Asian and US stocks retreated while Europe rallied.
United States
United States markets were lower Friday as more retailers reported plunging first quarter sales. Oil prices slipped after a string of recent gains. After declining for two days stocks were down for a third consecutive week. The Dow was down 1.0 percent, the S&P declined 0.8 percent and the Nasdaq lost 0.4 percent. On the week, the three indices retreated 1.2 percent, 0.5 percent and 0.4 percent respectively.
Department store Nordstrom dropped after the company released disappointing quarterly results late Thursday. JC Penney declined after the company reported disappointing earnings on Friday. Dillard’s slipped after the company also posted disappointing profit and sales data late Thursday. Shake Shack advanced after it said its profit and sales beat estimates. The chain raised its estimates for sales and said it would open more stores than it previously planned. AT&T and Verizon were down along with Walmart and Procter & Gamble. The graphics chip and processor maker Nvidia jumped after it beat expectations in the first quarter. Amazon retreated on the day but was higher for the week.
April total retail sales grew 1.3 percent, suggesting spending might have rebounded after a weak first quarter. Retail sales were up 3 percent over the last year. But the report contained still more bad news for department stores: Online and catalogue shopping increased 10 percent from a year ago, and sales at department stores fell almost 2 percent over the same period.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$13.35 to US$1,265.90. Copper futures were down 0.05 percent to US$2.07. WTI spot crude was down 49 US cents to US$46.21. Dated Brent spot crude was down 25 US cents to US$47.83. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen. The Dollar Index was up 0.6 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 5 basis points to 2.55 percent and 1.70 percent respectively.
Europe
European stocks rallied Friday, erasing early losses. Both the FTSE and CAC added 0.6 percent while the DAX was up 0.9 percent and the SMI was 0.5 percent higher.
BMW shares declined on going ex-dividend. Salzgitter declined after the steelmaker confirmed its full year targets after reporting lower revenue and pre-tax profit in the first quarter this year. Bouygues advanced after the mobile and broadband operator showed a sharp improvement in its telecom business despite posting a wider loss in the first quarter of 2016. Royal Dutch Shell was down in London. The US Coast Guard said about 88,200 gallons of oil spilled into the Gulf of Mexico, about 90 miles off the coast of Louisiana.
Inmarsat declined after an outlook cut from sector peer Eutelsat sent its shares lower. Coca-Cola was lower after adverse currency movements hit its revenue, although underlying trends improved in its established emerging markets. Broadcaster ITV extended its losses from the previous session on downgrades from several brokers. ITV cut its advertising revenue forecast on Thursday saying that companies were holding back from buying advertising in the build-up to next month’s European Union referendum in Britain.
First quarter Eurozone gross domestic product was revised down to 0.5 percent from 0.6 percent estimated earlier. On a yearly basis, GDP growth eased marginally to 1.5 percent from 1.6 percent. German GDP grew 0.7 percent on the quarter after increasing 0.3 percent in the previous three months.
Asia Pacific
Asian stocks fell across the board Friday as the yen ticked up and oil prices fell after rising about 1 percent in choppy trading overnight. Caution ahead of a deluge of European, US and Chinese data also kept investors on the sidelines, heading into the weekend.
The Shanghai Composite declined 0.3 percent to its lowest level since March 11, as metal prices declined and hopes for additional stimulus faded. The index lost 3.0 percent on the week The Hang Seng lost 1.0 percent on the day and 1.9 percent for the week.
The Nikkei retreated 1.4 percent on the day but was up 1.9 percent on the week. An uptick in the yen hit exporter’s shares and Apple suppliers underperformed on concerns they will see a significant drop in orders in H2 due to weak demand for smart phones. The yen edged up slightly but hovered near two-week lows amid speculation the Bank of Japan could expand its monetary stimulus as soon as next month. Exporters Canon, Honda Motor, Panasonic and Toyota Motor tumbled.
Apple suppliers Japan Display, Alps Electric, Murata Manufacturing and Minebea retreated after Apple dropped below $90 Thursday for the first time since 2014 on worries about slumping sales of iPhones. Rakuten plunged after its first quarter profit fell 17.3 percent from a year earlier. Retailer Marui Group gained after announcing plans to repurchase up to 10 million shares. SoftBank tumbled after the company said it would join hands with Alibaba Group Holding to launch cloud-computing services in Japan. Nissan Motor rallied after it agreed to take a 34 percent stake in scandal-hit Mitsubishi Motors for about $2.2 billion. Shares of Mitsubishi Motors declined. Tokuyama jumped after reporting operating profit for the March quarter above expectations.
The S&P/ASX was down 0.6 percent and the All Ordinaries lost 0.5 percent as shares succumbed to selling pressure as softness in oil and iron ore prices weighed on the resource sector. However, both indices added 0.7 percent on the week. Weaker metal prices weighed on miners including BHP Billiton, Rio Tinto and Fortescue Metals Group. Gold miners Newcrest Mining and Evolution were down as a strengthening US dollar prompted some traders to cash in on recent gains in the precious metal. The four big banks retreated.
The Kospi was down 0.5 percent on the day and 0.5 percent for the week after the Bank of Korea left its interest rate unchanged at 1.50 percent for the eleventh straight month. The Sensex tumbled 1.2 percent primarily thanks to disappointing industrial output as well as consumer inflation data. On the week, the Sensex added 1.0 percent.
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*

Central Bank activities

May 18

United States

FOMC Meeting Minutes

The following indicators will be released this week…

Europe

May 17

Eurozone

Merchandise Trade (March)

Italy

Merchandise Trade (March)

UK

Consumer Price Index (April)

Producer Price Index (April)

May 18

Eurozone

Harmonized Index of Consumer Prices (April final)

UK

Labour Market Report (April)

May 19

UK

Retail Sales (April)

May 20

Germany

Producer Price Index (April)

Asia/Pacific

May 16

Japan

Producer Price Index (April)

May 18

Japan

Gross Domestic Product (Q1.2016 first estimate)

May 19

Japan

Machinery Orders (March)

Americas

May 16

United States

Empire State Survey (May)

May 17

Canada

Manufacturing Sales (March)

May 18

United States

Consumer Price Index (April)

Housing Starts (April)

Industrial Production (April)

May 19

United States

Initial Unemployment Claims (week ending prior Saturday)

Philadelphia Fed Survey (May)

May 20

Canada

Consumer Price Index (April)

Retail Sales (March)

*Note — all releases are listed in local time.

Source: Fidelity

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