On 04 February, 2016 – Stocks mostly advanced on Thursday in volatile trading

Investors were nervous ahead of US employment data scheduled for release on Friday. 

United States

Stocks ended modestly higher after a day of gyrating between slight gains and losses. Materials companies notched some of the biggest gains Thursday as prices for metals and other commodities ended mostly higher. The Dow Jones industrials were up 0.5 percent, the S&P gained 0.2 percent and the Nasdaq edged up 0.1 percent. Investors were cautious prior to the release of the US employment report. Disappointing results at retailers dragged consumer shares lower.

Freeport McMoRan and Alcoa jumped. Retailer Ralph Lauren plunged after its revenue fell short of forecasts. Kohl’s also declined after the retailer posted lower than expected overall sales for the fourth quarter and cut its full-year earnings guidance. GoPro tumbled after the company issued disappointing results. Credit Suisse Group retreated to its lowest price since August 1992 after posting a quarterly loss as it wrote off goodwill and set aside provisions for litigation, while its two investment banking divisions slumped.

Initial jobless claims for the week ended January 30 were up 8,000 to 285,000. Claims have risen for three of the past four weeks suggesting the labor market may be cooling slightly after very strong hiring in December. Factory orders declined 2.9 percent.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$24.35 to US$1,156.35. Copper futures were up 1.2 percent to US$2.12. WTI spot crude was down 61 US cents to US$31.67. Dated Brent spot crude was down 64 US cents to US$34.40. The US dollar was down against the euro, Swiss franc, yen and the Canadian and Australian dollars. However, it advanced against the pound. The Dollar Index dropped 1.0 percent. The yield on US Treasury 30 year bond was down 1 basis point to 2.69 percent while the yield on the 10 year note was down 3 basis points to 1.85 percent.

Europe

Stocks were mixed in Europe Thursday with a rebound in commodity prices providing a boost. Mining and energy stocks were among the best performers. However, mixed corporate earnings results and an EC growth downgrade limited today's gains. The FTSE added 1.1 percent while the CAC was virtually unchanged. The DAX and SMI retreated 0.4 percent and 1.5 percent respectively.

The European Commission marginally downgraded euro area growth and inflation projections as risks from the slowdown in China and other emerging markets, falling oil prices and the weak global trade escalate. Nonetheless, the Eurozone entered its fourth year of recovery and moderate growth is forecast to continue, driven by consumption. The EU projected 1.7 percent growth for the euro area this year, a notch lower than the 1.8 percent estimated previously. The projection for 2017 was maintained at 1.9 percent.

Bank of England monetary policy committee left its interest rate unchanged at 0.5 percent. It also left its asset purchase ceiling at £375 billion. The BoE also downgraded its growth projections in the wake of subdued global activity and continuing fiscal consolidation.

Munich Re increased after the reinsurer raised its dividend for 2015 and reported slightly better than expected full year results. Daimler declined after it reported record profits for last year but forecast slower growth in 2016. RWE and peer E.ON advanced. Deutsche Bank and Commerzbank finished higher. In Paris, LafargeHolcim dropped after it said it is considering divestment of its interest in Lafarge India with an annual cement capacity of around 11 million tons. Total gained after signing a binding agreement with ENN LNG Trading for the delivery of 0.5 million tons per year of liquefied natural gas for a period of 10 years. Technip also closed higher.

Renault and Peugeot were down on the day. In London, Royal Dutch Shell climbed even as it reported an 80 percent decline in profit last year amid the global oil price slump. Vodafone slipped despite reporting its sixth consecutive quarter of growth in revenues. AstraZeneca retreated after saying it expects lower revenues and earnings this year. Mining stocks including Anglo American, Antofagasta, Glencore, Rio Tinto, BHP Billiton and Fresnillo surged after a rebound in commodity prices. Credit Suisse sank in Zurich. The banking group firm slipped into a loss in the fourth quarter, weighed down by impairment charges and restructuring costs.

Asia Pacific

Shares were mostly higher in Asia Thursday. Sentiment was bolstered by a late rebound in U.S. stock indices overnight, higher oil prices and speculation about the Federal Reserve putting interest rate increases on hold. Oil extended overnight gains in Asian deals as a weaker dollar and speculation of collective production cuts helped outweigh data showing a large surge in U.S. crude oil and gasoline inventories last week.

The Nikkei retreated 0.9 percent thanks to a firmer yen and weak earnings forecasts from Panasonic and Hitachi. Exporters ended mixed, with Nissan Motor and Toyota declining while Canon and Fanuc ended higher. Panasonic and Hitachi were down after both lowered their full-year profit forecasts. Sharp climbed on a report it has accepted a takeover offer from Taiwanese electronics assembler Foxconn. Inpex and JX Holdings advanced.

Australian shares rebounded sharply after sinking on the previous day. The S&P/ASX 200 index climbed 2.1 percent as a weakening dollar sparked a powerful rally in crude and other US dollar-denominated commodities. The All Ordinaries was 2 percent higher. The big four banks advanced following Wednesday's steep losses. Macquarie Group was down after the investment bank released its quarterly operating update.

The Shanghai Composite was up 1.5 percent as yuan worries eased and the People’s Bank of China stepped up efforts to stave off a potential liquidity squeeze heading into next week’s Lunar New Year holidays. The Hang Seng index gained 1.0 percent. The Kospi added 1.4 percent while the Sensex snapped a three day decline and was up 0.5 percent.

Looking forward

Australia posts December retail sales. Germany reports December manufacturers’ orders. France releases merchandise trade data for December. Canada’s January labour force survey and December’s merchandise trade balance will be released. In the US, December international trade and January employment situation report will be reported.

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.