On 09 January, 2017 – Investors wait for earnings reports
Stocks were mixed with little new economic data available.
United States
Stocks were mixed with little new economic data to sway investors’ sentiment. However, the Nasdaq climbed 0.2 percent higher to a record close as investors purchased biotechnology shares. The S&P closed 0.4 percent lower while the Dow Jones industrials retreated 0.4 percent.
Stocks were weighed down by a decline in oil and natural gas companies as the price of crude oil and other energy futures tumbled. Utilities were also among the big decliners, while health care stocks rallied. Southwestern Energy, Range Resources and Devon Energy retreated. Acuity Brands tumbled after the lighting maker reported quarterly results that fell well short of what was expected. Global Payments climbed after it reported better-than-anticipated quarterly results.
Surgical Care Affiliates advanced after the company agreed to be acquired by UnitedHealth for $2.3 billion in cash and stock. The deal comes as UnitedHealth, the nation’s biggest health insurer, looks to expand its Optum health business. Merrimack Pharmaceuticals was higher on news the company is selling its first approved drug, a pancreatic cancer treatment to Ipsen in a deal worth at least $575 million. VCA jumped after the pet health care company agreed to be acquired by Mars for around $7.7 billion. The deal also includes $1.4 billion in debt.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.65 to US$1,178.50. Copper futures were down 0.55 percent to US$2.53. WTI spot crude was down US$2.08 to US$51.91. Dated Brent spot crude was down US$2.24 to US$54.86. The US dollar was up against the pound and the yuan. It declined against the yen, euro, Swiss franc and the Australian dollar. It was virtually unchanged against the Canadian dollar. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 4 basis points to 2.97 percent while the yield on the 10 year note declined 5 basis points to 2.37percent.
Europe
Most stock indices retreated Monday. Investor sentiment suffered after some disappointing corporate news from companies like Deutsche Lufthansa and William Hill. A decline in crude oil prices also had a negative impact on the markets. The FTSE was up 0.4 percent and the SMI edged up 0.1 percent. The CAC and DAX lost 0.5 percent and 0.3 percent respectively.
The British pound declined against its major rivals Monday on worries over the likelihood of a “hard Brexit,” after UK Prime Minister Theresa May remarked that the UK cannot hold on to “bits of membership” after leaving the EU. In an interview with Sky News over the weekend, the UK PM gave a strong indication that the UK doesn’t have plans to negotiate continued full access to the European single market when it quits the EU.
Deutsche Lufthansa declined after the airline group estimated its fuel costs would rise to €5.3 billion in 2017 from €4.9 billion in 2016. Volkswagen climbed on reports that it is close to reaching a multibillion dollar settlement with the US Justice Department over its cheating on emissions tests. Fresenius Medical Care tumbled after its US unit received a subpoena regarding its ties to the American Kidney Fund. Evotec advanced. The company together with Epidarex Capital and a consortium of prominent German investors will participate in Eternygen’s latest funding round of €8 million.
Dialog Semiconductor advanced after releasing its unaudited preliminary fourth-quarter report. In Paris, Ipsen gained after saying it has entered into a definitive agreement to buy some assets of peer Merrimack Pharmaceuticals. In London, William Hill declined after it reported that the Group’s full-year operating profit for 2016 was approximately £260 million pounds, at the bottom end of its guided £260 to £280 million range. UBS finished lower in Zurich. The bank and Morgan Stanley are planning to increase investment-banking operations in mainland China, in a sign of commitment toward developing more business in the country, according to the Wall Street Journal.
November Eurozone unemployment rate remained unchanged at 9.8 percent, its lowest level in over seven years. November German industrial production climbed 0.4 percent after increasing 0.5 percent in October.
Asia Pacific
Asian stocks were mixed Monday in light trading with markets in Japan closed for a holiday. With China’s yuan resuming its downward slide and oil prices edging lower amid renewed doubts about touted production cuts, investors were wary of making any big moves. US President-elect Donald Trump is scheduled to hold a news conference on Wednesday where his views on tax reform, infrastructure spending and China trade will come under close scrutiny.
The Shanghai Composite was up 0.5 percent led by defense stocks after the China North Industries Group (Norinco) said it would pursue a “mixed ownership” model and work to improve its corporate governance. The Hang Seng added 0.2 percent. In economic releases, China’s foreign exchange reserves continued to decline at the end of 2016. Reserves fell $41.1 billion from prior month to $3.01 trillion in December as the People’s Bank of China intervened to curb the weakness in the yuan. This was the sixth consecutive fall in reserves and they reached the lowest level in more than five years.
The S&P/ASX was up 0.9 percent and the All Ordinaries added 0.8 percent. The big four banks rallied but miners Rio Tinto and Fortescue Metals Group retreated. The Kospi was virtually unchanged (down 0.34 point) after North Korea said it would test the launch of its intercontinental ballistic missile whenever it sees fit. The Sensex slipped 0.1 percent in lackluster trade.
Looking Forward
Australia releases November retail sales. China reports consumer and producer prices for December. France releases November industrial production. In the US, November JOLTS and wholesale trade will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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