On 26 January, 2017 – Global stocks mixed in Europe and the US

Asian stocks rallied in advance of the Lunar New Year.
United States
Stocks wavered between small gains and losses as investors analyzed the latest company earnings news. While consumer goods and financial stocks climbed, health care sagged. The Dow Jones industrials added 0.2 percent while the S&P slipped 0.1 percent and the Nasdaq was virtually unchanged (down 1.16 points).
United Rentals jumped after the equipment rentals company said it has agreed to acquire construction equipment company NES Rentals for $965 million. Sherwin-Williams climbed after the company reported quarterly earnings and revenue that easily beat forecasts. The company said it expects to complete its $11.3 billion purchase of Valspar within 90 days after making a relatively small divestiture. Biogen advanced after the company reported a bigger profit than expected which brought it back to around breakeven this year.
D.R. Horton and Lennar advanced. PulteGroup gained after reporting higher-than-expected quarterly profits, which were boosted by an increase in home sales and prices. Royal Caribbean was up after the cruise line operator gave an optimistic forecast for 2017 and said bookings are good. Mattel sank after the toymaker reported a big slowdown in sales over the holidays. McKesson slid after the prescription drug distributor said prices were weaker than it expected in its fiscal third quarter.
Intel reported a 9.8 percent rise in quarterly revenue, boosted by a stabilizing PC market and an increase in demand for its data center services. However net income fell to $3.56 billion or 73 cents per share for the fourth quarter ended December 31, from $3.61 billion or 74 cents per share a year earlier. Net revenue rose to $16.37 billion from $14.91 billion.
Microsoft reported a 3.6 percent rise in quarterly profit powered by a surge in demand for the company’s flagship cloud platform Azure. Net income rose to $5.20 billion or 66 cents per share in the second quarter ended December 31 from $5.02 billion or 62 cents per share a year earlier. Adjusted revenue rose to $26.07 billion from $25.51 billion.
PayPal Holdings reported a 16.6 percent increase in quarterly revenue helped by the continued growth in customer and merchant accounts on its payments platform. PayPal said its net income rose to $390 million or 32 cents per share in the fourth quarter ended December 31, from $367 million or 30 cents per share a year earlier. Revenue rose to $2.98 billion from $2.56 billion.
Starbucks reported a smaller-than-expected increase in quarterly sales at established restaurants in its US-dominated Americas region amid a persistent restaurant slump. Sales in the Americas region were up 3 percent for the fiscal first quarter that ended January 1.
Google parent Alphabet reported a 22.2 percent increase in quarterly revenue as advertisers spent more to reach an expanding user base. Net income rose to $5.33 billion or $7.56 per Class A and B share and Class C capital stock in the fourth quarter from $4.92 billion or $7.06 per share a year earlier. The company’s consolidated revenue rose to $26.06 billion in the three months ended December 31 from $21.33 billion a year earlier.
A slew of new economic data were released today. New single-family home sales dropped to a 10-month low in December after three straight months of solid gains. Initial jobless claims increased 22,000 in a holiday week that often makes for volatility in these data. The goods trade deficit narrowed in December as exports rose. New home sales dropped 10.4 percent to a seasonally adjusted annual rate of 536,000 units last month. Analysts attributed the decline as mostly due to volatility rather than a drop in the underlying fundamentals for housing demand and despite the rise in mortgage rates.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$5.30 to US$1,189.70. Copper futures were down 1.6 percent to US$2.67. WTI spot crude was up US$1.03 to US$53.78. Dated Brent spot crude was up US$1.10 to US$56.18. The US dollar was up against the yen, euro, pound and the Canadian and Australian dollars. However, it was unchanged against the Swiss franc and yuan. The Dollar Index was up 0.5 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 2 basis points to 3.08 percent and 2.50 percent respectively.
Europe
Although stocks got off to a positive start, markets pared their gains and finished with mixed results. The FTSE was virtually unchanged (down 2.64 points) and the CAC was down 0.2 percent. The DAX and SMI were up 0.4 percent and 0.2 percent respectively. Profit taking appears to have played a role. Encouraging German and UK economic reports provided a boost to investor sentiment. Traders were also pleased that Johnson & Johnson said it would buy Swiss biotech firm Actelion.
Software advanced after the business software firm reported an 11 percent drop in fourth-quarter profit. STMicroelectronics surged after its fourth-quarter sales beat expectations. In London, Royal Bank of Scotland Group gained after setting aside a $3.8 billion to cover fines and litigation costs related to its issuance and underwriting of US residential mortgage-backed securities. Diageo was higher after its sales growth beat forecasts. Lonmin tumbled after the miner said it is reviewing its capital expenditure plans after production of platinum and platinum group metals both declined in the first quarter.
Whitbread was down after saying its full-year results will be in line with expectations. Daily Mail & General Trust retreated after slashing its revenue forecast for the information unit. Unilever declined after the consumer products firm cautioned of a difficult trading environment after reporting lower-than-expected fourth quarter sales. Actelion soared in Zurich after Johnson & Johnson agreed to acquire the biotechnology firm for $30 billion. Ericsson climbed in Stockholm despite posting a quarterly loss and lowering its dividend.
UK fourth quarter gross domestic product grew 0.6 percent on the quarter and was up 2.2 percent when compared with the same quarter a year ago.
Asia Pacific
Asian stocks advanced on the heels of the rally in US markets overnight thanks to an improved risk appetite in response to robust earnings reports and optimism over stronger post-election growth in the United States. Several markets including the All Ordinaries, S&P/ASX, TAIEX and Sensex were closed for holidays.
The Shanghai Composite added 0.3 percent after data showed profits earned by Chinese industrial firms rose the most in three years in 2016. Gains were curbed by caution ahead of the Lunar New Year holidays starting on Friday. The Hang Seng jumped 1.4 percent.
The Nikkei was up 1.8 percent and the Topix gained 1.5 percent. Banks Mizuho Financial Group, Mitsubishi UFJ Financial and Sumitomo Mitsui Financial rallied after US Treasury yields hit four-week highs overnight. Daiwa Securities Group and Nomura Holdings climbed. Takata soared to extend gains for a second day running.
The Kospi was up 0.8 percent ahead of the New Year holidays.
Looking Forward
Japan posts December consumer price index. Australia releases fourth quarter producer price index. The Eurozone reports December M3 money supply. In the US, December durable goods orders and final January consumer sentiment will be reported. The first estimate of fourth quarter gross domestic product will be released.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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