On 07 August, 2015 – European markets retreated on disappointing German economic data

Most stock indices retreated Friday but were mixed for the week. Anticipation of and reaction to the US employment report and what it means for Federal Reserve policy dominated investors’ attitude towards risk.
United States
Stocks declined Friday after a solid employment report kept alive the possibly that the Federal Reserve will raise interest rates as soon as next month. The losses gave the Dow Jones industrials its seventh straight decline — its longest losing streak in four years. All three indices — the Dow, S&P and Nasdaq — lost 0.3% on the day. For the week, the Dow declined 1.8%, the S&P retreated 1.3% and the Nasdaq was 1.7% lower.
Employers added 215,000 jobs in July, signaling a steadily rising job market and providing a crucial piece of evidence for the Federal Reserve in deciding whether the economy can withstand higher interest rates as soon as September. That number was slightly below consensus expectations. The unemployment rate remained at 5.3%. Investors continue to scour economic data, including Friday’s jobs report, for guidance on the timing of the first increase in US short-term rates in nearly a decade.
Walt Disney continued its decline. Exxon Mobil was lower along with oil prices. Cablevision Systems was down even after the company managed to stem video subscriber losses, but at the cost of margins. Nvidia surged a day after the chipmaker reported a surprise rise in quarterly revenue, helped by strong demand for its graphic chips for high-end video game computers. American Express jumped after it was reported that activist fund ValueAct took a US$1 billion stake in the company.
Gold at the afternoon London fixing was up US$3.75 to US$1,093.50. Copper futures were down 0.4% to US$2.33. WTI spot crude was down 79 US cents to US$43.87. Dated Brent spot crude was down 91 US cents US$48.61. The US dollar was up against the pound Swiss franc and the Canadian dollar. However, it declined against the euro, yen and the Australian dollar. The Dollar Index was down 0.2%. The yield on US Treasury 30 year bond was down 8 basis points to 2.82% while the yield on the 10 year note was down 6 basis points to 2.16%.
Europe
European stocks retreated, extending the weakness from the previous trading day. The markets got off to a weak start Friday following the release of some disappointing German economic data. The situation did not improve after the release of the US jobs report, which was largely in line with expectations. The FTSE was down 0.4%, the CAC declined 0.7%, the DAX retreated 0.8% and the SMI was 0.5% lower. On the week, the FTSE added 0.3%, the CAC advanced 1.4% and the DAX gained 1.6%. However, the SMI slipped 0.2%.
Energy and mining stocks were among the best performers at the end of the week, despite recent weakness in commodity prices. However, European broadcasters and drug companies were under pressure. Allianz slipped after reporting second-quarter results. Merck sank, adding to its losses from the previous session. Both Commerzbank and Deutsche Bank were down. Orange and Alcatel-Lucent dropped. Vivendi retreated — European broadcasters were under pressure following the disappointing report from Viacom on Thursday. Total and Technip gained. ITV declined following unimpressive corporate reports from the US. William Hill was down after its first half profit fell. However, mining stocks turned in a positive performance, despite recent weakness in metal prices. Anglo American, Glencore and. Antofagasta gained. Hikma Pharmaceuticals and AstraZeneca were down.
German June exports decreased for the first time in five months in June and imports declined unexpectedly. Germany’s industrial production logged a 1.4% decline in June. French industrial output declined unexpectedly in June after rising in the previous month. Industrial production declined 0.1% on the month in contrast to a 0.4% rise in May. France’s trade deficit sharply narrowed in June to reach its lowest level in more than eight years as exports grew robustly on the back of several large contracts. June UK visible trade deficit widened to GBP9.2 billion from GBP8.4 billion in May.
Asia Pacific
Stocks were mixed Friday as disappointing US earnings and continued weakness in commodity prices kept investors on edge prior to the release of US employment report. Investors were hoping the report could provide fresh information on whether the Federal Reserve will raise interest rates in September or wait until December. The report was released after markets here were closed for the week.
The Shanghai Composite was up 2.3% after the Shanghai Securities News reported that close to 300 Chinese funds were sitting on the sidelines with “ammunition” to enter the stock market. The Hang Seng added 0.7%. The former was up 2.2% on the week while the latter shed 0.3%. After recent mixed data on manufacturing and services sector activity, investors waited for Chinese trade balance, imports and exports figures along with consumer and producer price indices that would be released over the weekend.
The Nikkei added 0.3% on the day and 0.7% on the week. The Bank of Japan left both its policy interest rates and quantitative easing unchanged along with its overall assessment of the economy while blaming zero inflation on weak energy prices. A weaker yen and solid earnings from Softbank offered some support. Softbank advanced as the telecoms conglomerate reported a higher quarterly profit and announced a share buyback. Kobe Steel, Daikin Industries and Nikon also climbed.
The S&P/ASX lost 2.4% and the All Ordinaries retreated 2.3% as anxiety over earnings and indications that the Reserve Bank of Australia is unlikely to cut interest rates further in the near term led investors to dump banking stocks for the second day running. The S&P/ASX dropped 4.0% and the All Ordinaries 3.7% on the week. The Reserve Bank of Australia’s quarterly monetary policy statement noted improvement in the economy overall, though the RBA modestly downgraded its economic growth forecasts for the year to June 2016. Jobs data has improved while non-mining business conditions are ‘clearly above average’, the bank said while raising its forecasts for inflation to 2.5% over the next 2 years.
The Kospi slipped 0.2% on the day and 1.0% on the week as uncertainty over the timing of a Fed rate increase coupled with concerns over China’s economic slowdown and a weak earnings outlook for domestic companies kept investors cautious heading into the weekend. The Sensex declined 0.2% on the day but added 0.4% on the week.
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*
Monday — US labor market conditions index will be posted.
Tuesday — Japan reports June tertiary index. In the US, July NFIB index, second quarter productivity and costs and June wholesale trade will be released.
Wednesday — Japan releases July producer price index. China reports July industrial production and retail sales. India releases July consumer prices and June industrial production. The UK releases July labour market report and the Eurozone posts June industrial production. In the US, June JOLTS and Treasury budget will be reported.
Thursday — Japan reports June machine orders. France and Germany release July consumer prices. The European Central Bank releases minutes from its July 16 governing council meeting. In the US, July retail sales and import/export prices along with June business inventories and weekly jobless claims, money supply and Fed balance sheet will be released.
Friday — India posts July WPI. In Europe, flash second quarter gross domestic product will be released for the Eurozone, France, Germany and Italy. Final harmonized index of consumer prices for July also will be released. In the US, July producer prices and industrial production and preliminary consumer sentiment for August will be reported.
*Note — all releases are listed in local time.