On 25 September, 2015 – European markets rose as the US Federal Reserve provided clarity about interest rates

Stocks were mixed to end the week on Friday while all retreated for the week (except the FTSE).
United States
Stocks were mixed Friday even after Federal Reserve Chair Janet Yellen cleared up some of the uncertainty surrounding the outlook for interest rates. Strong early gains evaporated amid word that John Boehner decided to step down from his role as Speaker of the House of Representatives. The Dow Jones industrials added 0.7% while the Nasdaq retreated 1.0%. The S&P (down 0.9 point) was virtually unchanged. On the week the indices lost 0.4%, 2.9% and 1.4% respectively.
The S&P erased an early Fed driven rally as a selloff in biotech stocks offset gains in banking shares. The Dow was helped by shares of Nike which hit a record high after its profit topped expectations on strong China growth. The stock market has been volatile for the past six weeks on worries about the impact of slowing growth in China and other emerging markets as well as uncertainty about the outlook for interest rates. The late sell-off on Friday pushed stocks to their third losing week in the last four.
Federal Reserve Chair Janet Yellen gave investors a clear signal with remarks she delivered after the market close on Thursday. Yellen stated that the Fed remains on track to raise rates this year, saying the more “prudent strategy is to begin tightening in a timely fashion and at a gradual pace.” And in Washington, House Speaker John Boehner’s announcement that he will resign his House set at the end of October comes as lawmakers struggle with the President to avoid a government shutdown on October first.
Final second quarter gross domestic product indicated that the economy expanded at a revised annualized rate of 3.9% in the second quarter, up from the previous estimate of 3.7%. The University of Michigan’s final September reading on consumer sentiment was 87.2, down from 91.9 in August.
Gold at the afternoon London fixing was down US$7.85 to US$1,146.65. Copper futures were down 0.8% to US$2.28. WTI spot crude was up 79 US cents to US$45.70. Dated Brent spot crude was up 43 US cents to US$48.60. The US dollar was up against the euro, pound, yen and Swiss franc. It was virtually unchanged against the Canadian and Australian dollars. The Dollar Index slipped 0.1%. The yields on both US Treasury 30 year bond and the 10 year note slipped 4 basis points to 2.96% and 2.16% respectively.
Europe
European markets ended Friday’s session solidly in positive territory but ended a turbulent week with losses. Investors were heartened by comments from Janet Yellen late Thursday, which provided the clarity investors had been seeking on the direction of US monetary policy. The remarks came a week after the Fed left interest rates near zero yet again. The move left investors confused about when the long anticipated interest rate increase was likely to happen. The FTSE added 2.5%, the CAC climbed 3.1%, and the DAX gained 2.8% as did the SMI. For the week, the FTSE inched up 0.1%. However, the CAC, DAX and SMI retreated 1.2%, 2.3% and 2.7% respectively.
The Bank of England sees risks in both China and emerging market economies to affect UK financial stability through the direct exposures of British banks. BoE’s Financial Policy Committee said Friday that the immediate risks in relation to Greece and the euro area have fallen somewhat but other downside risks to financial stability stemming from the global environment have increased.
Volkswagen retreated on reports that the automaker will name Matthias Mueller, the head of its Porsche Sports car brand, as its new chief executive. However, BMW and Daimler advanced as did Renault and Peugeot. Merck climbed after the company and Pfizer said they would collaborate with Dako, an Agilent Technologies company, to jointly develop and commercialize an investigational immune checkpoint inhibitor. Shares of Adidas finished higher after Nike posted better than expected sales and profit growth for the first quarter of fiscal 2016. Kering, LVMH and L’Oréal finished higher. Synergy Health surged after a federal court in Ohio refused to block the company’s takeover by Steris. ARM Holdings climbed on a broker upgrade. Heineken gained in Amsterdam after the Dutch brewer announced the formation of a new joint venture in Ivory Coast under the name of “Brassivoire” to produce and market beer in the country.
Asia Pacific
Asian stocks ended mixed on Friday as lackluster cues from US markets overnight and comments by US Federal Reserve Chair Janet Yellen on US economic outlook, inflation and prospects of an interest rate increase at some point this year kept investors’ risk appetite in check heading into the weekend. Japanese shares finished sharply higher after Prime Minister Shinzo Abe set out three new goals for “Abenomics” targeting a 20% increase in gross domestic product to ¥600 trillion.
The Nikkei jumped 1.8% on the day but lost 1.0% on the week. The country inched back into deflationary territory in August thanks to lower oil prices. While overall nationwide consumer prices was up 0.2% in August from a year ago, core inflation excluding volatile food prices slipped 0.1%. The Nikkei advanced on speculation the Bank of Japan will loosen its monetary policy at the October policy meeting to support a fragile economic recovery. Automakers closed mostly higher after steep losses Thursday amid concerns over the news around Volkswagen’s emissions scandal. Sony and Panasonic were up as the dollar gained against its peers on Yellen’s comments late Thursday on inflation and monetary policy. Sharp retreated on a Nikkei report that the struggling electronics maker would likely report an operating loss of ¥30 billion for the first half of the year.
The Shanghai Composite dropped 1.6% as investors fretted over valuations amid weakening economic growth. However, the Hang Seng added 0.4%. The Shanghai Composite was down 0.2% and the Hang Seng retreated 3.4% on the week.
The Australian market ended another choppy session lower, dragged down by banking and energy stocks. The S&P/ASX rose as much as 0.8% in early trade before turning volatile to end the session down 0.6%, taking the week’s loss to 2.5% after two consecutive weekly gains. The All Ordinaries shed 0.5% and was 2.3% lower on the week. The four big banks retreated as did miners. The Kospi was down 0.2% and 2.7% on the week. The index retreated on global growth worries and amid caution ahead of next week’s Chuseok national holiday. The Sensex was closed for a holiday and was 1.4% lower 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 — August personal income and spending will be posted in the US along with September pending home sales index and Dallas Fed manufacturing index.
Tuesday — The Reserve Bank of India announces its monetary policy decision. September EC economic sentiment will be released. In the US, August international trade in goods, July S&P Case/Shiller house price index and September consumer confidence will be reported.
Wednesday — August industrial production and retail sales will be posted in Japan. France releases July and August consumption of manufactured goods and August producer prices. Germany posts September unemployment. The UK reports its final second quarter gross domestic product data. The Eurozone releases August unemployment and September flash harmonized index of consumer prices. In the US, ADP private employment for September will be posted along with September’s Chicago PMI index.
Thursday — Japan posts third quarter Tankan and final September manufacturing PMI. China releases CFLP and Caixin PMIs. India, the Eurozone, Germany, France, UK and US post final September manufacturing PMI, In the US, September ISM manufacturing survey, August construction spending along with weekly jobless claims, money supply and Fed balance sheet will be reported.
Friday — Japan’s August household spending and unemployment will be released. Australia posts August retail sales. The Eurozone releases August producer price index. In the US, September employment situation report and August factory orders will be reported.
*Note — all releases are listed in local time.