On 26 February, 2015 – European markets rallied on stronger-than-expected economic data

Stocks were mixed in Asia Pacific and US but rallied in Europe.
United States
US shares drifted Thursday with energy stocks among the biggest decliners as crude oil prices declined. Investors were weighing new economic data on unemployment benefit claims, consumer prices and orders for durable goods. Investors were mostly focused on the consumer prices report. Rising inflation would make it more likely that the Fed would move sooner to raise its key interest rate. Both the Dow Jones industrials and the S&P lost 0.1%. The Nasdaq however added 0.4% on deal news in the technology sector.
Durable goods orders were up 2.8% in January, the biggest increase since July 2014. January consumer prices excluding food and energy were up 0.2% and were up 1.6% on the year. Weekly applications for unemployment benefits rose last week to a seasonally adjusted 313,000 and the most in six weeks. That total is still consistent with steady hiring.
Several oil drilling companies were down sharply including Newfield Exploration, Ensco and Noble. Avago Technologies jumped after the company reached a deal to acquire Emulex for US$8 per share. Emulex shares surged. Apple was up after the company sent out invitations for a March 9 event, about one month before the much-anticipated launch of the new Apple Watch. Salesforce.com climbed after the cloud software company reported quarterly earnings and raised its full-year revenue forecast. Transocean was down 1after quarterly results. Exxon Mobil and Chevron declined on falling oil prices. International Business Machines was down after the company said it expects currency swings will drag on revenue growth in the first quarter by more than it had initially forecast.
Gold at the afternoon London fixing was up US$3.50 to US$1,208.25. Copper futures were up 1.9% to US$2.69. WTI spot crude was down US$1.97 to US$49.02. Dated Brent spot crude was down US$1.04 to US$60.59. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 1.4%. The yield on US Treasury 30 year bond was up 6 basis points to 2.63% while the yield on the 10 year note was up 8 basis points to 2.04%.
Europe
European stocks rallied Thursday following the release of some better than expected economic data. Eurozone economic confidence and German consumer confidence data were better than expected and the German unemployment declined. The FTSE was up 0.2%, the CAC gained 0.6%, the DAX advanced 1.0% and the SMI added 0.8%.
Bayer advanced after it reported strong quarterly revenues. Rocket Internet gained on a broker upgrade. Allianz declined but Deutsche Telekom was up after both reported financial results. AXA gained even though it received a broker downgrade. Saint-Gobain retreated after it reported its full year results. Royal Bank of Scotland declined after the lender’s full year operating loss missed estimates. Reed Elsevier dropped after its full year earnings and revenues declined from a year ago. Standard Chartered advanced as traders welcomed the appointment of William Thomas Winters as chief executive. Credit Suisse declined on a broker downgrade.
Eurozone economic confidence strengthened to a 7-month high in February. The economic confidence index climbed to 102.1 from 101.4 in the prior month. It was expected to improve to 102. German consumer confidence is set to rise to its highest level since October 2001 as consumer optimism turned stronger underpinned by an upward trend in economic expectations. The forward looking consumer confidence index was up more than expected to 9.7 in March from 9.3 in February. This was the highest score since October 2001. Germany’s February jobless rate remained at a record low of 6.5% in February. Spain’s fourth quarter gross domestic product was up 0.7% on the quarter and 2.0% on the year. UK fourth quarter growth was confirmed at 0.5% on the quarter and 2.7% on the year.
Asia Pacific
Shares were mixed Thursday. The Shanghai Composite and Nikkei rallied while the S&P/ASX and All Ordinaries declined in response to mixed corporate earnings. The markets in India, Singapore and Taiwan also were lower as Federal Reserve Chair Janet Yellen reiterated a cautious stance on interest rates during her second day Congressional testimony.
The Shanghai Composite jumped 2.2%, led by financials and builders, after the State Council said it will pursue proactive fiscal policies to spur growth and help mitigate the pace of the economic slowdown. Also, there are expectations that the government will announce more easing measures to stimulate the economy at the next meeting of the National People’s Congress that begins next week. The Hang Seng added 0.5%, reversing early losses following the strong rally on mainland markets.
The Nikkei added 1.1% after news that Japan’s public servant pension fund will raise its target allocation for domestic stocks. J Front Retailing, Daiwa Securities, Yahoo Japan and Kawasaki Kisen Kaisha rallied. TDK gained on a Nikkei report that it will build large factories in Japan for the first time in eight years. Inpex and Japan Petroleum Exploration advanced after oil prices rebounded strongly Wednesday amid a mixed US oil inventories report. Mizuho Financial Group was up on a Nikkei report that it is in advanced talks with the Royal Bank of Scotland to buy its US loan assets for several billion dollars. Mitsubishi UFJ Financial and Sumitomo Mitsui Financial also advanced.
The S&P/ASX was down 0.6% and the All Ordinaries lost 0.5% even though weak economic data fueled expectations that the Reserve Bank of Australia could cut its cash rate again at its next week’s monetary policy meeting. The four big banks retreated. Bauxite miner Alumina was down after it reported an annual net loss in 2014, hurt by restructuring charges. Fortescue Metals Group ended virtually unchanged while BHP Billiton and Rio Tinto advanced. The Kospi edged up 0.1% while the Sensex lost 0.9% ahead of the expiry of February series derivative contracts.
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*
Japan reports January data for the consumer price index, unemployment, industrial production, household spending and retail sales. France releases January producer prices and consumption of manufactured goods. The US posts its second estimate of fourth quarter GDP, February Chicago PMI and final consumer sentiment.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday