On 14 September, 2017 – Global shares were mixed as investors waited for the Bank of England’s decision

Then investors looked ahead to next week’s Federal Reserve meeting.
United States
Stocks were mixed Thursday after finishing at record highs the last two days. Companies that sell everything from clothes to groceries were slipping after the government said prices paid by consumers jumped in August. That could be a sign that inflation is increasing, which would push the Federal Reserve to raise interest rates at a faster pace and slow the economy down. The Dow Jones industrials added 0.2 percent while the S&P and Nasdaq were down 0.1 percent and 0.5 percent respectively.
August consumer prices were up a monthly 0.4 percent thanks to rising gas and housing costs. On the year, the CPI was up 1.9 percent. Core CPI (excluding food and energy) was up 0.2 percent on the month and 1.7 percent on the year. Weekly jobless claims were down 14,000 to 284,000.
Under Armour and Ross Stores declined. Amazon retreated along with Coca-Cola and Kroger. Tiffany tumbled after one of its biggest shareholders, Qatar’s investment fund, said it sold some of its Tiffany stock. Halliburton and Chevron advanced. Boeing was higher after its CEO said the company expects to start delivering more planes. United Technologies gained. Lattice Semiconductor wobbled after the US government stopped its sale to a firm backed by the Chinese government because of national security concerns. Equifax declined after the Federal Trade Commission opened a probe into the company’s massive data breach. Pfizer and Merck advanced.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$3.00 to US$1,324.55. Copper futures were down 0.7 percent to US$2.96. WTI spot crude was up 43 US cents to US$49.73. Dated Brent spot crude was up 12 US cents to US$55.28. The US dollar was down against the yen, euro, pound, Swiss franc and the Australian dollar. The currency was unchanged against the Canadian dollar. The Dollar Index was down 0.3 percent. The yield on the US Treasury 30 year bond was down 2 basis points to 2.77 percent while the 10 year note was unchanged at 2.19 percent.
European markets
Stocks were mixed Thursday with the FTSE down 1.1 percent to a four month low and the DAX slipping 0.1 percent. The CAC and SMI added 0.1 percent and 0.2 percent respectively.
As expected, September’s Bank of England Monetary Policy Committee meeting made no changes to monetary policy. Bank Rate was held at 0.25 percent while QE purchases of gilts and corporate bonds remain at £435 billion and £10 billion respectively. It was another split decision (7-2) Ian McCafferty and Michael Saunders renewing their call for an immediate 25 basis point tightening. The minutes which were released at the same time suggested that a tightening may not be too far away with most members apparently leaning towards a rate increase in coming months if the economy evolves as expected. The accompanying statement again warned that policy may have to be tightened by more than financial markets currently discount and also hinted that the first rate increase could be delivered quite soon. The pound rallied.
The Swiss National Bank published its quarterly monetary policy review. As widely anticipated, the SNB kept its target corridor for 3-month CHF Libor at minus 1.25 percent to minus 0.25 percent and the deposit rate at minus 0.75 percent. However, it did modify its view of the Swiss franc which, in the wake of the currency’s recent losses, is now seen as ‘highly valued’ as opposed to the ‘significantly overvalued’ status of recent reviews. Even so, the central bank indicated that it would remain active as necessary in the FX markets; it will not want see the Swiss franc start to appreciate again.
American Tobacco and Diageo which source a large part of their revenues from overseas retreated. HSBC and Barclays dropped along with mining stocks Rio Tinto, BHP Billiton, Glencore and Anglo American. Miners were down after China’s industrial production slowed in August for a second month. Morrisons tumbled after publishing first-half results. Next surged after it lifted its guidance — it said that it had managed to cushion the inflationary impact of a weak pound.
Fiat Chrysler, which has two-thirds of revenues denominated in dollars, was among top gainers. Munich Re advanced as investors shrugged off news the German firm could miss its profit target this year due to losses from hurricanes Harvey and Irma. Swiss Life was down on worries over a possible fine in the United States after the company said it was contacted by the Department of Justice about whether it helped U.S. clients avoid tax. Hermes retreated after the French luxury goods maker struck a note of caution over the impact of the euro’s strength, which overshadowed a record first half operating margin.
Asia Pacific
Asian stocks were mostly lower Thursday after the latest Chinese data were below estimates. Investors were waiting for the US consumer price index release later in the day for clues on the possible timing of the Federal Reserve’s next rate increase.
The Shanghai Composite was down 0.4 percent from a 20-month high after the release of weaker-than-expected data. The Hang Seng also lost 0.4 percent. China’s industrial output was up an annual 6.0 percent in August missing forecasts for an increase of 6.6 percent and down from 6.4 percent in July. Retail sales also missed forecasts and were up 10.1 percent — missing expectations for 10.5 percent growth. Fixed asset investment advanced an annual 6.7 percent —shy of forecasts for 6.8 percent.
Both the Nikkei and Topix were down 0.3 percent, dragged down by commodity-related stocks such as Toho Zinc and Mitsui Mining & Smelting. Toshiba tumbled after saying it was stepping up talks to sell its flash memory unit to a consortium led by US investment fund Bain Capital.
Both the S&P/ASX an All Ordinaries were down 0.1 percent after China reported weak factory data and domestic data showed the unemployment rate held steady in August despite phenomenal employment growth. August employment jumped 54,200 while the unemployment rate remained at 5.6 percent for a third month. The participation rate edged up to 65.3 percent from 65.1 percent. BHP Billiton and Rio Tinto were down after base metal prices slid on muted demand. South32 retreated after reiterating its support for a carbon pricing mechanism. The big four banks were higher along with Woodside Petroleum and Santos.
The Kospi jumped 0.7 percent after a bout of late buying in automakers and technology stocks. Credit rating agency Standard & Poor’s said tensions over a raft of provocations by North Korea were not high enough to change its outlook on the country’s rating. The Sensex was up 0.2 percent.
Looking forward
The Eurozone releases July merchandise trade. In the US, August retail sales and industrial production will be reported along July business inventories. September Empire State manufacturing survey and preliminary consumer sentiment will also be posted.

*Note — all releases are listed in local time.

Source: Fidelity

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