On 15 March, 2016 – Most stock indices retreated Tuesday
Investors were cautious ahead of the Federal Reserve policy announcement.
United States
Stocks were mostly lower with shares of energy and materials companies declining along with the price of oil and precious metals. Drug companies were pummeled again on investor concerns that raising prices would become more difficult for the companies. The Dow Jones industrials edged up 0.1 percent but the S&P and Nasdaq retreated 0.2 percent and 0.45 percent respectively. Trading was light.
Freeport-McMoRan, Chevron and Murphy Oil retreated. Valeant Pharmaceuticals plunged after it reported its preliminary fourth-quarter profit and cut its forecast for 2016, disappointing investors. Valeant is already under scrutiny from Congress over drug prices and it is being investigated by the Securities and Exchange Commission. Acquiring older drugs and raising their prices is a significant part of Valeant’s business, and the company’s stock is one of a group that has tumbled as Congress has questioned that practice. Mallinckrodt and Endo International also declined. Other pharmaceutical stocks that slumped included the multiple sclerosis medication maker Biogen and eye drug maker Regeneron. Eli Lilly fell on concerns surrounding the potential approval of a drug intended to treat dementia caused by Alzheimer’s disease. The company said on Tuesday that it would change the goal of a late-stage trial, and investors worried that it would make regulatory approval less likely. However, utility stocks, which are generally viewed as relatively safe investments, advanced. Apple gained after an analyst said first-quarter iPhone sales looked stronger than Wall Street had expected.
February retail sales slipped 0.1 percent as consumers spent less and remained cautious about the state of the economy despite steady hiring. Sales fell 0.1 percent on the month and were up 3.1 percent from the same month a year ago.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$10.75 to US$1,232.00.Copper futures were down 0.2 percent to US$2.23. WTI spot crude was down 75 US cents to US$36.43. Dated Brent spot crude was down 76 US cents to US$38.77. The US dollar was up against the pound and the Canadian and Australian dollars. However, it declined against the yen, euro and Swiss franc. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.72 percent while the yield on the 10 year note slipped 1 basis point to 1.96 percent.
Europe
Shares retreated Tuesday, tracking lower commodity prices and losses in Asia as investors became cautious after recent sharp gains. Investors are also waiting for the policy announcements from the Federal Reserve and the Bank of England. The FTSE and DAX were down 0.6 percent and the CAC an SMI both declined 0.8 percent.
Antofagasta tumbled after the company decided against paying a final dividend after posting a 58 percent fall in annual core profit. Anglo American, BHP Billiton, Glencore, Rio Tinto and Tullow Oil also were down. Sainsbury gained as the grocer posted its first quarterly like-for-like sales growth in over two years. Numericable rallied in Paris, a day after winning a bidding war for Vivendi’s SFR telecom unit against Bouygues.
Volkswagen retreated in Frankfurt. A former Volkswagen employee has filed a whistle-blower lawsuit in Michigan, accusing the automaker of deleting documents immediately after its diesel emissions scandal broke. The US Environment Protection Agency asked the company to preserve any evidence. Royal Bank of Scotland advanced on a broker upgrade.
Asia Pacific
Asian shares slid from a 10-week high Tuesday as oil prices fell again on oversupply concerns and the Bank of Japan preferred to stand pat on rates after its surprise decision to adopt negative interest rates in January. A weaker yuan and profit taking after recent sharp gains kept investors risk averse prior to the Federal Reserve’s monetary policy announcement Wednesday afternoon at 2 PM US DST. The Shanghai Composite edged up 0.2 percent after sharp gains Monday. The Hang Seng however, was down 0.7 percent.
The Nikkei was down 0.7 percent thanks to a firmer yen after the Bank of Japan downgraded its view on the economy and inflation expectations, citing risks from weaker growth in China and other emerging markets. Mazda, Nissan and Toyota Motor were down along with Inpex, Panasonic and Sharp. Toshiba retreated on a Nikkei report that it is in late-stage talks to sell its white goods business to Chinese household appliance giant Midea Group.
Both the S&P/ASX and All Ordinaries tumbled 1.4 percent. They were dragged down by resource and financial stocks. The big four banks retreated. The minutes of the Reserve Bank of Australia’s monetary policy meeting indicated that the board is concerned about global demand and believes low inflation would give it scope to cut interest rates in the coming months.
The Kospi slipped 0.1 percent as investors wait for the outcome of the Fed and BoE meetings this week. The Sensex was down 1.0 percent and the rupee weakened against the dollar as investors waited for the Federal Reserve’s monetary policy decision.
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*
The UK releases its February labour market report. In the US, February consumer prices, housing starts and industrial product will be posted. The Federal Reserve publishes its FOMC decision. Fed Chair Janet Yellen holds her quarterly press conference.
*Note — all releases are listed in local time.
Source: Fidelity
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