On 03 August, 2016 – Most stock indices retreated

Investors are waiting for Thursday’s announcement from the Bank of England.
United States
US markets were slightly higher Wednesday after a survey showed that hiring by private companies continued at a solid clip in July. Buying was somewhat subdued ahead of the Bank of England announcement and the US employment report on Friday. Bank stocks advanced while the biggest losers were household goods makers and phone and utility companies, which are typically considered safe investments. The Dow Jones industrials were up 0.2 percent, the S&P added 0.3 percent and the Nasdaq was 0.4 percent higher.
A survey by ADP said that private US payrolls grew by 179,000 in July as companies like retailers and shipping companies brought on more workers. The total suggested that employers continued to hire new workers and at a faster pace than they did in the spring, when hiring slowed sharply.
American International Group rose after it issued a strong second-quarter report. Intercontinental Exchange, the owner of the New York Stock Exchange and other stock markets, said it would split its stock 5-for-1 and buy back $1 billion in shares. Shares of Bank of America gained. Clothing, handbag and accessories company Kate Spade tumbled after the company disclosed weak results and lowered its estimates for the year. Footwear maker Crocs dropped after it reported a smaller-than-expected profit in the second quarter and its sales fell $25 million short of estimates. Its third-quarter sales forecast fell ever further below estimates. Fitbit rebounded after its quarterly results were stronger than expected.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$4.85 to US$1,358.90. Copper futures were down 0.6 percent to US$2.20. WTI spot crude was up US$1.61 to US$41.12. Dated Brent spot crude was us US$1.59 to US$43.39. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. However, it declined against the Canadian dollar. The Dollar Index was up 0.6 percent. The yield on US Treasury 30 year bond was down 1 basis point to 2.29 percent while the yield on the 10 year note was unchanged at 1.54 percent.
Europe
Stocks were mixed in Europe despite a rebound in bank shares. Bank stocks were under heavy pressure on Tuesday following the results of the EU stress tests, but have bounced back strongly today after several of them reported better than expected financial results. Investors were in a cautious mood before Thursday’s announcement from the Bank of England. The FTSE and CAC slipped 0.2 percent while the DAX added 0.3 percent and the SMI was virtually unchanged (down 1.14 points).
According to the National Institute of Economic and Social Research, the UK economy is set to experience a marked slowdown in the second half of this year and throughout 2017. Gross domestic product is expected to grow 1.7 percent this year, but slow to just 1 percent in 2017. NIESR expects GDP to decline 0.2 percent in the third quarter of this year and there is a risk of a further deterioration.
BMW advanced but Volkswagen declined after releasing their July US sales figures. Publisher Axel Springer dropped after cutting its 2016 sales guidance. In Paris, AXA was lower after reporting flat underlying earnings in the first six months of the year. Société Générale climbed after it reported an 8 percent rise in second-quarter profit, boosted by lower provisions for bad loans and the sale of its stake in Visa Europe. Crédit Agricole was up after reporting a 26 percent rise in second-quarter net profit, boosted by income from a stake sale in Visa Europe. HSBC Holdings jumped after the lender announced a $2.5 billion share buyback in the second half of the year despite reporting a 29 percent decline in first-half profit. Standard Chartered jumped after returning to profit in the first half.
July final composite PMI climbed to a 6-month high of 53.2 in July from 53.1 in June. Eurozone retail sales remained flat as expected in June. The UK Markit/CIPS business activity index for services declined to 47.4 from 52.3 in June. The monthly drop of 4.9 points was the biggest since the survey began in July 1996 according to Markit.
Asia Pacific
Stocks declined for a variety of reasons — a firmer yen, sliding oil prices, a deepening rout in Japanese government debt and concerns about the state of Europe’s banks.
However, the Shanghai Composite managed to increase 0.2 percent after the Caixin composite output index rose to 51.9 from 50.3 in June, driven by a marked expansion in the manufacturing sector. The services PMI however, slid to 51.7 from an 11-month high of 52.7 in June. The Hang Seng tumbled 1.8 percent as trading resumed after the market was closed Tuesday due to a typhoon.
The Nikkei dropped 1.9 percent to hit a three-week low. A sell-off in government bonds and the internal debate conveyed by minutes of the Bank of Japan’s June 15-16 policy meeting added to speculation the BoJ could scale back on quantitative easing in the coming months. Exporters Canon, Toshiba, Sony and Hitachi declined as the yen consolidated recent gains. Investors were disappointed by the government’s ¥28 trillion stimulus package. Recent volatility in the bond market exerted pressure on financials and realty stocks with Mitsubishi Estate, Mitsubishi UFJ Financial and Nomura Holdings tumbling. However, Honda Motor rallied after reporting an increase in operating profit for the first quarter. Japan’s service sector rebounded in July. The PMI jumped to growth with a reading of 50.4 from 49.4 in June.
Both the S&P/ASX and All Ordinaries tumbled 1.3 percent with banks leading losses following the RBA rate cut the previous day. The big four banks retreated following a rout in Europe overnight on worries that several Eurozone lenders may need to strengthen their capital base. Energy stocks were mixed.
The Kospi was down 1.2 percent as foreign investors turned net sellers on worries over the health of Europe’s banks and skepticism over the Japanese government’s latest stimulus package. The Sensex declined 1.0 percent.
Looking forward
Australia reports June retail sales. The Bank of England announces its policy decision and publishes its minutes and its Quarterly Inflation Report. The US releases June factor orders and weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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