On 13 June, 2017 – Stocks rebounded from Monday’s decline
Technology stocks advanced as did banks prior to FOMC announcement.
United States
US stocks rebounded Tuesday with the Dow Jones industrials and S&P hitting all-time highs, as bank shares advanced ahead of an expected Federal Reserve interest rate increase and technology stocks bounced back. The Dow was up 0.4 percent the S&P gained 0.5 percent and the Nasdaq bounced 0.7 percent higher. Virtually all traders are expecting an interest rate increase Wednesday afternoon from the Federal Reserve.
Microsoft, Apple and Facebook rebounded. Financials, which tend to benefit when interest rates are rising, climbed after the US Treasury Department announced a plan to upend the country’s financial regulatory framework. Cheesecake Factory retreated after the restaurant chain warned of a decline in comparable store sales. Western Digital and Logitech posted gains. Amazon and Best Buy advanced as consumer-focused companies rose. Basic materials companies, which make products including chemicals, paints & packaging were higher as well.
Financial companies including State Street, Comerica and Goldman Sachs advanced. Halliburton and Tesoro were higher. Science Applications International was lower after its sales fell short of projections. The company said tight budgets for customers are hurting its sales, and greater costs affected its profits. Verizon officially bought Yahoo’s internet business for $4.5 billion. Yahoo is being combined with AOL in a new Verizon unit called Oath, which is run by AOL CEO Tim Armstrong. Verizon retreated.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$4.40 to US$1,262.00. Copper futures were down 0.7 percent to US$2.60. WTI spot crude was up 41 US cents to US$46.49. Dated Brent spot crude was up 47 US cents to US$48.76. The US dollar was up against the yen and the Australian dollar. The currency declined against the pound and the Canadian dollar and virtually unchanged against the Swiss franc and euro. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was down 1 basis point to 2.86 percent while the yield on the 10 year note was unchanged at 2.21 percent.
Europe
Stocks advanced Tuesday with exception of those in the UK. Investors bought technology shares after Monday’s drop. The political uncertainty in the UK remains a concern among investors. Traders were also waiting for the Federal Reserve’s policy announcement on Wednesday after markets here have closed for the day. The FTSE retreated 0.2 percent while the CAC gained 0.4 percent, the DAX added 0.5 percent and the SMI was 0.7 percent higher.
The Bank of Spain raised its growth forecasts from its March estimates. Growth is expected to be 3.1 percent this year and 2.5 percent in 2018. The forecast for 2019 was left unchanged at 2.2 percent. The Bank of Finland also increased its forecasts thanks to firmer exports because of the global recovery.
Deutsche Bank gained after it agreed to pay $170 million to settle an investor lawsuit accusing it of conspiring with other banks to manipulate the benchmark European Interbank Offered Rate and related derivatives. BASF was higher but Syngenta slid in Zurich on a Bloomberg report that they have submitted preliminary bids for assets that Bayer plans to sell in order to get regulatory approval for its $66 billion takeover of seeds giant Monsanto. Bayer advanced. Lufthansa climbed on a broker upgrade. The Royal Bank of Scotland increased on reports that the lender is in advanced negotiations to reach a settlement with a US regulator over the mis-selling of toxic mortgage bonds.
Ashtead dropped after it reported a 7 percent rise in full year profit as a result of a weaker pound and strong growth in its core North American unit. Capita soared after saying it expects profitability to improve in the second half of the year. Merlin Entertainments dropped after the theme park owner warned of slower growth following recent attacks in Manchester and London. UniCredit, UBI Banca and Banco BPM climbed in Milan after Italy’s finance minister Pier Carlo Padoan said “a solution is now close” for rescuing two struggling banks in the north east Veneto region.
The ZEW indicator of economic sentiment dropped to 18.6 in June from 20.6 in May. UK May consumer prices rose to 2.9 percent on the year from 2.7 percent in April. This was the highest since June 2013 and above the Bank of England’s inflation target of 2 percent.
Asia Pacific
Stocks were mostly higher Tuesday. While the yen was steady against the US dollar before the slew of central bank meetings this week, oil prices rose on reports that Saudi Arabia was making significant supply cuts to customers.
The Shanghai Composite was up 0.4 percent despite speculation that the People’s Bank of China will likely raise short-term interest rates this week if the Fed raises rates as expected. The Hang Seng was up 0.6 percent.
The Nikkei slipped 9.83 points while the Topix edged up 0.1 percent as the selloff in technology shares eased somewhat and the yen was steady. US Attorney General Jeff Sessions testifies before the Senate Intelligence Committee later in the global market day to explain his role in the Russia investigation. Toshiba, which is facing a fresh lawsuit over an accounting scandal, reversed early gains and retreated. SoftBank declined after it reached a broad agreement to merge its Indian e-commerce unit Snapdeal with rival Flipkart. Energy explorer Inpex advanced after oil prices rose overnight.
The S&P/ASX and All Ordinaries rallied after traders returned following a long holiday weekend. The S&P ASX climbed 1.7 percent while the All Ordinaries added 1.5 percent. Financial and energy stocks were among the biggest gainers, while tech stocks paced the decliners after a selloff in Apple and other tech heavyweights pulled down US stocks for a second consecutive session on Monday.
The Kospi was up 0.7 percent while the Sensex was virtually unchanged (up 7.79 points).
Looking forward
China posts May industrial production and retail sales. India releases May WPI. The Eurozone reports April industrial production. The UK releases May labour market report. In the US, May consumer prices and retail sales and April business inventories will be released along with weekly EIA petroleum inventories. The FOMC will announce its monetary policy decision and will release its latest forecasts. Chair Janet Yellen will hold her quarterly news conference.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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