On 16 August, 2017 – Stocks in the US and Europe advanced while those in Asia were mixed

Fed minutes indicated FOMC concerned regarding weak inflation.
United States
US stocks edged upward Wednesday but were off highs reached earlier in the day. Worries about the administration’s agenda after both the manufacturing council as well as the strategy and policy forum were disbanded along with the latest FOMC minutes indicating that committee members were concerned about weak inflation muted gains and sent the US dollar lower. The Dow Jones industrials and S&P added 0.1 percent while the Nasdaq was 0.2 percent higher.
July housing starts surprised and declined 4.8 percent to an annualized rate of 1.155 million. Permits were also lower than expected. They declined 4.1 percent to a 1.223 million annualized rate.
The Federal Reserve published minutes from its FOMC meeting held on July 25 and 26. At that time, the FOMC voted to keep its fed funds interest rate range at 1.00 percent to 1.25 percent. It was a unanimous decision. The minutes revealed that the committee was split on the timing to begin winding down its balance sheet with some members prepared to announce a start date at the July meeting and other wanting to push the debate to the September FOMC meeting. The minutes also revealed a growing concern among some policymakers over low inflation, which bolsters the case against quick tightening. However, most FOMC members preferred to defer that decision until an upcoming meeting while at the same time accumulating additional information on the economic outlook and developments potentially affecting financial markets.
The US, Canada and Mexico began discussions today with the goal to modernize the North American Free Trade Agreement (NAFTA). The US is demanding major changes to the pact that would reduce the US trade deficits with Canada and Mexico and increase US content in autos. Canadian and Mexican officials defended NAFTA and said its benefits and structure should be preserved while it is modernized.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.45 to US$1,272.75. Copper futures were up 2.9 percent to US$2.97. WTI spot crude was down 77 US cents to US$46.78. Dated Brent spot crude was down 48 US cents to US$50.32. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.82 percent while the yield on the 10 year note was down 3 basis points to 2.23 percent.
Europe
European markets continued to climb for the third consecutive day after tumbling last week. Investors were encouraged by some solid European economic data including second quarter Italian and Eurozone GDP and declining UK unemployment. Traders were also anticipating the release Federal Reserve FOMC minutes after markets here were closed for the day. The FTSE, CAC and DAX increased 0.7 percent each while the SMI added 0.3 percent.
Deutsche EuroShop slid after the company reaffirmed its guidance for financial year 2017 after reporting a 4.1 percent increase in EBIT earnings for the first half. BHP Billiton advanced after hedge fund Elliott Management increased its stake in the company to 5 percent. Balfour Beatty jumped after posting turnaround results for the six months to June 30. Airlines easyJet and Lufthansa rose after Air Berlin filed for insolvency.
Car insurer Admiral sank after posting muted growth in first-half profits. Carlsberg was down in Copenhagen after keeping its annual profit guidance unchanged. Glencore, Boliden, Anglo American, Antofagasta, Rio Tinto and Outokumpu advanced. M&A speculation again boosted Fiat Chrysler and Exor, the investment fund which owns the carmaker after a media report said a Chinese company may be interested in the carmaker.
Euro area flash second quarter gross domestic product expanded 0.6 percent on the quarter and 2.2 percent from the same quarter a year ago. In the UK, the second quarter unemployment rate slid to 4.4 percent — the lowest level since 1975 — from 4.5 percent. Earnings growth exceeded expectations, but continued to lag inflation, squeezing consumers’ disposable income.
In a Reuters report Wednesday, ECB sources poured cold water on any hopes for a hawkish shift from ECB president Mario Draghi at the US Federal Reserve symposium next week, saying Draghi will not deliver any new policy messages at the conference. Instead, he will focus on the theme of the symposium — “Fostering a dynamic global economy”. The event in Jackson Hole, Wyoming is an annual gathering of central bankers to discuss a specific topic.
Asia Pacific
Stocks here were mixed Wednesday as underlying sentiment turned cautious in the wake of expectations for a Federal Reserve December rate increase and the IMF’s warning that China’s credit growth is on a “dangerous trajectory”.
The Shanghai Composite declined 0.1 percent after data from the People’s Bank of China showed China’s new yuan loans fell sharply in July and broad money supply growth slowed. Meanwhile, the International Monetary Fund revised upward its growth forecast for China, but warned the country’s debt is on dangerous trajectory. The Hang Seng added 0.9 percent.
The Nikkei slipped 0.1 percent and the Topix was 0.21 point lower dragged down by automakers on uncertainty about the fate of Mexico prior to the start of the first round of NAFTA negotiations. Toyota Motor and Mazda Motor retreated. Japan Airlines advanced on a broker upgrade. Rival ANA Holdings also was higher.
The S&P/ASX and All Ordinaries were up 0.5 percent each. CSL’s earnings disappointed investors and Commonwealth Bank shares traded ex-dividend. Traders ignored weak wage and consumer confidence data as well. Biotech firm CSL declined after its full-year profit missed expectations. Broadcaster Seven West Media was lower after it posted a full-year loss of A$744.3 million on the back of large write-downs. Woodside Petroleum rallied after reporting a 49 percent increase in first-half profit. Retail giant Westfield also was higher on encouraging half-year results.
The Kospi was up 0.6 percent as traders returned after a public holiday on Tuesday. The Sensex, also returning from a public holiday was up 1.0 percent.
Looking forward
Australia posts July labour force survey. Japan and Singapore release July merchandise trade data. France reports second quarter ILO unemployment rate. The UK releases July retail sales. The Eurozone posts June merchandise trade and final July harmonized index of consumer prices. The European Central Bank publishes minutes for its monetary policy meeting held on July 20. Canada posts June manufacturing sales. In the US, the Philadelphia Fed business outlook survey, July industrial production and leading indicators and weekly jobless claims, money supply and fed balance sheet will be released.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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