On 23 March, 2016 – Global stock mostly lower
Falling commodity prices combined with investor wariness after the Brussels terrorist attacks sent most indices lower.
United States
Stocks opened broadly lower on Wednesday, led by declines in mining companies as prices for metals and other commodities weakened. Several companies were also moving lower after reporting disappointing results or outlooks. The Dow Jones industrials were down 0.45 percent, the S&P was 0.6 percent lower and the Nasdaq lost 1.1 percent. Trading was thin.
Energy stocks led the indices lower as oil prices declined after data confirmed a large addition to US crude stockpiles, adding to the global glut of oil. Nike retreated after reporting revenue that fell far short of expectations. Red Hat was down after delivering disappointing forecasts. Bristol-Myers Squibb said it would acquire Padlock Therapeutics, which is privately held, in a deal potentially valued at up to $600 million. Bristol-Myers was lower.
Investor focus also remains locked on the Federal Reserve, which last week reduced its growth forecasts and indicated a slower pace of interest rate increases. Policy makers continue to stress their rate decisions depend on progress in data, and a report today showed purchases of new homes climbed in February for the fourth time in the last five months, indicating residential construction will remain a source of support for the economy.
St. Louis Fed President James Bullard said in an interview today a decline in joblessness below the natural rate may force policy makers to raise rates faster in the future. Chicago Fed President Charles Evans said yesterday two rate increases this year are “not at all unreasonable.”
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$34.90 to US$1,217.60. Copper futures were down 2.2 percent to US$2.24. WTI spot crude was down US$1.67 to US$39.78. Dated Brent spot crude was down US$1.27 to US$40.52. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was down 7 basis points to 2.65 percent while the yield on the 10 year note declined 6 basis points to 1.88 percent.
Europe
Stocks were mixed Wednesday. The markets were in positive territory for much of the morning but those early gains began to erode around midday. The pullback brought the markets back near the flat line, resulting in a mixed bag of modest gains and losses. Weakness in commodity prices weighed on mining and energy stocks and financial stocks also turned in a weak performance. Many of the travel and leisure stocks that declined after yesterday’s attacks in Belgium recovered today. The FTSE edged up 0.1 percent, the DAX gained 0.3 percent and the SMI added 0.5 percent. The CAC retreated 0.2 percent.
Switzerland’s economy is likely to grow less than previously estimated this year due to global economic weakness and the structural adjustments in the region according to the KOF Swiss Economic Institute. According to its spring forecast, the economy will grow 1 percent in 2016 and, in line with the global recovery, by 2 percent in 2017.
Deutsche Bank and Commerzbank declined. In Paris, Société Générale, BNP Paribas and Crédit Agricole finished lower. Deutsche Lufthansa gained. Technip and Total declined. In London, Premier Foods soared after rejecting a revised bid approach from US spices and herbs maker McCormick. Kingfisher climbed after the home improvement retailer beat estimates with a 0.3 percent rise in annual profit. Gambling group William Hill sank after issuing a profit warning.
Mining stocks were under pressure thanks to falling metal prices. Anglo American, Fresnillo, Glencore, Randgold Resources, Antofagasta and BHP Billiton were all lower. Credit Suisse gained in Zurich. The bank unveiled plans to eliminate an additional 2,000 jobs this year and deepen cuts at its investment bank as part of efforts to reduce annual costs by CHF800 million. Shares in cruise operator Carnival, International Hotels Group, tour operator TUI and airlines easyJet and IAG all advanced.
Asia Pacific
Asian shares closed mostly lower Wednesday thanks to falling oil prices. Tuesday’s terrorist attacks in Brussels kept risk appetite in check ahead of the long Easter break beginning Friday. Losses were capped somewhat following the muted reaction in the US markets to the terror attacks in the Belgian capital.
The Shanghai Composite was up 0.4 percent despite Fitch Ratings warning on banks’ profitability in 2016. Fitch expects Chinese bank profits to decline this year unless authorities relax the minimum NPL provisioning requirement of 150 percent. The Hang Seng was 0.2 percent lower.
The Nikkei lost 0.3 percent in choppy trading as investors remained wary of movements in yen, yuan and oil. Hitachi Construction Machinery and energy explorer Inpex were down while Fast Retailing advanced. Sharp was up on a Nikkei report that Taiwan’s Foxconn is lowering an offer for the loss making Japanese electronics maker. Nintendo was lower after denying reports that it plans to halt production of its latest console, the Wii U.
Both the S&P/ASX and All Ordinaries retreated 0.5 percent on a dip in commodity prices and a note from a broker regarding ‘funding dilemmas’ weighed on resource and banking stocks. Banks were lower as were miners. Sigma Pharmaceuticals advanced after publishing its full-year results.
The Kospi slipped 0.1 percent as investors braced for earnings and North Korea threatened a “miserable end” for South Korea’s president and her American allies in its latest colorfully worded attack. The Sensex was virtually unchanged in choppy trading as hopes of a rate cut by RBI and renewed foreign fund flows helped investors shrug off geopolitical worries in the aftermath of the Brussels bombings the previous day.
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 February retail sales and March CBI distributive trades survey. In the US, February durable goods orders and weekly jobless claims, Fed balance sheet and money supply will be reported.
*Note — all releases are listed in local time.
Source: Fidelity
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