On 14 April, 2015 – European markets slid as investor were cautious ahead of European Central Bank meeting

Stocks were mixed as earnings season began. Investors in Europe continue to worry about the Greek situation. Those in Asia are looking for stimulus from Beijing for the Chinese economy.
United States
US stocks closed mostly higher, led by gains in energy companies as the price of oil recovers. The market moved between small gains and losses in the morning Tuesday, then headed gradually higher in the afternoon. The Dow was up 0.3% and the S&P added 0.2%. Nasdaq lost 0.2%.
Company earnings were mixed. JPMorgan jumped after reporting first-quarter results that beat expectations but Wells Fargo fell after its earnings declined. JPMorgan Chase reported a 12.2% increase in quarterly profits as revenue from fixed income trading rebounded. The bank’s net income rose to US$5.91 billion or US$1.45 per share in the first quarter ended March 31 from US$5.27 billion or US$1.28 per share a year earlier. The results for the latest quarter included an after-tax charge of US$487 million for legal expenses. Wells Fargo reported a 2.6% decline in quarterly profits as expenses rose and the bank set aside more money to cover bad loans. Net income applicable to Wells Fargo’s common shareholders rose to US$5.46 billion or US$1.04 per share in the first quarter ended March 31 from US$5.61 billion or US$1.05 per share a year earlier.
Norfolk Southern slumped after forecasting disappointing first quarter results as demand for coal shipments for export fell. Johnson & Johnson was little changed after reporting first quarter profit dropped 8.6% hurt by unfavorable exchange rates, a divestiture and a slightly higher tax rate. Intel’s first-quarter revenue was flat from a year ago and in line with its own recently lowered expectations due to weak demand for PCs that use the company’s chips. The company’s sales were flat at US$12.8 billion in the quarter ended March 28. Net income rose to US$1.99 billion or 41 US cents per share from US$1.93 billion or 38 US cents per share a year earlier. Intel had slashed its first-quarter sales forecast by nearly US$1 billion last month to US$12.8 billion, plus or minus US$300 million.
Retail sales jumped 0.9% last month, after declining 0.5% in February. The rebound suggests that shoppers are returning after an unseasonably cold winter froze sales. The increase disappointed markets because it was less than expected, however.
Gold at the afternoon London fixing was down US$4.15 to US$1,194.75. Copper futures were down 0.7% to US$2.70. WTI spot crude was up US$1.22 to US$53.13. Dated Brent spot crude was up 54 US cents to US$58.47. The US dollar was down against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.9%. The yield on US Treasury 30 year bond was down 4 basis points to 2.54% while the yield on the 10 year note declined 3 basis points to 1.90%.
Europe
Most stock indices declined Tuesday. Investor concerns over the situation in Greece weighed on the markets. Market participants also were exercising caution ahead of Wednesday’s European Central Bank meeting. Investors were disappointed by the US retail sales report that was lower than expectations and mixed US corporate earnings results. The FTSE was up 0.2%, the CAC retreated 0.7%, the DAX lost 0.9% and the SMI slipped 0.2%.
Expectations are that the European Central Bank will retain its current monetary policy. With inflation staying well below the target and the economic recovery just taking hold, ECB President Mario Draghi is expected to quash talk of wrapping up the quantitative easing program early at the post Governing council meeting press conference. Investors also continue to monitor the situation in Greece. Greece has until April 24 to present a list of reforms which, if found acceptable, would unlock the final tranche of aid to keep the Greek economy afloat. The Greek government denied reports that it is planning to default on its loan repayment to the IMF. Greece also denied reports that it is considering early elections.
Fraport retreated after reporting passenger data for the month of March. Gerresheimer climbed after the company reported increased profit for the first quarter. Banks including Commerzbank, Deutsche Bank, Société Générale, BNP Paribas and Crédit Agricole were lower on the day. Daimler, BMW and Volkswagen declined. LVMH was down after the company’s first quarter revenue rose 16% to €8.32 billion from €7.21 billion in the same quarter last year. Alcatel Lucent surged after Nokia confirmed talks to acquire the telecom equipment maker. However, Nokia dropped. Ericsson advanced — a combination of Nokia and Alcatel Lucent is expected to enable the Finnish networking company compete better against Ericsson. Aberdeen Asset Management declined on a broker downgrade. Mining stocks were among the best performing stocks. Anglo American, BHP Billiton, Antofagasta, Rio Tinto and Glencore finished higher on the day.
Asia Pacific
Shares were mixed in lackluster trading. While mainland Chinese shares extended recent gains, Hong Kong shares succumbed to profit taking after eight consecutive sessions of gains. Japanese shares closed on a flat note in the wake of comments by an adviser to Prime Minister Shinzo Abe, which indicated that the yen was excessively weak against the dollar.
The Shanghai Composite was up 0.3% to close at a fresh seven year high, ahead of GDP data due out Wednesday. The Hang Seng dropped 1.6% as caution set in after sharp gains over the past eight sessions.
The Nikkei was virtually unchanged (up 3.22 points) as investors braced for the upcoming earnings season. Exporters were mixed, weighed down by a broadly firmer yen. Canon, Mazda Motor, Toyota Motor, Hitachi and Honda Motor advanced while Nikon, Panasonic and Nissan Motor retreated. Fast Retailing and Fanuc declined while SoftBank gained. Sony and Sharp were up while Nintendo dropped. Mitsubishi UFJ Financial Group, Mizuho Financial and Sumitomo Mitsui Financial Group advanced. Itochu was up on a Nikkei report that it will likely generate a record net profit of ¥330 billion for the current year ending March 2016.
Both the S&P/ASX and All Ordinaries slipped 0.2%, weight down by losses in the resources and banking sectors. BHP Billiton and Rio Tinto were lower after Standard and Poor’s put some of the world’s biggest iron ore miners on “credit watch negative” citing lower ore prices. Fortescue Metals climbed on news that it will change the roster for its Pilbara workforce in order to bring down costs. The big four banks were lower on the day. The Kospi added 0.6% buoyed by increasing liquidity in the financial system and rising optimism over earnings. The Sensex was closed for a holiday.
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*
China reports first quarter gross domestic product and March industrial production and retail sales. The Eurozone posts February merchandise trade balance. The European Central Bank and Bank of Canada publish their respective monetary policy decisions. In the US, April Empire State survey and March industrial production will be reported. February Treasury international capital will be posted. The Federal Reserve will publish its Beige Book in preparation for its FOMC meeting on April 28 and 29.
*Note — all releases are listed in local time.
Anne D PickerChief EconomistEconoday