On 29 November, 2016 – Global stocks mixed
Investors are waiting for an OPEC production decision.
United States
US stocks advanced Wednesday. Both the Dow Jones industrials and the S&P edged 0.1 percent higher while the Nasdaq added 0.2 percent.
The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna Wednesday to discuss output cuts. OPEC provisionally agreed in September that a drop in output was needed to increase oil prices. An agreement is complicated by the Saudi Arabia rivalry with Iran which is hesitant to limit its own output as it increases production after years of international sanctions.
Exxon Mobil and Chevron retreated. UnitedHealth backed its forecast for this year and said it expected its earnings to grow in 2017. That is because of stable medical costs, less exposure to Affordable Care Act health care exchanges and growth for Optum, a business that manages pharmacy benefits, runs clinics and doctors’ offices and provides technology services. Other health care stocks also rallied. Alexion Pharmaceuticals, AbbVie and Aetna increased. Tiffany was higher after the company reported stronger sales in Asia, which countered weaker results from the United States and Europe. Thor Industries, which makes Airstream and other recreational vehicles, surged after the company reported a much stronger profit and better sales than expected.
Third quarter gross domestic product was revised upward to a gain of an annualized 3.2 percent. The Conference Board said its consumer confidence index surged up to 107.1 in November from an upwardly revised 100.8 in October. With the bigger than expected increase, the consumer confidence index reached its highest level since hitting 111.9 in July of 2007.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 45 US cents to US$1,186.55. Copper futures were down 2.5 percent to US$2.60. WTI spot crude was down US$1.81 to US$45.27. Dated Brent spot crude was down US$1.75 to US$46.49. The US dollar was down against the euro, pound, Swiss franc, yuan and the Australian dollar. However, it advanced against the yen and Canadian dollar. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was down 5 basis points to 2.95 percent while the yield on the 10 year note slipped 1 basis point to 2.30 percent.
Europe
European stocks were mixed Tuesday fluctuating between small gains and losses. Investors were reluctant to make major moves ahead of Wednesday’s OPEC meeting. Investors are uncertain whether the cartel will come to an agreement on production cuts. News that non-OPEC oil producer Russia will not attend the OPEC meeting has added to uncertainty about the outcome. The FTSE was down 0.4 percent while the CAC was up 0.9 percent, the DAX added 0.4 percent and the SMI gained 0.3 percent.
The upcoming Italian referendum this weekend also put investors into a cautious mood. Italian Prime Minister Matteo Renzi is staking his political future on this referendum that would change the Italian constitution by weakening the upper house of parliament and strengthening the central government. Italian banks recovered some ground today, following Tuesday’s sharp sell-off.
Deutsche Lufthansa advanced after the airline announced that it would cancel more than 1700 flights on Tuesday and Wednesday as its main pilots union extended its strike into the second week. SGL Carbon retreated after its board approved a proposal to increase the company’s share capital by €76 million against cash contributions with shareholders’ indirect subscription rights. Both Technip and Total were lower.
Mining stocks tumbled following a decline in metal prices. Antofagasta, BHP Billiton, Fresnillo, Anglo American, Rio Tinto and Randgold Resources were lower. UK homebuilders including Barratt Developments, Taylor Wimpey and Persimmon advanced after a rise in UK mortgage approvals. Actelion surged in Zurich after reports that the biotech company is considering a complicated deal to combine with Johnson & Johnson.
November Eurozone economic confidence improved to an 11-month high as upbeat assessments of consumers and retailers offset weakness in industrial sentiment. Third quarter French gross domestic product was up 0.2 percent on the quarter according to the second estimate.
Asia Pacific
Stocks were mixed in Asia on Tuesday thanks to volatile oil prices prior to Wednesday’s OPEC meeting. Concerns about Sunday’s referendum in Italy also kept investors’ appetite in check. With Brexit causing economic uncertainty and Europe bracing for major elections in France and Germany, European Central Bank president Mario Draghi on Monday warned that a long period of low interest rates has created ‘fertile terrain’ for financial market risks.
The Shanghai Composite was up 0.2 percent on optimism the Chinese economy will show further signs of recovery in November. The Hang Seng lost 0.4 percent. The yuan climbed to its highest level in a week as authorities stepped up measures to stem capital outflows.
The Nikkei was down 0.3 percent and the Topix slipped 0.1 percent. Mitsubishi Motors, Kawasaki Heavy Industries, Suzuki Motor, Mitsubishi Electric, JFE and Fast Retailing all declined. Insurers including MS&AD Insurance Group and Dai-ichi Life Holdings fell on profit taking after recent gains. October unemployment rate remained at 3.0 percent. Both household spending and retail sales were down when compared with a year ago, but the losses were smaller than those in September.
The S&P/ASX was down 0.1 percent while the All Ordinaries lost 0.2 percent in choppy trading. The Kospi was virtually unchanged as buying momentum waned ahead of the Organization of the Petroleum Exporting Countries (OPEC) meeting in Vienna on Wednesday. The Sensex gained for a third session, this time adding 0.2 percent.
Looking Forward
Japan posts October industrial production. India releases third quarter GDP. Germany reports November unemployment rate. The Eurozone releases flash November harmonized index of consumer prices. Canada posts third quarter GDP. In the US, October personal income and spending and pending home sales, November ADP private employment and Chicago PMI will be reported. The Federal Reserve publishes its Beige Book in preparation for its mid-December FOMC meeting. OPEC meeting is scheduled for Wednesday.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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