On 01 March, 2016 – A global rally in stocks

Shares closed sharply higher as investors seemed to be encouraged by economic data. 

United States

Stocks closed sharply higher, giving the market its best day in over a month. Traders appeared to be encouraged by several pieces of good news on the US economy including a jump in construction spending to the highest level in eight years. The Dow Jones industrials were up 2.1 percent, the S&P added 2.4 percent and the Nasdaq climbed 2.9 percent.

January construction spending rose 1.5 percent as spending on non-residential buildings and government projects improved. That was the largest gain in eight months and took spending on construction to its highest level in eight years.

Apple and Alphabet advanced. Facebook stock added 2.2 percent. Microsoft, Facebook, Amazon, Netflix and Starbucks were higher. Hertz climbed after the company said it had cut costs and improved the management of its rental fleet. JPMorgan Chase and Bank of America advanced. Kate Spade gained after company gave a strong profit forecast for 2016. Workday climbed after it reported a smaller loss and better than expected sales. Medtronic retreated after its sales fell short of projections. Ford Motor was up after the company’s sales rose almost 20 percent, a better gain than expected. GM gained even though sales fell as it tries to shift its business away from rental sales. Honeywell said it would give up on its effort to buy United Technologies. It said the company was not willing to negotiate a deal. Honeywell had offered to buy United Technologies for $108 a share, or about $90 billion. United Technologies retreated while Honeywell rallied.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$1.60 to US$1,236.50. Copper futures were up 0.5 percent to US$2.14. WTI spot crude was up 60 US cents to US$34.35. Dated Brent spot crude was up 23 US cents to US$36.80.The US dollar was up against the yen and euro. The currency retreated against the pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.2 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 9 basis points to 2.70 percent and 1.82 percent respectively.

Europe

Stocks advanced Tuesday despite some weak global economic data. Employment data from the Eurozone were viewed positively, but manufacturing data were disappointing. The FTSE was up 0.9 percent, the CAC gained 1.2 percent, the DAX jumped 2.3 percent and the SMI added 1.5 percent.

Automakers climbed on the opening day of the Geneva motor show. BMW, Daimler, Volkswagen, Peugeot and Renault advanced. RWE and peer E.ON gained. Klöckner jumped even though the metals trader posted fiscal 2015 net loss of €349 million, hit by goodwill impairments in its North American activities. In London, Barclays tumbled after announcing further restructuring and halving its dividend in a bid to boost its capital buffer. The London Stock Exchange Group rallied after the Intercontinental Exchange confirmed that it is considering making an offer for LSE, which is in talks over a potential merger with Deutsche Börse. Glencore retreated after it reported a 70 percent drop in annual adjusted net income after being hit by weak commodity prices. Fresnillo declined after the company reported profit before income tax of $212.4 million for the full year ended 31 December 2015 compared to $251.1 million last year.

Eurozone manufacturing growth eased to a one-year low in February according to the final Markit manufacturing PMI. The index declined to a reading of 51.2 — a 12-month low — from 52.3 in January. The UK manufacturing PMI slid to 50.8 from 52.9 in January. This was the lowest reading since April 2013. Eurozone unemployment rate declined to the lowest level in more than four years in January despite sluggish economic growth and weak confidence. The jobless rate was 10.3 percent, down from 10.4 percent in December.

Asia Pacific

Shares here advanced Tuesday as oil prices extended overnight gains and The People’s Bank of China set the yuan fixing stronger for the first time in six days. With China stepping up support for the economy and Eurozone inflation data adding pressure on the European Central Bank to expand its monetary stimulus program in March, markets paid little attention to lackluster US and Chinese data.

The Sensex was up 3.4 percent, leading regional gains on hopes that the government's decision to stick to its projected fiscal consolidation path and reduce its net borrowing program would open up space for another interest rate cut by the Reserve Bank of India.

The Shanghai Composite was up 1.7 percent after the surprise decision late Monday to cut banks' reserve requirements by 50 basis points to 17 percent. While both official and unofficial PMI readings of China's manufacturing activity indicated contraction, the dismal data were compounded by a drop in services activity to the weakest level in seven years. The Hang Seng added 1.5 percent.

The Nikkei was up 0.4 percent after declining as much as 1.1 percent earlier in the day amid the yen's strength and disappointing capital spending, household spending and corporate profits data. NEC retreated after downgrading its earnings forecast for the fiscal year to March. Nissan dropped on profit taking after climbing the previous day on share buyback news. Marubeni declined on a Nikkei report that the trading house may help build Egypt's largest power plant.

Both the S&P/ASX and All Ordinaries added 0.8 percent. The Reserve Bank of Australia left its monetary policy unchanged and signaled growing confidence about the strength of the economy, adding it would cut the cash rate should conditions worsen. The big four banks climbed. Energy stocks Woodside Petroleum, Oil Search, Origin Energy and Santos gained after US crude prices advanced overnight following a drop in crude output from OPEC and the US and a pledge by Saudi Arabia to work with OPEC members to limit oil market volatility.

Global Stock Markets

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*

Australia reports fourth quarter 2015 gross domestic product. In the US, ADP employment for February will be released. The Federal Reserve will publish its Beige Book in preparation for its FOMC meeting March 15 and 16. Weekly EIA petroleum status will also be released.

*Note — all releases are listed in local time.