On 12 April, 2016 – Most global stocks advanced

Rising oil prices provide impetuous for risk taking.
United States

Stocks in the US advanced thanks to big gains in oil and gas companies as energy prices climbed. The Dow Jones industrials were up 0.9 percent, the S&P added 1.0 percent and the Nasdaq was 0.8 percent higher. Oil prices moved sharply higher after Russian officials told Interfax, the Russian news agency, that they planned to reach a deal with Saudi Arabia for an output freeze. OPEC ministers meet this Sunday in Doha, Qatar.

Financial companies were up more than the broader market. Concerns had mounted about banks’ loans to the still-troubled energy sector as oil prices languished near multiyear lows. While commodities prices led the rally, every sector in the S&P gained. Southwestern Energy and Marathon Oil rallied. Alcoa, which unofficially kicked off the US corporate earnings season late Monday, retreated after the company said its first quarter earnings declined 92 percent and lowered its outlook for 2016. Chesapeake Energy surged after pledging assets to maintain access to financing. Juniper Networks tumbled after sales missed forecasts, dragging the semiconductor industry lower. Starbucks declined on a broker downgrade.

According to the IMF’s latest World Economic Outlook, the “increasingly disappointing” performance of the global economy has increased the risks of financial turbulence, political backlash and a “synchronized slowdown.”  The IMF cut the global economic growth forecast for this year to 3.2 percent from 3.4 percent projected in January. The outlook for next year was lowered to 3.5 percent from 3.6 percent. The IMF cited the risk of further market turmoil in the wake of China-led turbulence this year while also warning of the political consequences of lacklustre growth since the 2008 global financial crisis.

The gloomy new forecasts from the IMF include downgrades for the growth prospects of major economies ranging from the US, which it now expects to grow by just 1.9 percent this year, to Japan (0.5 percent), the Euro area (2.4 percent) and the UK which, like the US, it also expects to slow to 1.9 per cent growth this year. The one bright spot among major economies is China which the IMF said it now believes will grow by 6.5 percent in 2016, up from its previous forecast of 6.3 percent thanks to a raft of short-term stimulus measures pushed through by Beijing to meet politically-loaded growth targets.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 15 US cents to US$1,254.60. Copper futures were up 2.7 percent to US$2.14. WTI spot crude was up US$1.61 to US$41.97. Dated Brent spot crude was up US$1.66 to US$44.49. The US dollar was up against the yen, euro and Swiss franc. The currency was down against the pound and the Canadian and Australian dollars. The Dollar Index was virtually unchanged. The yield on US Treasury 30 year bond was up 3 basis points to 2.59 percent while the yield on the 10 year note was up 5 basis points to 1.77 percent.
Europe

European stocks were mixed in choppy trading. Energy and mining stocks continued to benefit from rising commodity prices. Crude oil prices extended their recent gains on hopes for a deal between major producers to freeze output. The FTSE was up 0.7 percent, the CAC and DAX both added 0.8 percent and the SMI was 0.5 percent higher.

Italian banks finished lower after an agreement on a $5.7 billion fund to support troubled banks was viewed as insufficient. Luxury goods companies were also under pressure after LVMH posted disappointing first quarter revenues.

Air Liquide rose after signing a new long-term contract with Maoming Petrochemical to invest around €40 million in a new Air Separation Unit. LVMH Moet Hennessy Louis Vuitton finished up even after its first quarter revenue fell below expectations. Burberry Group gained in London. Accor jumped on reports that China’s Jin Jiang is considering increasing its stake in the company to around 20 percent. Both Total and Technip increased.

Anglo American climbed after rough diamond sales for its De Beers unit continued their “reasonably positive” pricing trend at this year’s third sales cycle. Glencore, BHP Billiton, Fresnillo and Rio Tinto advanced. Tesco increased after it announced the sale of a partial stake in Lazada. EKF Diagnostics Holdings gained after the company said it expects positive adjusted EBITDA and slightly higher sales in fiscal 2016. Oxford Instruments advanced after backing its full year forecast.
March UK inflation increased at the fastest pace since late 2014. Consumer prices climbed 0.5 percent on the year, up from 0.3 percent in February.
Asia Pacific

Asia was also mixed Tuesday with Chinese shares succumbing to profit taking after sharp gains in the previous session thanks to encouraging consumer and producer price inflation data. While a slightly weaker yen and steadier oil prices helped underpin investor sentiment, gains were capped by the lackluster performance in the US on Monday and Alcoa’s mixed quarterly results which were announced after the US market closed.

The Shanghai Composite was down 0.3 percent on liquidity worries after the country’s securities regulator approved seven initial public offerings that will raise a total 2.8 billion yuan. The Hang Seng gained 0.3 percent.

The Nikkei rallied 1.1 percent as the yen retreated from its recent gains against the US dollar. Finance Minister Taro Aso today said that the government will take steps as needed to check the yen’s rise, based on a G20 agreement backing currency stability, if currency moves are excessive. Automakers Honda Motor, Mazda, Nissan and Toyota climbed. Banks Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial gained as did steelmaker Nippon Steel & Sumitomo Metal and machinery manufacturer Komatsu. Nomura Holdings soared on reports the brokerage plans to shut down its European cash equities business.

The S&P/ASX was up 0.9 percent while the All Ordinaries added 0.8 percent. The four big banks and miners advanced on the day. The National Australia Bank’s monthly survey of more than 400 firms showed its index of business confidence rose by 3 points to plus 6 points in March, while the business conditions index jumped from plus 8 to plus 12 points, the highest since early 2008.
The Kospi was up 0.6 percent on foreign fund buying ahead of parliamentary elections set for Wednesday. The Sensex added 0.5 percent as expectations of above-normal monsoon rains lifted local sentiment ahead of an official weather forecast by the nation’s meteorological department.
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*
China releases March merchandise trade data. Japan reports March producer prices. The Eurozone posts February industrial production. The Bank of Canada announces its monetary policy decision and publishes its monetary policy report. In the US, March producer prices and retail sales will be reported along with February business inventories and the weekly EIA petroleum status report. The Federal Reserve publishes its Beige Book in preparation for its FOMC meeting on April 26 and 27.
*Note — all releases are listed in local time.

Source: Fidelity

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