Shares retreated in the Asia Pacific region but were mostly higher in Europe and the US.
United States
US stock indices managed to end the week with minimal gains on Friday after Fed Chair Janet Yellen signaled the Federal Reserve is ready to raise interest rates at its mid-March FOMC meeting if employment and other economic data hold up. The Dow Jones industrials were virtually unchanged (up 2.74 points), the S&P edged up 0.1 percent and the Nasdaq gained 0.2 percent. On the week, the three indices added 0.9 percent, 0.7 percent and 0.4 percent respectively.
Financial stocks, which benefit from higher interest rates, were higher while real estate shares retreated. Costco declined after its quarterly sales and profit missed expectations. Snap, which rallied Thursday in its debut, jumped after NBCUniversal invested $500 million in the parent of Snapchat. Macy’s dropped after sources said Canada’s Hudson’s Bay has not yet lined up equity financing for a bid more than a month after making an approach.
Hawkish comments from Federal Reserve officials climaxed Friday when both Chair Janet Yellen and Vice Chair Stanley Fischer indicated that a fed funds interest rate could happen at the mid-March FOMC meeting. During the week, others including New York Fed President William Dudley, San Francisco Fed President John Williams and Governor Jerome Powell indicated that US borrowing costs may climb possibly at a faster clip than many expected.
In her remarks at the Executives’ Club of Chicago Friday, Fed Chair Janet Yellen said an increase in short-term interest rates was likely to be “appropriate” at this month’s meeting as long as “employment and inflation are continuing to evolve in line with “officials’ expectations”. The words pushed the odds of a rate increase in March to 96 percent. While equities and bond yields remained stable, the US dollar tumbled against its major counterparts.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$11.60 to US$1,226.50. Copper futures were up 0.2 percent to US$2.70. WTI spot crude was up 72 US cents to US$53.33. Dated Brent spot crude was up 82 US cents to US$55.90. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollar. The Dollar Index was down 0.8 percent. The yield on US Treasury 30 year bond was down 1 basis point to 3.07 percent while the yield on the 10 year note was unchanged at 2.48 percent.
Europe
Stocks were mixed Friday, fluctuating between small gains and losses throughout the trading session. Investors were cautious prior to a highly anticipated speech from Federal Reserve Chair Janet Yellen which would take place after markets here were closed for the week. Traders were hopeful that Dr Yellen would provide some clues about the outlook for interest rates. The FTSE slipped 1 percent while the SMI added 0.1 percent. The CAC was up 0.6 percent while the DAX was 0.3 percent lower. For the week, the FTSE was up 1.8 percent, the CAC gained 3.1 percent, the DAX advanced 1.9 percent and the SMI was 1.7 percent higher.
ThyssenKrupp gained on a report that the company is thinking about listing its steel business. Sanofi and AstraZeneca were higher after joining hands to develop and commercialize an antibody to treat the most common respiratory illness in newborns and infants. WPP sank after saying it expects slower growth in 2017. Berendsen tumbled after the commercial laundry company sounded a more cautious note on its outlook for 2017, citing the legacy issues in the UK.
Glencore advanced after the company told an independent transparency board that it had paid tens of millions of dollars in mining royalties and bonuses to an Israeli businessman accused of corruption in the Democratic Republic of Congo. Swiss Life Group was higher in Zurich. The company proposed to boost dividend after reporting a rise in its net profit for fiscal year 2016. Anheuser-Busch InBev was lower after reporting weaker-than-expected earnings. Travis Perkins was lower after the UK building-products supplier posted a drop in 2016 pretax profit on restructuring costs. LafargeHolcim gained after the company swung to a yearly profit, helped by cost-cutting.
January Eurozone retail sales dropped unexpectedly — both food and non-food sales weakened from prior month. The February composite PMI rose to a 70-month high of 56.0 from 54.4 in January. In the UK, the services PMI slid to 53.3 in February from 54.5 the prior month and the weakest expansion since September.
Asia Pacific
Stocks declined in the Asia Pacific region on growing expectations of an interest rate increase by the Federal Reserve at its March 14 and 15 FOMC meeting. A drop in oil prices Thursday and mixed regional data also kept investors left investors feeling cautious.
The Shanghai Composite dropped 0.4 percent and was down 1.1 percent on the week. According to the Caixin services sector PMI, activity continued to expand in February although at a slightly slower pace. The services PMI reading was 52.6, down from 53.1 in January. The Hang Seng lost 0.7 percent and was 1.7 percent lower on the week. The weekend’s annual meeting of the Chinese People’s Political Consultative Conference will be closely monitored with investors waiting to see whether leaders will announce new measures to rein in debt and tighten oversight of financial markets.
The Nikkei was down 0.5 percent and the Topix retreated 0.4 percent. On the week however, the indices were up 1.0 percent and 0.5 percent respectively. Shares declined as the yen strengthened after four days of losses and a slew of data painted a mixed picture of the economy. In the latest sign of an uptick in inflation around the world, Japan’s core consumer prices rose for the first time by 0.1 percent on the year, the first increase in over a year. However, household spending continued to tumble. The services PMI slipped to a reading of 51.3 in February from 51.9 in January. Exporters Hitachi, Mazda Motor and Toshiba dropped 1along with oil majors Inpex, JX Holdings and Japan Petroleum. Nintendo rallied after releasing the Switch’s day-one update. Fast Retailing advanced after posting strong monthly sales.
Both the S&P/ASX and All Ordinaries retreated 0.8 percent thanks to lower commodity prices and weak service sector data. Both indices were down 0.2 percent on the week. Australia’s services sector contracted in February with the performance of service index reading of 49.0, down from 54.5 in January. A decline in industrial metals prices sent Rio Tinto and Fortescue Metals Group tumbling. Gold miners Newcrest, Evolution, Northern Star and Regis Resources declined after gold futures dropped to finish at a more than two-week low overnight. Energy majors Origin Energy and Santos were lower after crude oil prices fell more than 2 percent Thursday on data showing record-high U.S. crude stockpiles and no cuts to Russian oil production in February. The big four banks retreated.
The Kospi was down 1.1 percent Friday and 0.7 percent for the week as concerns over the planned deployment in South Korea of a US missile system continued to haunt investors. The Sensex was virtually unchanged (down 7.34 points) and down 0.2 percent on the week. Expectations of a Fed rate increase and anxiety ahead of the assembly election results due next week induced some caution among traders after recent sharp gains.
Looking Forward

Central Bank activities

March 7

Australia

Reserve Bank of Australia Monetary Policy Announcement

March 9

Eurozone

European Central Bank Monetary Policy Announcement

The following indicators will be released this week…

Europe

March 7

Eurozone

Gross Domestic Product (Q4.2016 final)

Germany

Manufacturers Orders (January)

March 8

Germany

Industrial Production (January)

France

Merchandise Trade (January)

March 10

Germany

Merchandise Trade (January)

France

Industrial Production (January)

UK

Industrial Production (January)

Merchandise Trade (January)

Asia Pacific

March 6

Australia

Retail Sales (January)

March 8

Japan

Gross Domestic Product (Q4.2016 second estimate)

China

Merchandise Trade (January)

March 9

China

Consumer Price Index (February)

Producer Price Index (February)

March 10

Japan

Producer Price Index (February)

India

Industrial Production (January)

Americas

March 6

United States

Factory Orders (January)

March 7

Canada

Merchandise Trade Balance (January)

International Trade Balance (January)

March 8

Canada

Housing Starts (February)

United States

ADP Employment (February)

March 9

United States

Initial Unemployment Claims (week ending prior Saturday)

Import/Export Prices (February)

March 10

Canada

Labour Force Survey (February)

United States

Employment Situation Report (February)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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