On 06 April, 2016 – Investors wait for earnings season

Stocks in Europe and the US rallied while those in Asia were mixed.
United States
Stocks advanced Wednesday thanks to health care and energy companies. The indices slumped over the last two days and on Tuesday, the market had its worst day in about a month. The Dow Jones industrials were up 0.6 percent, the S&P gained 1.1 percent and the Nasdaq added 1.6 percent.
Energy companies rallied on rising oil prices after US inventories dropped. Chevron, Hess and Exxon Mobil were higher. Shares of the oil field services companies Halliburton and Baker Hughes traded higher after the United States government sued to block them from combining. Halliburton agreed to buy its rival for more than $34 billion in November 2014 after oil prices began to fall. Baker Hughes and Halliburton shares climbed. Shares of Pfizer and Allergan both advanced after they called off their $160 billion merger in light of the Treasury Department’s introduction of new tax rules that make the deal far less appealing. Shares of biotechnology companies also rose. Celgene and Vertex Pharmaceuticals were higher. Constellation Brands reported solid quarterly results and raised its profit forecasts for the year. Cree retreated after it said its sales would fall far short of expectations because of new product delays and software problems. The company said it might report a loss in the third quarter. Global Payments gained after the company posted strong quarterly results.
The Federal Reserve published minutes of its March FOMC meeting. At that time, the committee chose to leave the fed funds target range at 0.25 percent to 0.50 percent. The meeting account emphasized that the Fed retained a relatively optimistic outlook for the domestic economy. The economic expansion has been “resilient” despite the jitters of financial markets and the weakness of the global economy. However, at the same time, they worried about the impact of slow global growth. US growth and inflation remain modest, and the weakness of global growth looms as a threat. The Fed’s hesitation to increase rates comes after it raised the fed funds rate in December for the first time since the financial crisis and signaled that it planned to march ahead with rate increases this year. The minutes indicated that there are differing opinions among FOMC members.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$9.80 to US$1,221.40. Copper futures were up 0.3 percent to US$2.14. WTI spot crude was up US$1.79 to US$37.68. Dated Brent spot crude was up US$1.81 to US$39.68. The US dollar was up against the pound but down against the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was up 4 basis points to 2.58 percent while the yield on the 10 year note was up 3 basis points to 1.75 percent.
Europe
Stocks rebounded from Tuesday’s losses in choppy trading. The markets received a boost from rising crude oil prices and an improved Chinese service sector report. Investors remained cautious ahead of the release of the minutes from the most recent FOMC meeting. The FTSE and SMI were up 1.2 percent, the CAC gained 0.8 percent and the DAX was 0.6 percent higher.
Daimler retreated but BMW advanced. Amazon and Microsoft are in talks about taking a minority stake in HERE, a digital mapping business controlled by Germany’s luxury carmakers to help develop self-driving cars, Daimler said Wednesday. Germany’s luxury carmakers bought HERE for €2.5 billion from Nokia last year to create an alternative digital mapping business to Google. Merck, Fresenius Medical Care and Fresenius gained.
In Paris, Air France-KLM dropped after chief executive Alexandre de Juniac announced he is stepping down amid continued uncertainty over a restructuring plan he launched in September 2014. Both Technip and Total were up. In London, Glencore slid after the miner and commodity trader entered into a definitive agreement with Canada Pension Plan Investment Board for the sale of a 40 percent stake in its agricultural business. Shire, which plans to buy Baxalta in a cash and stock deal, climbed while easyJet weakened after its March load factor declined 1.3 percentage points to 91.3 percent from 92.6 percent in the prior year.
Pharmaceuticals companies helped the FTSE to move higher after Pfizer terminated a deal for Allergan prompting speculation over other merger and acquisition activity in the sector. Pfizer terminated its $160 billion agreement to acquire Botox maker Allergan in a major victory for the US drive to thwart tax dodging corporate mergers. The news lifted shares in Shire and AstraZeneca.
Crude oil prices climbed on investor hopes for a deal between major oil producers that would freeze output. A Kuwaiti official told Bloomberg that he expects a deal between Saudi Arabia and others even if Iran does not agree to join the pact. Germany’s industrial production declined a less than expected 0.5 percent in February.
Asia Pacific
Asian stocks were mixed Wednesday. A firmer yen and steep overnight losses in US and European markets following the latest IMF warning on global growth prospects weighed on investors. Weak Eurozone data offset support from a rebound in oil prices. IMF’s Christine Lagarde warned of downside risks to the global economy.
Chinese shares edged 0.1 percent lower despite improvement in China’s service sector PMI. The March reading climbed to 52.2 from 51.2 in February, but the employment sub-component pointed to contraction for the first time in over two and a half years. The Hang Seng inched 0.1 percent higher.
The Nikkei slipped 0.1 percent to extend its losing streak for the seventh consecutive session. It is the longest losing streak in the era of Abenomics as the yen hovers near a 17-month high against the US dollar. Inpex retreated after cutting its fiscal 2015-2016 net profit forecast by half to ¥26 billion. Kyushu Electric Power jumped after a Japanese court rejected an appeal to shut down two nuclear reactors operated by the company.
The S&P/ASX was up 0.4 percent and the All Ordinaries added 0.5 percent. Energy shares rallied, offsetting losses among banks and gold mining stocks. Westpac dropped after the Australian Securities and Investments Commission accused the bank of “unconscionable conduct and market manipulation” in relation to its involvement in setting the bank bill swap reference rate between April 2010 and June 2012. The other three big banks also slipped.
The Kospi was up 0.4 percent as foreign investors remained net buyers. The Sensex added 0.1 percent in choppy trading. India’s March services PMI jumped 2.9 points to 53.4 while the composite PMI, which maps both manufacturing and services sectors, climbed to a 37-month high of 54.3.
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*
France posts February merchandise trade and the UK releases Halifax house price index. The European Central Bank publishes minutes from its most recent governing council meeting. In the US, weekly jobless claims, EIA natural gas report, money supply and Fed balance sheet will be released. Fed chair Janet Yellen participates in a round table discussion with former Fed chairs Paul Volker, Alan Greenspan and Ben Bernanke.
*Note — all releases are listed in local time.

Source: Fidelity

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