On 09 March, 2016 – Global stocks mixed ahead of ECB announcement
With little economic data to guide them, investors were cautious despite rising oil prices.
United States
Shares advanced on some strong earnings reports and a rise in crude oil prices. Several energy companies were rebounding from big declines the day before. The Dow Jones industrials were up 0.2 percent, the S&P and Nasdaq both added 0.5 percent. The S&P has almost tripled since bottoming out at 676.53 exactly seven years ago during the financial crisis. Stocks have been pushed up by higher corporate earnings, though not in the last year, and by the Federal Reserve’s efforts to encourage investors to take more risks by lowering interest rates on bonds and other safer assets.
Murphy Oil and Chevron advanced. Devon Energy, Chesapeake Energy and Freeport-McMoRan were up on the day along with Dow Chemical, Mosaic and International Paper. Air Transport Services jumped after the company turned in solid results and said it would operate an air transportation network for Amazon. Blue Buffalo Pet Products gained after the company posted strong earnings.
Darden Restaurants advanced after it forecast strong quarterly sales and a larger than expected profit. Chipotle Mexican Grill retreated after the company said it closed a Massachusetts store after four employees said they were feeling ill. Nike and Goldman Sachs Group retreated. Microsoft, Cisco Systems and International Business Machines advanced. Biogen, Amgen and Regeneron Pharmaceuticals retreated as the government prepares to test a variety of alternative payment plans in an effort to lower costs.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$20.60 to US$1,246.40. Copper futures were up 0.6 percent to US$2.24. WTI spot crude was up US$1.70 to US$38.20. Dated Brent spot crude was up US$1.19 to US$40.84. The US dollar was up against the yen and the Swiss franc. It was virtually unchanged against the euro and pound. However, it declined against the Canadian and Australian dollars. The Dollar Index was down 0.1 percent. The yield on US Treasury 30 year bond was up 3 basis points to 2.67 percent while the yield on the 10 year note was up 5 basis points to 1.88 percent.
Europe
Stocks rebounded from yesterday’s losses. The indices reached their intraday highs around midday but then the early gains eroded somewhat as the afternoon progressed. The FTSE and DAX were up 0.3 percent, the CAC gained 0.5 percent and the SMI edged up 0.1 percent. Early strength was fueled by rising crude oil prices and investor hopes for further stimulus measures from the European Central Bank. The ECB will make its announcement when it concludes its meeting on Thursday.
Volkswagen advanced despite news that the probe into the emissions-cheating scandal at the company widened. Both E.ON and RWE were down. Crédit Agricole climbed after it said that it aims to boost its annual profit to more than €4.2 billion in 2019 by cutting costs and simplifying the corporate structure. Technip and Total gained.
In London, security firm G4S sank after warning of further possible losses from government contracts. Prudential advanced after it reported a 22 percent rise in full-year operating profit and declaring a special dividend. Restaurant Group tumbled after its 2016 outlook disappointed. Telecom Italia climbed in Milan after completing the sale of the remaining 51 percent stake in Telecom Argentina. Glencore advanced as it recovered some of the previous session's heavy losses. Burberry Group dropped reversing gains made in the previous session on bid rumors and a broker downgrade.
UK industrial production increased for the first time in three months in January as the expansion in manufacturing offset a sharp reduction in oil and gas extraction. Industrial output was up a monthly 0.3 percent. The increase was the first in three months and the fastest in five months.
Asia Pacific
Shares here were mixed Wednesday as a rally in oil prices faded and investors flocked to safe havens on renewed concerns over growth in the wake of the dismal Chinese merchandise trade report. Losses were capped somewhat as oil and metal prices steadied in Asian deals after steep losses overnight following a broker’s note warning that the 20-month commodity rout had further to run in a supply-driven market.
The Shanghai Composite retreated 1.3 percent as growth worries weighed on resource stocks. The Hang Seng slipped 0.1 percent. .
The Nikkei was down 0.8 percent after China’s trade data stoked safe haven demand for the yen. Mazda Motor, Mitsubishi UFJ Financial, and Toshiba tumbled. Oil firms Inpex and JX Holdings retreated after oil prices fell overnight on fresh signals of global over supply and weak demand. Canon advanced on a Nikkei report that it has emerged as the front-runner to buy Toshiba Medical Systems. Nippon Telegraph & Telephone jumped on reports that it was in talks to buy Perot Systems, the information-technology consulting division of Dell, for several billion dollars.
The S&P/ASX and All Ordinaries advanced 1.0 percent and 0.9 percent respectively. Investors shrugged off soft housing finance and consumer confidence data. Gains in banks, retailers and healthcare companies outweighed weakness in the mining and energy sectors. The big four banks were up while miners retreated.
The Kospi added 0.4 percent as investors looked ahead to the policy decision by Bank of Korea, scheduled for Thursday. The Sensex was 0.5 percent higher.
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*
Japan posts February producer price index. China releases February consumer and producer price indices. Germany reports January merchandise trade balance while France releases January industrial production. The European Central Bank announces its monetary policy decision. In the US, February Treasury budget and weekly jobless claims, money supply and Fed balance sheet will be released.