On 30 March, 2015 – Shares advance on economic data and corporate deals

Stocks advanced globally Monday. Economic data and merger activity in Europe and the US helped investor morale. Friday’s comments by Fed Chair Janet Yellen also soothed investors’ concerns regarding monetary policy normalization.
United States
Stocks moved sharply higher Monday. Investors cheered encouraging economic data and the latest batch of corporate deal news. Expectations that any increase in the Federal Reserve’s fed funds rate this year will be gradual also helped lift the market. The Dow Jones industrials were up 1.5%, the S&P gained 1.2% and the Nasdaq added 1.15%.
February consumer spending edged up 0.1% after two straight monthly declines. The report also said consumers’ incomes rose a solid 0.4%, a development that could mean higher spending in coming months. February pending home sales were up 3.1%. KB Home led a broad rally among homebuilders. Also shoring up markets were remarks on Friday by Fed Chair Janet Yellen. In her speech, Yellen noted that continued improvement in the US economy means an increase in the Fed’s key interest rate could come later this year, but would likely be gradual.
Investors bid up several health care companies and drug makers involved in deals. UnitedHealth Group jumped after the insurer agreed to buy pharmacy benefits manager Catamaran. Catamaran also gained. Auspex Pharmaceuticals soared after it agreed to be acquired by Teva Pharmaceuticals Industries for about US$3.2 billion in cash. Horizon Pharma climbed 15% on news it is buying Hyperion Therapeutics for US$1.1 billion. Both companies were higher on the day. Fortune Brands Home & Security agreed to buy kitchen and bathroom cabinet maker Norcraft Companies for about US$600 million in cash. Shares in both companies climbed. BioDelivery Sciences International plunged after the drug developer said its potential treatment for pain related to diabetic neuropathy did not meet its main goal in a key study. Fujifilm Holdings agreed to acquire Cellular Dynamics International for US$307 million. Cellular shares more than doubled in heavy trading.
Gold at the afternoon London fixing was down US$10.25 to US$1,185.50. Copper futures were up 0.6% to US$2.78. WTI spot crude was down 39 US cents to US$48.48. Dated Brent spot crude was down 28 US cents to US$56.13. 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 0.7%. The yield on US Treasury 30 year bond was up 1 basis point to 2.55% while the yield on the 10 year note was unchanged at 1.96%.
Europe
Stocks rallied Monday after investor sentiment received a boost from the stronger than expected Eurozone economic sentiment and optimism for a resolution to the situation in Greece. The FTSE was up 0.5%, the CAC gained 1.0%, the DAX added 1.8% and the SMI was 1.3% higher. Strategists said that the appetite for stocks was chiefly being triggered by central banks in both Europe and China reiterating their commitment to stimulus measures.
Greece is expected to present a list of economic reform proposals to international creditors today after Prime Minister Alexis Tsipras’ earlier reform plans met resistance from EU leaders. Tsipras said in remarks published Sunday he is looking for a “happy ending” in his current talks with EU creditors.
Adidas increased on a broker upgrade. Infineon Technologies was up on the day. Banks including Deutsche Bank, Commerzbank, Société Générale, Crédit Agricole and BNP Paribas advanced. Auto makers Daimler, BMW, Volkswagen, Peugeot and Renault also were up on the day. Kingfisher climbed after it announced that its proposed acquisition of Mr. Bricolage collapsed. WPP advanced on a broker upgrade. Compass Group gained after it issued a trading update. The company stated that it expects revenue growth of 5.5% for the first half of the year.
Eurozone economic sentiment rose for the fourth successive month to its highest level in nearly four years as lower oil prices, weak euro and measures of the ECB lifted confidence among firms and consumers. Germany’s consumer prices increased for the second straight month in March according to preliminary data. Italy’s consumer confidence and business confidence climbed strongly in March, strengthening hopes of recovery in the economy.
Asia Pacific
Most stock markets were up Monday even as lower commodity prices kept energy and mining stocks under pressure. The safe-haven Japanese yen declined and dovish comments from People’s Bank of China Governor Zhou Xiaochuan supported the case for further monetary easing, helping to underpin investor sentiment. The markets were also relieved by Federal Reserve Chair Janet Yellen’s talk on Friday. She emphasized that the return to normal interest rates will be gradual.
China on Monday relaxed rules on down payment requirements and housing tax for home buyers, as policymakers try to revive momentum in the slowing property market that poses risks to overall economic growth. The People’s Bank of China said on its website that the minimum down payment requirement for buyers of second homes has been lowered to 40% from 60%. Separately, the finance ministry announced that homeowners who have held a property for at least two years will be exempt from paying business taxes. Previously, only those who owned a property for at least five years were exempt from taxes. Further, the PBoC said first time home buyers who borrow from the housing provident fund need to make a minimum down payment of 20%. Second home buyers using the same facility will have to pay a minimum down payment of 30%. Both ratios were lowered from the previous levels.
The Shanghai Composite jumped 2.6% to a seven-year high, with infrastructure stocks rallying after Beijing unveiled details of an ambitious plan to better connect the economy with the rest of Asia, Africa, the Middle East and Europe with more roads, railways, ports and other related projects. Dovish comments from central bank Governor Zhou Xiaochuan also bolstered expectations that policymakers will unveil further stimulus measures to boost the economy amid growing deflationary risks. The Hang Seng added 1.5%.
The Nikkei was up 0.7% as investors shrugged off weak data which showed that companies curbed output in February due to the Lunar New Year holidays. Honda Motor, Canon, Sony, Nissan Motor and Kyocera advanced as did Fast Retailing and Fanuc. Kikkoman soared on a Nikkei report the company will report a record operating profit of about ¥24.7 billion for the year ending March 31. Japanese industrial output contracted for the first time in three months in February indicating continued sluggishness in the economy. Output dropped 3.4 on the month. The fiscal year for Japan ends on March 31.
Both the S&P/ASX and All Ordinaries dropped 1.2% as lower commodity prices dragged down mining and energy stocks. BHP Billiton, Rio Tinto and Fortescue Metals Group tumbled as iron ore prices plunged to a fresh six-year low. The Kospi added 0.5% amid expectations falling oil prices and low interest rates will help fuel growth. The Sensex rallied 1.9% after Fed Chair Janet Yellen emphasized the return to normal interest rates will be gradual.
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*
Germany releases February retail sales and March unemployment. France posts February consumption of manufactured goods and producer prices. The UK reports its final revision for fourth quarter GDP. The Eurozone releases its flash estimate of March harmonized index of consumer prices and February unemployment. Canada posts February monthly gross domestic product. In the US, January S&P/Case Shiller house prices are released. Also on tap are March consumer confidence and Chicago PMI.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday