On 14 August, 2015 – Week Ahead: Fed minutes in focus

Stocks mostly were up Friday but were lower for the week. Some disappointing European second quarter growth figures weighed on stock markets there. The devaluation of the yuan sent investors to safe havens during the week.
United States
Stocks were up Friday as China’s currency stabilized and oil edged higher after hitting its lowest price in more than six years. The Dow Jones industrials and S&P both added 0.4% while the Nasdaq added 0.3%. On the week, the Dow was up 0.6%, the S&P gained 0.7% and Nasdaq edged up 0.1%. Trading was somewhat subdued Friday — it is the middle of the August vacation season. Stocks hit session highs late in the day after Eurozone finance ministers agreed to a Memorandum of Understanding with Greece that was drafted by institutional negotiators, “with some additional measures.”
JCPenney advanced after reporting a narrower loss in its second quarter on stronger-than expected sales as it continued to turn its business around. Nordstrom was up as it also beat expectations in results reported after the markets closed Thursday. The earnings reports came a day after the Commerce Department reported that retail sales climbed last month, raising hopes of continued good news for retailers in the current quarter. Sprint helped to lead the telecom sector higher.
On Friday, the July producer price index was up 0.2% after climbing 0.4% in June. July industrial production climbed 0.6% after inching up 0.1% in June. The bigger than expected increase in production reflected a rebound in manufacturing output, which was attributed to an increase in production of motor vehicle assemblies.
Gold at the afternoon London fixing was up US$1.50 to US$1,118.25. Copper futures were down 0.1% to US$2.35. WTI spot crude was up 27 US cents to US$42.50. Dated Brent spot crude was down 44 US cents to US$49.19. The US dollar was up against the euro, Swiss franc and the Canadian dollar. However, it declined against the pound, yen and the Australian dollar. The Dollar Index was up 0.3%. The yield on US Treasury 30 year bond was down 2 basis points to 2.84% while the yield on the 10 year note was up 2 basis points to 2.20%.
Europe
Stocks retreated Friday as disappointing Eurozone GDP figures raised further concerns about the health of the global economy. The FTSE and DAX lost 0.3% while the CAC was down 0.6%. The SMI however, gained 0.2%. On the week, stocks retreated with the FTSE down 2.5%, the CAC down 3.8%, the DAX 5.1% lower and the SMI 0.7% lower. Lawmakers in Greece approved the country’s third bailout program. The program was approved late on Friday by Eurozone finance ministers.
Eurozone second quarter gross domestic product growth slowed to 0.3% from 0.4% in the first quarter, missing forecasts of a 0.4% gain. Annual inflation was 0.2%, in line with estimates. German growth accelerated slightly, while French GDP was flat.
Glencore was down after it said it raised almost $290 million from the sale of its Tampakan copper project in the Philippines. Commerzbank retreated after it reportedly agreed to settle a dispute with former management board member for almost $3 million. RWE was down after a broker downgrade.
Asia Pacific
Asian markets were mixed and were mostly lower on the week — some regional currencies rebounded Friday after China’s yuan traded slightly stronger after its steep devaluation earlier in the week.
On Friday, Beijing set the yuan’s daily rate against the US dollar roughly unchanged from the previous day. A slightly stronger daily fixing marks a turnaround from Beijing’s moves the previous three days to guide the yuan down on the currency’s previous close. The yuan’s strengthening Friday eased some worries about the implications of its rapid decline for regional currencies. Chinese shares posted modest gains as the yuan held steady against the dollar following three days of declines. Investor sentiment also improved after many Tianjin-based companies said their losses following explosions in the northeastern port city would be limited. The Shanghai Composite closed 0.3% higher while the Hang Seng was down 0.2%. On the week, the index jumped 5.9%. The Hang Seng retreated 0.1% (and was down 2.3% on the year) as shares of Lenovo Group fell sharply for a second day.
The Nikkei ended down 0.4% and was 1.0% lower on the week. Shares were dragged down by commodity related stocks. Investors also looked forward to the release of Monday’s GDP figures in the wake of recent spate of mixed data releases. Energy stocks Inpex and JX Holdings dropped as did steel producer Nippon Steel & Sumitomo Metal, Nisshin Steel and JFE Holdings. Tractor and heavy equipment manufacturer Kubota slumped a day after data showed the country’s core machinery orders fell for the first time in four months. Companies with significant exposure to China including Komatsu and Hitachi Construction Machinery continued to drift lower. Subaru maker Fuji Heavy Industries advanced despite a Nikkei report that it has suffered damage to more than 100 new vehicles in Tianjin. Nexon shares climbed after posting strong earnings for the second quarter.
The S&P/ASX was down 0.6% on the day and lost 2.2% on the week while the All Ordinaries retreated 0.5% and 2.1%. Weak commodity prices weighed on the resource sector. South Korea’s market ended 1.3% lower for the week. It was closed for a national holiday Friday. The Sensex bounced up 1.9% after official data showed that the country’s wholesale inflation plunged to a historic low of minus 4.05% in July, driven by weak food and fuel prices. With both CPI and WPI figures surprising on the downside, investors are now pinning hopes of another rate cut by the Reserve Bank of India when it meets in September.
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 — June merchandise trade for the Eurozone is released. In the US, August Empire State manufacturing survey and housing market index are posted along with June Treasury international capital.
Tuesday — Minutes from the Reserve Bank of Australia’s meeting earlier this month are published. The UK releases July consumer and producer price indices. July housing starts are posted in the US.
Wednesday — Japan posts merchandise trade balance for July. In the US, July consumer prices will be released. The Federal Reserve publishes minutes from the July 28 and 29 FOMC meeting.
Thursday — Germany posts July producer prices and the UK reports July retail sales. In the US, July existing home sales, August Philadelphia Fed surveys and July leading indicators will be released along with the weekly jobless claims, money supply and Fed balance sheet.
Friday — Flash manufacturing PMIs will be released for Japan, China, France, Germany, Eurozone and US. The EU releases its flash consumer confidence survey. Canada posts July consumer price index and June retail sales.
*Note — all releases are listed in local time.