On 06 March, 2017 – Most global stock exchanges retreat on Monday
Geopolitical concerns dampened investors’ risk appetite.
United States
US stocks were lower Monday while the dollar strengthened. Geopolitical fears and a looming Federal Reserve interest-rate increase curbed investors’ risk appetite. The Dow Jones industrials were down 0.2 percent, the S&P retreated 0.3 percent and the Nasdaq lost 0.4 percent. Profit taking contributed to the declines.
Financials were lower after rallying last week on expectations of a rate increase. Fed fund futures currently point to a 98 percent chance of higher interest rates this month. Higher rates are a positive for banks’ net interest margins — the difference in the rates they charge on loans and their own funding costs.
Tyson Foods declined after avian flu was discovered at a supplier’s farm. Sanderson Farms and Pilgrim’s Pride also were lower. French automaker PSA Group agreed to buy General Motors’ European business, which hasn’t made a profit for GM since 1999. Delta Air Lines declined after its revenue projection for the second quarter disappointed. The airline said its business isn’t improving as quickly as it expected. United Continental, JetBlue and American Airlines also retreated. Deutsche Bank was lower after it said it will raise at least $8.5 billion in capital and sell a stake in its asset management business to shore up its finances. JP Morgan was lower.
January factory orders climbed 1.2 percent on the month. However, excluding transportation equipment orders were up only 0.3 percent.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$4.45 to US$1,230.95 Copper futures were down 1.6 percent to US$2.65. WTI spot crude was down 12 US cents to US$53.21. Dated Brent spot crude was up 11 US cents to US$56.01. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. The currency was unchanged against the yen. The Dollar Index was up 0.2 percent. The yield on US Treasury 30 year bond was up 3 basis points to 3.10 percent while the yield on the 10 year note was up 1 basis point to 2.49 percent.
Europe
Most European stock indices were lower Monday with shares trading in a narrow range. The weak opening on US stock markets added some downward pressure in afternoon trading. Rising geopolitical concerns following the recent North Korean missile tests and the uncertainty surrounding next week’s parliamentary elections in the Netherlands resulted in risk averse investors. Bank stocks tumbled on the news Deutsche Bank plans to raise capital through a share sale. Mining shares dropped with copper prices after China cut its GDP target to 6.5 percent in 2017, a 25-year low. The FTSE was down 0.3 percent, the CAC retreated 0.5 percent, the DAX lost 0.6 percent and the SMI slipped 0.1 percent.
Deutsche Bank dropped after the bank unveiled plans to raise around €8 billion through a share sale, list its asset management business and overhaul its business structure. Uniper climbed as the firm unveiled plans to sell its 25 percent stake in the Yuzhno-Russkoye gas field in western Siberia to Austrian oil and gas company OMV AG for €1.749 billion. MorphoSys increased after the biotechnology firm announced that its partner Roche plans to initiate a new pivotal phase 3 program for patients with prodromal to mild Alzheimer’s disease. Glencore, Anglo American, Antofagasta and Rio Tinto declined.
Peugeot gained after the PSA Group, the maker of Peugeot and Citroen cars, agreed to buy General Motors’ Opel unit in a transaction valued at €2.2 billion. In London, asset management firm Standard Life and Aberdeen jumped after confirming that they are holding talks about a possible all-share merger. Informa advanced after the publishing firm reported a rise in full-year underlying profit and said it expects to see further progress in 2017. EasyJet advanced after reporting an 8.2 percent increase in passenger traffic for February.
Greece’s fourth quarter gross domestic product declined a seasonally-and-calendar adjusted 1.2 percent from the previous three months, which was more than double the 0.4 percent decline estimated in the initial report on February 14. The latest contraction was the sharpest since the third quarter of 2015, when the Greek economy shrank 1.7 percent.
Asia Pacific
Asian stocks were mixed Monday. Investors took comments from Fed officials, geopolitical tensions and prospects of slower-than-expected growth in China calmly.
The Shanghai Composite gained 0.5 percent. China’s Premier Li Keqiang on Sunday cut the country’s GDP target to 6.5 percent in 2017, a 25-year low. But, he said China will “pursue better results in actual economic work”. The projected target is in line with economic principles and realities, the Xinhua news agency reported. The Hang Seng added 0.2 percent after the opening of the annual session of the National People’s Congress in Beijing.
Both the Nikkei and Topix retreated as the yen gained amid escalating political tensions after North Korea fired four ballistic missiles in the early hours of Monday morning. The Nikkei was down 0.5 percent and the Topix lost 0.2 percent. Isetan Mitsukoshi shares declined on a Nikkei report that the department store operator’s President will resign on March 31. Defense-related stocks advanced on expectations of increasing defense spending due to rising geopolitical tensions. Landmine maker Ishikawa Seisakusho, Mitsubishi Heavy Industries and Kawasaki Heavy Industries advanced.
The S&P/ASX was up 0.3 percent and the All Ordinaries gained 0.2 percent. The advances were led by financials and material stocks after retail sales rebounded in January after a disappointing end to 2016. The four big banks were higher after hawkish comments from US Federal Reserve officials regarding an interest rate increase when the FOMC meets on March 14 and 15. BHP Billiton, Bluescope Steel, Fortescue Metals Group and Rio Tinto rallied.
The Kospi edged up 0.1 percent supported by strong foreign investor inflows. The Sensex was up 0.7 percent after the GST (goods and services tax) Council unanimously approved two supporting legislations in its 11th meeting on Saturday, paving the way for implementation of GST regime from July.
Looking Forward
The Reserve Bank of Australia announces its monetary policy decision. Germany posts January manufacturing orders. The Eurozone reports revised fourth quarter GDP. In Canada, January merchandise trade and the Ivey purchasing managers index will be reported. In the US, January international trade and consumer credit will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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