On 24 August, 2016 – Global stocks mixed in light trading
There was little economic news to distract investors from Fed watching.
United States
Stocks retreated in light trading Wednesday as investors continued to weigh the possibility of an interest rate increase going forward as they wait for Fed Chair Janet Yellen’s Friday speech. The Dow Jones industrials were down 0.4 percent, the S&P declined 0.5 percent and the Nasdaq lost 0.8 percent. Mining and materials companies retreated as the markets continued a late summer pattern of drifting between small gains and losses.
Metals and mining stocks declined after disappointing results from the European mining company Glencore. The company reported a loss and it continues to sell off billions in assets to pay down its huge debt load. Freeport-McMoRan and Newmont Mining were lower. Express plunged after the company slashed its full-year forecast and said same-store sales and traffic were down compared with the same period last year. TurboTax and QuickBooks software declined after the company’s full-year forecasts came in below estimates. Healthcare stocks were weighed down by a drop in Mylan as political pressure mounted on the company in the wake of price increases for its EpiPen allergy treatment.
July existing home sales dropped 3.2 percent to an annualized rate of 5.39 million from a revised 5.57 million in June.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$14.75 to US$1,327.25. Copper futures were down 1.7 percent to US$2.09. WTI spot crude was down US$1.34 to US$46.76. Dated Brent spot crude was down 98 US cents to US$48.98. The US dollar was up against the yen, euro, Swiss franc and the Canadian and Australian dollars. However, it declined against the pound. The Dollar Index was up 0.3 percent. The yields on both the US Treasury 30 year bond and 10 year note edged up 1 basis point to 2.24 percent and 1.56 percent respectively.
Europe
Stocks were mixed Wednesday — bank stocks advanced while miners limited the upside. Falling crude oil weighed on energy stocks as rising US crude inventories pressured prices. The FTSE was down 0.5 percent while the SMI was virtually unchanged (down 1.78 points). Both the DAX and CAC added 0.3 percent.
Commerzbank and Deutsche Bank gained along with Société Générale, BNP Paribas and Crédit Agricole. In London, Glencore retreated after reporting a 66 percent drop in first-half profit. The company also agreed to sell a 30 percent stake in the Ernest Henry copper-gold mine in Australia to Evolution Mining for A$880 million. Randgold Resources, Fresnillo, Anglo American Antofagasta and Rio Tinto retreated. WPP Group advanced after the company reported better-than-expected headline pre-tax profit and increased revenues in its first half of the year. Homebuilders Persimmon, Berkeley Group and Taylor Wimpey climbed higher.
Germany’s second quarter gross domestic product climbed 0.4 percent on the quarter after growing 0.7 percent in the first quarter. The economy expanded thanks to foreign trade and consumer spending.
Asia Pacific
Stocks were mixed as oil prices dropped and tempered investor optimism over a weaker yen and solid US new-home sales data. Investors remained firmly focused on Friday’s Jackson Hole speech from Fed Chair Janet Yellen, with market participants hoping that she will provide a little more clarity on Fed policy going forward.
The Shanghai Composite slipped 0.1 percent as fresh liquidity injection from China’s central bank through reverse purchase agreements dashed hopes for policy easing. The Hang Seng retreated 0.8 percent.
The Nikkei added 0.6 percent thanks to a weaker yen and investors shrugged off North Korea’s submarine missile launch. Japan’s Prime Minister, Shinzo Abe, said the latest missile launch was “unforgivable” and posed a grave threat to Japan’s security. Nippon Electric Glass, Astellas Pharma, Advantest and Dainippon Screen Manufacturing climbed. Automakers Honda Motor, Mazda, Nissan and Toyota also advanced while Fast Retailing retreated.
Both the S&P/ASX and All Ordinaries added 0.1 percent. The big four banks were higher as were miners BHP Billiton, South32, Rio Tinto and Fortescue Metals Group. Qantas Airways advanced after posting a record full year underlying profit and announcing its first dividend in seven years. Evolution Mining entered a trading halt after the gold miner agreed to acquire Glencore’s Ernest Henry gold and copper mine in Queensland for A$900 million. Building materials firm Boral tumbled after reporting a flat full-year profit.
The Kospi was down 0.3 percent. The Sensex added 0.2 percent.
Looking forward
In Germany, the August Ifo survey will be released and in the UK, the CBI distributive trades survey will be reported. In the US, July durable goods orders and weekly jobless claims, Fed balance sheet and money supply will be reported. The three day Kansas City Fed symposium begins in Jackson Hole, Wyoming.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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