On 08 March, 2017 – Global stocks were mixed in lethargic trading
Investors are waiting for the European Central Bank’s policy decision along with the US employment report.
United States
US stocks were little changed Wednesday as tumbling energy shares offset rallying banks. The Dow Jones industrials were down 0.3 percent while the S&P lost 0.2 percent. The Nasdaq edged up 0.1 percent. Trading was muted as investors waited for the European Central Bank’s monetary policy decision on Thursday and the February employment report on Friday. Traders also are waiting for next week’s FOMC policy decision.
Chevron and Exxon Mobil retreated. The sell-off in energy shares came as a report from the Energy Information Administration published earlier in the day showed US crude stocks climbing for the ninth straight week.
The ADP National Employment Report on Wednesday pointed to continued strength in the labor market before Friday’s monthly employment report. The report is the last major piece of economic data the Fed will consider before making its interest rate decision next week. ADP estimates that private employers added 298,000 jobs in February, far above Econoday’s consensus estimate of 183,000. Fourth quarter second estimate of nonfarm productivity was up an unchanged 1.3 percent on the quarter and 1.7 percent when compared with the same quarter a year ago.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$7.45 to US$1,209.20. Copper futures were down 1.0 percent to US$2.59. WTI spot crude was down US$2.85 to US$50.29. Dated Brent spot crude was down US$2.74 to US$53.18. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.25 percent. The yield on US Treasury 30 year bond was up 3 basis points to 3.14 percent while the yield on the 10 year note was up 4 basis points to 2.55 percent.
Europe
Stock indices here once again gyrated between small gains and losses with the majority recording slight gains. The FTSE however, ended down 0.1 percent while both the DAX and SMI were virtually unchanged (up 1.17 points and 2.68 points respectively) as investors waited for the European Central Bank’s policy announcement on Thursday.
Analysts noted that rising inflation in the euro area is unlikely to prompt the European Central Bank to start tapering — policymakers would prefer to wait to determine whether price pressures will remain. They also want to avoid any uncertainty prior to the crucial French and Dutch elections.
According to the Spring Budget Announcement, the UK is expected to grow at a faster pace this year than estimated in the November announcement. The Office for Budget Responsibility raised the growth forecast for this year to 2 percent from the 1.4 percent projected in the Autumn Statement in November. According to Chancellor of the Exchequer Phillip Hammond, the British economy “has continued to confound the commentators with robust growth”. He added that his country’s growth was only second to that of Germany’s among major advanced economies in 2016.
Adidas jumped after the sporting goods maker raised its 2017 sales targets after delivering a mixed set of results for 2016. Deutsche Post DHL Group was lower despite the mail and logistics group delivering 2016 earnings in line with forecasts. EDF sank a day after launching a planned €4 billion capital increase. In London, Restaurant Group surged after announcing a turnaround plan after posting a pre-tax loss of £40 million in the year to January 1.
ITV slipped after it joined forces with rival broadcaster BBC to launch BritBox in the United States. Satellite operator Inmarsat rallied after the company unveiled a deal with International Consolidated Airlines Group for its aviation broadband network after reporting a rise in annual revenue. Legal & General retreated after its Solvency II ratio, a measure of the company’s ability to meet its obligations in the event of a severe shock, dropped from a year earlier.
Germany’s January industrial production expanded at the fastest pace in five months, driven by capital goods, while energy and construction pulled down overall growth. Output was up 2.8 percent on the month when production declined by a revised 2.4 percent.
Asia Pacific
Shares were mixed Wednesday following the release of China’s February merchandise trade data. Investors remained cautious with risk appetite taking a hit on rising geopolitical tensions in East Asia, with the arrival of the first components of a U.S.-deployed controversial missile-defense system in South Korea and tensions between Malaysia and North Korea after the two banned each other’s nationals from exiting their countries following the killing of North Korean leader Kim Jong-un’s half-brother.
The Shanghai Composite slipped 0.1 percent. Concerns over tighter liquidity offset data showing clear signs of increased domestic demand. The Hang Seng added 0.4 percent. China’s merchandise trade balance dropped from surplus to deficit in February. In yuan terms, imports advanced 44.7 percent on the year while exports were up 4.2 percent. As a result, the trade balance showed a deficit of CNY60.4 billion. In US dollar terms, the deficit was US$9.15 billion — exports declined 1.3 percent while imports jumped 38.1 percent. Separate data from the People’s Bank of China revealed that China’s foreign exchange reserves unexpectedly increased $7 billion to $3.0 trillion in February, marking the first increase in eight months.
The Nikkei and Topix declined 0.5 percent and 0.3 percent respectively as investors waited for the ECB’s decision Thursday and the US employment report on Friday. Toshiba advanced on a Nikkei report that Chinese appliance maker Midea Group is interested in investing in its semiconductor unit. Nintendo was up after reports that its Switch game console is selling out fast. The second estimate of fourth quarter GDP indicated that growth edged up to 0.3 percent on the quarter from the initial estimate of 0.2 percent or at an annualized pace of 1.2 percent.
Both the S&P/ASX and All Ordinaries were virtually unchanged (down 1.70 points and 2.45 points respectively). BHP Billiton and Rio Tinto retreated after iron ore prices fell overnight. Gold miners Newcrest, Evolution and Northern Star declined as gold hovered near four-week lows on expectations of a US interest rate increase next week. Banks closed mostly higher.
The Kospi was up 0.1 percent. The Sensex was 0.3 percent lower. Investors stayed on the sidelines before the state elections results due on Saturday.
Looking Forward
China posts February consumer and producer price indices. The European Central Bank announces its monetary policy decision. In the US, February import and export prices will be released along with the weekly jobless claims, money supply and fed balance sheet data.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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