this region advanced thanks to a sinking yen and a rebound in oil prices. Investors remained hopeful about the prospects of more central bank stimulus after Japanese Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending to help overcome consistently weak corporate investment.
The Shanghai Composite added 1.8 percent while the Hang Seng was 1.6 percent higher before the release of second quarter gross domestic product on Friday (local time).
The Nikkei jumped 2.5 percent after soaring 4.0 percent on Monday as hopes for fiscal stimulus weakened the yen. After a convincing win in Sunday’s Upper House election, Prime Minister Shinzo Abe said he would order a fresh round of fiscal stimulus to shore up spending and push consumer prices higher. Exporters, financials and Nintendo led advances.
Both the S&P/ASX and All Ordinaries were up 0.3 percent thanks to fading political uncertainty and solid business confidence data boosting investor sentiment. The big four banks advanced along with BHP Billiton and Fortescue Metals Group. Goldminer Newcrest and Evolution Mining tumbled 3 as gold prices struggled for direction after turning in a third day of declines Monday.
The Kospi edged up 0.1 percent as foreign investors continued to be net buyers in the wake of improving risk appetite. The Sensex added 0.7 percent as hopes for more central bank stimulus and the removal of political uncertainty in the UK helped underpin investors’ appetite for riskier assets.
Global Stock Markets
Looking forward
China releases June merchandise trade data. Italy and France poste June consumer price indices. The Eurozone releases May industrial production. The Bank of Canada announces its monetary policy decision. In the US, the Federal Reserve publishes its Beige Book in preparation for its July 26 and 27 FOMC meeting. Weekly petroleum status report will be released.
*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]