On 11 May, 2016 – Global stocks mixed

US and European shares retreated on disappointing earnings reports.
United States
Stocks closed solidly lower Wednesday. The Dow Jones industrials were down 1.2 percent while both the S&P and Nasdaq lost 1.0 percent.
Macy’s slashed its profit forecast after reporting a steep drop in earnings as shoppers spent less on clothes and international tourists spent less. Macy’s drop took other retailers with it. Michael Kors, Nordstrom, Ralph Lauren and Kohl’s all tumbled. Both Office Depot and Staples retreated after a judge blocked their merger. Amazon advanced. However, Electronic Arts and Blue Buffalo Pet Products both advanced after beating estimates.
Disney retreated after it posted weaker than expected earnings and sales. Its parks and consumer products divisions disappointed and the company said it was discontinuing its Disney Infinity video game line because the changing market was too risky. Fossil Group disclosed disappointing sales and said conditions had become worse. It cut its projections for the year. Wendy’s raised its annual projections after reporting strong first quarter results, but it cautioned that a crucial sales measurement would not meet its expectations in the second quarter. Energy companies Chesapeake Energy and Halliburton traded higher.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$14.05 to US$1,276.85. Copper futures were up 0.2 percent to US$2.10. WTI spot crude was up US$1.42 to US$46.08. Dated Brent spot crude was up US$1.90 to US$47.42. The US dollar was down against all of its major counterparts except the pound which was virtually unchanged. The Dollar Index was down 0.6 percent. The yield on US Treasury 30 year bond was down 3 basis points to 2.58 percent while the yield on the 10 year note slipped 2 basis points to 1.73 percent.
Europe
Stocks were mostly lower Wednesday, with German shares particularly weak on losses among the big auto makers. The CAC was down 0.5 percent and the DAX lost 0.7 percent. However, the FTSE edged up 0.1 percent while the SMI was virtually unchanged (up 2.95 points). The commodities-heavy FTSE benefited from demand for resource-related stocks.
In merger news, European officials blocked a bid by Hong Kong’s Hutchison to buy British mobile operator O2. BHP Billiton advanced in London after saying it would forge ahead with investments to boost production despite the bearish conditions in the iron ore and oil markets. Premier Oil was up after the company said it expects oil production for 2016 to be at the top end of expectations. Experian was down after adverse foreign exchange movements hit its full-year revenue. JCDecaux dropped in Paris after issuing a weak outlook for the second quarter.
Alstom rallied after the transport giant surged back into profit in fiscal year 2015/16 helped by the sale of most of its energy assets to General Electric last year. E.ON shares declined after the utility firm reported an improvement in first-quarter operating profit owing to one-off effects. TUI Group retreated after unveiling plans to sell its UK sailing and outdoor holidays unit Specialist Group. Axel Springer declined despite posting strong earnings growth in the first quarter on the back of one-time items and a strong performance at its online classified ads business. Credit Suisse was down after the company reported a first quarter loss.
March British industrial production grew less than expected adding to concerns about the health of the economy ahead of the EU referendum on June 23. Output was up 0.3 percent on the month after decreasing 0.2 percent in February. The manufacturing component edged up 0.1 percent after sinking a revised 0.9 percent the month before.
Asia Pacific
Shares were mixed Wednesday paring early gains as the US dollar dipped against the yen despite repeated verbal warnings from Japanese officials. Oil prices succumbed to profit taking after their overnight rally.
The Nikkei edged up 0.1 percent in choppy trading as a strengthening yen and falling oil prices sapped investors’ risk appetite. SoftBank advanced after its chief executive said a reversal of losses at its struggling US unit Sprint was “near”. Social network operator Mixi jumped after announcing a share buyback. Toyota retreated before saying it expects a 35 percent profit decline for the year through next March. Sumitomo Heavy Industries advanced after reporting annual profit that beat estimates. Oki Electric climbed after it forecast an 82 percent jump in full-year profit.
Both the S&P/ASX and All Ordinaries advanced 0.6 percent thanks to encouraging home loans and consumer confidence data. While the number of new home loans granted declined less than expected last month, the Westpac/Melbourne Institute index of consumer sentiment index recorded its largest increase in six years in May after the Reserve Bank of Australia lowered its policy interest rate. BHP Billiton gained after saying it would forge ahead with investments to boost production despite the bearish conditions in the iron ore and oil markets. Rio Tinto and Fortescue Metals Group also advanced. The big banks were mixed.
The Shanghai Composite was up 0.2 percent after recent steep losses as the country’s Cabinet approved measures to reverse an export decline. The Hang Seng dropped 0.9 percent. The Kospi slipped 0.1 percent on institutional selling ahead of the Bank of Korea’s monetary policy committee meeting Friday. The Sensex lost 0.7 percent on concerns over a revised tax treaty between India and Mauritius imposing capital gains tax on investments coming from Mauritius.
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 Bank of England announces its monetary policy decision and publishes its Quarterly Inflation Report. Italy and the Eurozone post March industrial production. In the US, April import/export prices and weekly jobless claims, EIA natural gas report, money supply and Fed balance sheet will be released.
*Note — all releases are listed in local time.

Source: Fidelity

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