On 25 February, 2015 – Global markets were mixed due to profit taking

US markets were mixed as investors monitored Federal Reserve Chair Janet Yellen’s Congressional testimony; European markets retreated on profit taking; Asian markets were mixed, though sentiment was supported by an improvement in China’s February flash manufacturing PMI.
United States
US markets drifted between small gains and losses as investors sifted through the latest corporate earnings news. Traders also monitored a second day of Congressional testimony by Federal Reserve Chair Janet Yellen, this time to the House of Representatives financial services committee. Oil prices rebounded after an early slide. The Dow Jones industrials were up 0.1% while the S&P slipped 0.1%. The Nasdaq was virtually unchanged (down 0.98 point).
The Dow and S&P closed at record highs on Tuesday after investors were encouraged by remarks from Ms Yellen suggesting that the Fed was not in a hurry to raise interest rates. Ms Yellen noted that the job market was still healing and inflation remained low. Lower interest rates make borrowing easier and tend to be a plus for financial markets. Ms Yellen’s second day of testimony repeated her prepared remarks. The testimony provided few clues for investors on the timing of an interest rate increase.
Chesapeake Energy slumped after the natural gas company’s fourth quarter results missed expectations. The company also said it planned to spend less this year. Hewlett-Packard tumbled a day after the computer and printer maker reported fiscal first quarter sales that fell short of forecasts. Lumber Liquidators Holdings slid after it reported fourth quarter results that were below expectations. Boston Beer declined after the brewer of Samuel Adams beer reported worse than expected fourth quarter results late Tuesday. It also issued a disappointing financial outlook. Lowe’s profit and revenue increased in the fourth quarter. Dollar Tree was up after the company reported fiscal fourth quarter results that surpassed expectations. Apple was down but was still up almost 10% this month.
January new homes sold at a faster pace than forecast, a sign of stabilization in the housing industry. The 481,000 houses purchased last month at an annualized pace were little changed from a more than six year high of 482,000 in December.
Gold at the afternoon London fixing was up US$12.25 to US$1,204.75. Copper futures were up 0.3% to US$2.65. WTI spot crude was up US$1.52 to US$50.85. Dated Brent spot crude was up US$3.08 to US$61.74. The US dollar retreated against the euro, pound, Swiss franc and the Canadian and Australian dollars. It was virtually unchanged against the yen. The Dollar Index was down 0.3%. The yields on both the US Treasury 30 year bond and 10 year note slipped 2 basis points to 2.57% and 1.96% respectively.
Europe
Stocks retreated Wednesday primarily due to profit taking. Investor relief over the four month Greek debt deal extension helped to fuel the recent gains and in the process drove most European markets to new highs. The FTSE was down 0.2% while both the CAC and SMI slipped 0.1%. The DAX was virtually unchanged (up 4.53 points). Investors continued to monitor Federal Reserve Chair Janet Yellen’s second day of testimony before a Congressional committee. The prevailing message appears to be that policy makers will be ‘patient’ before raising rates.
On Tuesday, the European Commission signaled its approval of the list of reforms that Greece submitted just ahead of the expiry of the Monday midnight headline. The commission noted that the list is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. However, the commission expects Greece to furnish details of the reforms before the end of April. The Greek government reportedly promised to not to roll back any ongoing or completed privatizations. The proposals also contained assurances to reform tax policy and enforcement.
Fresenius and its unit Fresenius Medical Care advanced after reporting results. RWE and E.ON gained. Commerzbank and Deutsche Bank declined as did Crédit Agricole, BNP Paribas and Société Générale. Bouygues was up after reporting annual results. Axa and Safran gained after both companies reported financial results. Weir Group retreated after reporting lower profit for the year. GKN declined on a broker downgrade. St. James Place advanced after it reported full year results. Whitbread was up after the company said total sales climbed 14.3% in the fourth quarter, and like for like sales growth was 5.8%. Whitbread expects to deliver full year results towards the top end of current expectations. AP Moeller-Maersk was up after the shipping giant said it plans to divest the 20% ownership stake in Danske Bank and pay a special dividend to shareholders.
Asia Pacific
Stocks here were mixed Wednesday after Greece successfully secured another four months of emergency funding and US Federal Reserve chair Janet Yellen indicated that the Fed is not likely to begin raising interest rates for at least the next couple of monetary policy meetings. Market sentiment was also propped up after China’s February flash manufacturing PMI climbed to a reading of 50.1 from 49.7.A reading above 50 indicates expansion and one below, contraction. However, the Shanghai Composite was down 0.6% on profit taking after the seven day Lunar New Year holiday. The Hang Seng added 0.1%.
The Nikkei slipped 0.1% on profit taking after five consecutive days of gains. Pioneer, Chubu Electric Power, Asahi Glass, Hitachi Construction, KDDI and Central Japan Railway Company retreated. Hitachi dropped after it agreed to buy Finmeccanica’s rail business. Takeda Pharmaceutical slid after the drug maker said its German unit would acquire Toplam Kalite for US$121 million. Yahoo Japan, SoftBank, Inpex and Nippon Paper Industries were up on the day.
Both the S&P/ASX and All Ordinaries were up 0.3% with resource stocks gaining ground as oil and metals prices advanced. BHP Billiton, Rio Tinto and Fortescue Metals advanced. Newcrest Mining was up as gold prices rebounded from seven week lows in response to the dovish message from the Fed. WorleyParsons was down after the mining and engineering group warned of an uncertain outlook. Banks were mixed. Kerry Stokes’ Seven Group Holdings jumped after the industrial services, media and investment conglomerate announced a A$100 million share buyback after reporting a 74% decline in half year net profit which was weighed down by the mining downturn. Broadcaster Southern Cross Media Group climbed after announcing its half-yearly results and appointing a new chairman.
The Kospi was up 0.7% to reach nearly a five month high, with encouraging manufacturing data from China and indications that the Federal Reserve would wait until later this year before raising interest rates buoying investor sentiment. The Sensex was virtually unchanged (up 3.33 points). Investors were cautious ahead of F&O contracts set to expire tomorrow and the Railway Budget due to be announced on Thursday.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
February Gfk consumer climate will be reported for Germany along with February unemployment. The Eurozone reports January M3 money supply along with February EC economic sentiment. Italy reports January retail sales. In the US, January consumer prices and durable goods orders will be released along with weekly jobless claims, money supply and Fed balance sheet.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday