On 21 March, 2016 – Global stocks mixed
Shares were mostly down in Asia and Europe but in the US, stocks edged higher.
United States
Stocks shook off early losses and closed incrementally higher in a quiet news day. The Dow Jones industrials and S&P edged up 0.1 percent while the Nasdaq added 0.3 percent. Merger news was offset by disappointing housing data. Some analysts said that investors were still digesting the Federal Reserve’s decision last week to cut the number of expected interest rate increases.
Valeant shares were up after it announced the departure of its chief executive officer and said billionaire investor Bill Ackman had joined its board as it tries to clean up accounting problems and save its business. Apple was down after the company unveiled a smaller, cheaper iPhone. Sherwin-Williams was down after it agreed to buy rival US paint company Valspar but Valspar rallied. Starwood advanced after the Sheraton hotel owner accepted a higher offer from Marriott that beat an all-cash offer by a group led by China’s Anbang Insurance Group. Marriott was down on the news. IHS gained after the US business research provider said it would buy London-based Markit in an all-stock deal valued at about $5.9 billion.
Shares in most homebuilders were down following a report indicating that sales of previously occupied homes sank 7.1 percent last month. A limited inventory of homes for sale in many markets has driven home prices higher, reducing affordability and damping sales.
Federal Reserve Bank of San Francisco President John Williams said in an interview that April or June have the potential for a move, adding that the Fed would be raising borrowing costs sooner if it weren’t for global factors. Atlanta Fed President Dennis Lockhart echoed that sentiment, saying the economy is strong enough to weather another rate increase as early as next month.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$7.20 to US$1,244.90. Copper futures were up 0.2 percent to US$2.29. WTI spot crude was up 47 US cents to US$39.91. Dated Brent spot crude was up 49 US cents to US$41.69. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.4 percent. The yield on US Treasury 30 year bond was up 4 basis points to 2.72 percent while the yield on the 10 year note was up 5 basis points to 1.92 percent.
Europe
Shares were mostly lower to begin the week. Weak commodity prices contributed to the downward pressure. After being higher earlier in the session, most bank stocks finished in the red. The upcoming Easter holiday may also be keeping some traders away from their desks. The FTSE slipped 0.1 percent while the CAC dropped 0.8 percent. The DAX was virtually unchanged but the SMI added 0.5 percent.
According to ECB Executive Board Member Benoit Coeure, “The stimulus measures announced by the European Central Bank this month are largely aimed at boosting lending to households and businesses to support the euro area recovery and the bank does not lack tools to bring inflation back to its target of near 2 percent.”
BASF and Bayer were up on reports that Monsanto is exploring possible deals with both companies to consolidate its position in the industry. RWE and E.ON declined. Banks including Commerzbank, Deutsche Bank, Société Générale, Crédit Agricole and BNP Paribas finished lower. Insurer AXA advanced after Chairman and Chief Executive Henri de Castries said he is leaving earlier than expected after 27 years at the group and nearly 17 years at the helm. Both Total and Technip retreated. J Sainsbury climbed after the supermarket chain confirmed a £1.4 billion offer for Argos-owner Home Retail Group. Mining stocks were under pressure due to weakness in metal prices. Antofagasta, Randgold Resources, Glencore, Anglo American, BHP Billiton and Fresnillo declined.
Asia Pacific
Stocks were mixed — a retreat in oil prices prompted investors to lock in some profits after three consecutive weeks of gains. Mainland Chinese stocks closed with strong gains on news of regulators loosening controls on margin lending. Japanese markets were closed for a holiday.
The Shanghai Composite added 2.2 percent to extend gains for a seventh day after authorities signaled a loosening stance toward margin trading and cut borrowing costs for brokerages. The Hang Seng inched up 0.1 percent. China’s yuan fell the most in seven weeks as the US dollar stabilized ahead of the Easter holiday. People’s Bank of China Governor Zhou Xiaochuan on Sunday played down the risks created by rising capital outflows, saying it is natural to see some capital outflows after years of explosive accumulation.
Both the S&P and All Ordinaries were 0.3 percent lower. The big four banks were down along with mining and energy stocks which were under selling pressure in the wake of a pullback in crude oil and other commodity prices. The Kospi retreated 0.1 percent following a three-day rally.
The Sensex rallied 1.3 percent to hit an 11-week high after the government slashed interest rates on a raft of centrally-sponsored savings schemes, giving banks greater flexibility to lower deposit rates and fully pass on the previous rate cuts to borrowers. Also, with the government adhering to its fiscal deficit targets and retail inflation figures easing to a four-month low in February, expectations are that the Reserve Bank of India (RBI) will cut rates by as much as 50 basis points in its monetary policy review on April 5.
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*
March flash manufacturing PMIs will be released for Japan, the Eurozone, Germany, France and the US. Germany will post both the March ZEW and Ifo surveys. The UK reports February consumer and producer price indices.
*Note — all releases are listed in local time.
Source: Fidelity
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