On 02 February, 2017 – Global stocks mixed
Investors in Europe and Asia reacted to Wednesday afternoon’s Federal Reserve’s announcement.
United States
Stocks were little changed Thursday as investors waited for the January employment situation report which will be released Friday morning US ET. The Dow Jones industrials were virtually unchanged (down 6.03 points), the Nasdaq slipped 0.1 percent but the S&P managed to add 0.1 percent.
Ryder System declined after reporting earnings that fell far short of expectations. Ralph Lauren tumbled after announcing that Stefan Larsson, who took over as CEO less than two years ago, is leaving the company. Facebook shares were down despite the company reporting results that easily exceeded expectations. The company continues to see huge growth in mobile and video advertising, which has bolstered its bottom line. Macy’s advanced after The New York Post reported the retailer’s outgoing CEO Terry Lundgren has become open to offers from potential buyers. Mead Johnson Nutrition jumped after Reckitt Benckiser said it was in advanced talks to buy the company for $16.7 billion.
Visa reported a 6.6 percent increase in first-quarter profit due to higher payment volumes growth. The company’s net income rose to $2.07 billion or 86 cents per Class A share in the quarter ended December 3, from $1.94 billion or 80 cents per share a year earlier. Net operating revenue rose to $4.46 billion from $3.57 billion.
Amazon’s quarterly revenue rose 22.4 percent, driven by strong sales in the holiday period and a jump in subscriptions for its Prime service. Net sales rose to $43.74 billion in the fourth quarter from $35.75 billion a year earlier. Amazon’s net income rose to $749 million or $1.54 per share from $482 million or $1 per share a year earlier. Revenue from Amazon Web Services, the company’s cloud services business, jumped 47 percent to $3.54 billion, missing estimates.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$18.30 to US$1,221.95. Copper futures were down 1.0 percent to US$2.68. WTI spot crude was down 15 US cents to US$53.73. Dated Brent spot crude was down 4 US cents to US$56.76. The US dollar was up against the euro and pound. It declined against the yen, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.05 percent. The yield on US Treasury 30 year bond was unchanged at 3.09 percent while the yield on the 10 year note slipped 1 basis point to 2.47 percent.
Europe
European stocks were mixed Thursday in directionless trading. Investors had their first opportunity to react to Wednesday’s Federal Reserve announcement. They were also taking a wait-and-see approach as they wait for fiscal spending plans from the new US government. The FTSE was up 0.5 percent but the DAX and SMI were down 0.3 percent and 0.6 percent respectively. The CAC was virtually unchanged (down 0.29 point).
As widely expected, the Bank of England kept its key Bank Rate at 0.25 percent. The BoE also kept its quantitative easing targets for gilt and corporate bond purchases at Stg435 billion and Stg10 billion respectively. The decision by the monetary policy committee was unanimous. The MPC revised its growth forecasts up on the back of a more favorable view of domestic demand. However, it remains concerned about higher inflation undermining real household incomes in the face of continued moderate pay rises.
Deutsche Bank declined after posting a net loss of €1.89 billion for its fourth quarter on the back of litigation costs. Daimler was down after saying it expects profit to rise only “slightly” in 2017. Deutsche Börse was down — German prosecutors opened a probe into share dealing by its group head. Infineon Technologies advanced after the chipmaker reported a rise in first-quarter net income and affirmed its 2017 outlook. Hannover Re advanced after raising its profit targets for the current fiscal year. Sanofi declined despite the company announcing that it had received approval from the US health regulator for a new over-the-counter allergy medicine.
Reckitt Benckiser Group jumped after the company confirmed that it is talks to buy baby formula maker Mead Johnson Nutrition for about $16.7 billion. AstraZeneca rose after providing a cautious guidance for 2017. Vodafone was down — the mobile phone group said it would meet the “lower end” of its underlying earnings growth range of 3 to 6 percent in the full year. Royal Dutch Shell edged higher even as its fourth-quarter earnings excluding exceptional items came in well below expectations. ING Group advanced in Amsterdam. The banking firm said its fourth quarter underlying profit rose to €1.38 billion from €822 million last year. Miners Randgold Resources and Fresnillo were higher.
Asia Pacific
Stocks were mostly lower Thursday. A firmer yen sent Japanese shares tumbling while many indices elsewhere finished mostly lower amid uncertainty about what US President Donald Trump means for the global economy. The US dollar remained on the defensive as the FOMC offered little clarity on the possible impact of Trump’s economic policies on interest rate outlook.
The Nikkei and Topix were down 1.2 percent and 1.1 percent respectively. Toyota Motor led carmakers lower after reporting weak monthly sales in the US. Casio Computer tumbled after its operating profit for the April through December period dropped 39.1 percent. Sony and Panasonic retreated before reporting their respective earnings after the market close. Mitsubishi Electric sank after its third quarter net income declined 22 percent from last year. Hitachi gained after raising its operating profit forecast for the year through March. IHI rallied on a Nikkei report that the company may sell its 3 percent stake in Westinghouse Electric to Toshiba.
Both the S&P/ASX and All Ordinaries slipped 0.1 percent. Banks ANZ, Commonwealth and NAB gave up early gains to close marginally lower. Miners BHP Billiton and Fortescue Metals Group declined while Rio Tinto edged up. Gold miners Evolution Mining, Newcrest, Northern Star and Regis Resources climbed as gold prices were higher. Australia’s December trade surplus reached a record high thanks to a surge in coal and iron ore prices. The surplus swelled to $3.51 billion. Exports jumped 5.4 percent on the month while imports were only 0.7 percent higher.
The Kospi average dropped 0.5 percent after the country’s consumer price index rose 2.0 percent — the fastest pace in more than four years in January, denting interest rate cut hopes. The Hang Seng was down 0.6 percent. The Sensex advanced 0.3 percent.
Looking Forward
Japan reports the January composite PMI and China releases its manufacturing PMI. India posts its services PMI. The Eurozone, Germany and France report January composite PMIs. The Eurozone releases December retail sales. In the US, January services PMI, December factory orders, ISM nonmanufacturing index and the employment situation report will be posted.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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