On 10 October, 2016 – Global stocks advance
A gain in oil prices rallied energy stocks.
United States
US stocks were up in subdued trading because of the Columbus Day holiday. The gain was led by the energy sector, which climbed higher after comments from Vladimir Putin about a Russian-OPEC production cut sent Brent crude prices to their highest level in a year. The Dow Jones industrials and S&P were up 0.5 percent while Nasdaq added 0.7 percent.
Materials companies moved higher. LyondellBasell Industries, Dow Chemical and DuPont were higher. Exxon Mobil and Murphy Oil advanced. Mylan gained after it agreed on Friday to pay $465 million to settle allegations it overcharged the Medicaid program for its EpiPen allergy shot. Legislators and federal health authorities had said Mylan wrongly classified EpiPen as a generic drug instead of a brand-name one, which meant Mylan paid lower rebates to federal and state Medicaid programs. Bristol-Myers Squibb retreated after the company reported new data from a study of its drug Opdivo in lung cancer patients. Merck advanced as investors were pleased with the outcome of a study of its cancer treatment Keytruda.
Twitter continued to fall as investors grew less optimistic that the company would be sold. It fell 20 percent Thursday on reports that possible buyers including Apple and Alphabet had decided not to make offers. Salesforce.com, which investors believe is a possible buyer, advanced. Apple shares gained after new reports of fires affecting Samsung’s Galaxy Note 7 phone, which competes with Apple’s iPhone. Investors bet the company would be able to sell more iPhones because Samsung faced new problems with its Galaxy Note 7.
US bond markets were closed on Monday for the Columbus Day holiday.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up 75 US cents to US$1,259.50. Copper futures were up 1.4 percent to US$2.19. WTI spot crude was us US$1.38 to US$51.19. Dated Brent spot crude was up US$1.05 to US$52.98. The US dollar was up against the yen, euro, pound and Swiss franc. It declined against the Canadian and Australian dollars. The Dollar Index was up 0.5 percent. The US Treasury market was closed for the Columbus Day holiday.
Europe
European markets rallied after getting off to a slow start Monday. Encouraging German exports and Eurozone investor confidence data provided a boost to investor sentiment. The continued weakening of the British pound led to further strength among exporters and mining stocks. The FTSE was up 0.8 percent, the CAC gained 1.1 percent, the DAX advanced 1.3 percent and the SMI added 0.6 percent.
Deutsche Bank increased amid reports that the bank’s negotiations with the US Justice Department to reach a deal over lowering a $14 billion fine are continuing. Automakers Volkswagen, BMW and Daimler finished higher. In Paris, Vivendi gained after billionaire Vincent Bolloré increased his stake in the French media conglomerate. In London, Randgold Resources retreated after it said it was “strongly defending its position” after the Malian government shut down its offices in the country’s capital Bamako in a long running dispute over taxes. Vedanta Resources advanced after unveiling its production results for the second quarter and half-year to 30 September.
Continued weakness in the British pound boosted the rest of the mining stocks. BHP Billiton, Anglo American, Fresnillo, Antofagasta, Rio Tinto and Glencore were higher. Shares in oil majors Royal Dutch Shell and BP advanced. William Hill advanced after the betting firm and Canada’s Amaya confirmed that they are in discussions regarding a potential all-share merger of equals. Rolls-Royce gained on a broker upgrade. EasyJet retreated following last week’s profit warning. However, Lufthansa and Air France KLM gained. Lloyds Banking Group declined on a broker downgrade. Salvatore Ferragamo declined on a broker downgrade.
Germany’s seasonally adjusted merchandise trade surplus was €22.2 billion in August following an unrevised €19.4 billion excess in July. Exports jumped 5.4 percent on the month that more than offset both July’s 2.6 percent decline and a 3.1 percent gain in imports. Italy’s industrial production increased for the second straight month in August. Seasonally adjusted industrial production rose 1.7 percent on the month after July’s 0.7 percent gain.
Asia Pacific
Asian stocks were mostly higher. Markets in Japan, Hong Kong and Taiwan were closed while the Shanghai Composite returned after a weeklong holiday. Investors here reacted to Friday’s US employment report. Employment, up a less than expected 156,000, reinforced expectations that the Federal Reserve will not raise short term interest rates at its FOMC meeting on November 2, a week before the US presidential election.
The Shanghai Composite rallied 1.4 percent as traders returned to their desks following a week-long national holiday. Chinese stocks shrugged off a move by the Chinese central bank earlier Monday to set the yuan’s reference exchange at a six-year low against the US dollar.
Both the S&P/ASX and All Ordinaries were up 0.1 percent. The four big banks along with BHP Billiton and Rio Tinto gained. Gold miners Newcrest and Regis Resources both climbed as gold rebounded from its biggest decline in almost a year on a weaker dollar. Energy stocks such as Origin Energy, Oil Search and Santos declined after oil prices extended their slide below $50 a barrel on doubts that OPEC will cut output. Insurance Australia Group rallied after saying it has completed a $314 million share buyback.
The Kospi inched up 0.1 percent even though Samsung Electronics sank on concerns over its flagship Galaxy Note 7 smartphones. The company temporarily halted production of its Galaxy Note 7 smartphones following reports of fires in replacement devices. The Sensex also was 0.1 percent higher as mixed global signals prompted traders to adopt a cautious stance ahead of public holidays on Tuesday and Wednesday on account of Dussehra and Muharram, respectively and the upcoming earnings season.
Looking Forward
German ZEW survey for October will be released. In the US, the September NFIB small business optimism index and labor market conditions index will be posted.
Central Bank activities
October 12
United States
FOMC Minutes
The following indicators will be released this week…
Europe
October 11
Germany
ZEW Survey (October)
October 12
Eurozone
Industrial Production (August)
October 14
Eurozone
Merchandise Trade (August)
Asia/Pacific
October 12
Japan
Machinery Orders (August)
India
Consumer Price Index (September)
Industrial Production (August)
October 14
Japan
Producer Price Index (September)
China
Consumer Price Index (September)
Consumer Price Index (September)
Americas
October 12
United States
JOLTS (August)
October 13
United States
Initial Unemployment Claims (week ending prior Saturday)
Import/Export Prices (September)
October 14
United States
Retail Sales (September)
Producer Price Index (September)
Consumer Sentiment (October preliminary)
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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