On 13 December, 2016 – Global indices mostly advanced
Investors were cautious as they waited for Wednesday afternoon’s Fed monetary policy announcement.
United States
Stocks once again recorded new all-time highs Tuesday as the Dow Jones industrials neared the 20,000 mark as the post-election rally showed no signs of fatigue. All the three major indices established record highs shortly after the open. Some investors see the Dow’s 20,000-level as a psychologically important signal of broad positive sentiment. The Dow was up 0.7 percent, the S&P gained 0.8 percent and the Nasdaq added 1.2 percent.
Tuesday’s gains were led by technology stocks. Apple and IBM advanced along with Microsoft and Amazon. Inovalon Holdings dropped after the company’s fourth quarter revenue forecast was below expectations. Energy stocks advanced after Monday’s rise in the price of crude oil. ExxonMobil climbed after its chief executive was nominated by president-elect Donald Trump for secretary of state. Moody’s downgraded its ratings of Caterpillar saying it did not expect “any meaningful recovery” in the company’s core markets until 2018.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.45 to US$1,158.55. Copper futures were down 0.8 percent to US$2.60. WTI spot crude was down 3 US cents to US$52.80. Dated Brent spot crude was down 11 US cents to US$55.58. The US dollar was up against the yen, euro and pound. It declined against the Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was down 3 basis points to 3.13 percent while the yield on the 10 year note was unchanged at 2.47 percent.
Europe
Stocks rallied Tuesday — a surge in Italian banks drove banks higher elsewhere as well. The Italian banks advanced after UniCredit announced a restructuring plan. However, investors remained cautious as they waited for tomorrow’s Federal Reserve monetary policy decision. The FTSE was up 1.1 percent, the CAC gained 0.9 percent, the DAX added 0.8 percent and the SMI was 1.5 percent higher.
Automakers Volkswagen, Daimler, BMW, Renault and Peugeot advanced. Merck was higher. UniCredit surged in Milan after the company’s Board of Directors approved its 2016 to 2019 Strategic Plan. The company announced a €13 billion rights issue aiming to strengthen its capital base. Banks Deutsche Bank, Société Générale, BNP Paribas, Standard Chartered, Barclays, Royal Bank of Scotland and Lloyds Banking Group were higher on the day. Bellway gained after the company announced that it expects full year housing completions to increase by 5 percent. Unilever gained on a broker upgrade. Mining stocks were weak with Antofagasta, BHP Billiton, Anglo American, Rio Tinto and Glencore all retreating.
In Germany the ZEW business expectations reading for December was 13.8, unchanged from November while the current conditions components jumped to 63.5 from 58.8 the month before. U.K. inflation accelerated to a 25-month high on higher clothing and gasoline prices in November. The CPI was up 1.2 percent from a year ago after climbing 0.9 percent in October. This was the highest rate since October 2014.
Asia Pacific
Asian stocks were mostly higher Tuesday as cautious investors awaited the Federal Reserve’s monetary policy announcement. The announcement will be made after markets here close on Wednesday. The Fed is widely expected to increase its fed funds rate by 25 basis points — the first increase since December 2015.
Both the Shanghai Composite and Hang Seng edged up 0.1 percent. Mainland China’s November industrial production and retail sales gained more than anticipated in November. Output was up 6.2 percent from the same month a year ago while retail sales were 10.8 percent higher.
The Nikkei was up 0.5 percent and the Topix added 0.6 percent. Expectations of fiscal stimulus by the incoming Trump administration and positive Chinese economic data boosted sentiment. Nippon Telegraph and Telephone rose after the company announced a share buyback plan on Monday. The Nikkei business daily reported that Apple supplier Japan Display will acquire Joled, an OLED panel maker created through the merger of Panasonic’s and Sony’s operations, for more than $100 million. Shares of Japan Display gained. Asahi Holdings declined after Asahi Breweries said it agreed to acquire beer brands in Eastern Europe from Anheuser-Busch InBev for €7.3 billion.
Both the All Ordinaries and S&P/ASX were down 0.3 percent, reflecting weakness in both mining and bank stocks. Investors were cautious ahead of the U.S. Federal Reserve’s monetary policy decision. Fortescue Metals, Rio Tinto and BHP Billiton declined. Banks ANZ, Commonwealth Bank, National Australia Bank and Westpac declined.
The Kospi was up 0.4 percent. The Sensex added 0.7 percent. Caution prevailed ahead of Wednesday’s FOMC decision.
Looking Forward
Japan publishes the Bank of Japan’s fourth quarter Tankan. India releases November WPI. The UK posts November labour market report and the Eurozone releases October industrial production. In the US, November producer price index, retail sales and industrial production will be released along with October business inventories. The Federal Reserve announces its monetary policy decision followed by Fed Chair Janet Yellen’s press conference.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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