On 02 June, 2016 – Global stocks mixed
Investors stayed on the sidelines waiting for Friday’s US employment data.
United States
Stocks rallied from early losses to end the trading day higher. Health care companies led the rebound. Energy stocks lagged after OPEC ministers could not agree again on crude production cuts. The Dow Jones industrials and S&P both added 0.3 percent while the Nasdaq was 0.4 percent higher.
Drug-maker Endo International, Aetna and Humana climbed. Aetna filed documents for a bond offering to fund its acquisition of Humana. Shares in several oil drilling and exploration companies including Diamond Offshore Drilling, Transocean and Anadarko Petroleum retreated. Shares of online storage provider Box tumbled after the company reported disappointing results late Wednesday. Johnson & Johnson advanced on news that the company agreed to buy the privately held hair care products maker Vogue International for about $3.3 billion.
Jobless claims declined for a third week. Weekly applications were down 1,000 to a seasonally adjusted 267,000. The four-week average, a less volatile measure, fell to 276,750.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.10 to US$1,212.40. Copper futures were down 0.12 percent to US$2.07. WTI spot crude was up 1 US cent to US$49.02. Dated Brent spot crude was up 20 US cents to US$49.92. The US dollar was up against the euro, Swiss franc and the Canadian and Australian dollars. However, it declined against the yen and pound. The Dollar Index was up 0.2 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 4 basis points to 2.58 percent and 1.81 percent respectively.
Europe
Stocks were mixed in choppy trading Thursday. Energy stocks declined after the OPEC meeting in Vienna failed to result in an agreement to cap production. Investors also were cautious ahead of the US May jobs report which will be released on Friday. The report could have a significant impact on the outlook for whether the Federal Reserve raises interest rates later this month. The FTSE slipped 0.1 percent while the CAC and SMI were 0.2 percent lower. The DAX was virtually unchanged (up 3.56 points).
The European Central Bank left interest rates unchanged for a second consecutive policy session. The Governing Council left the benchmark interest rate – the refi, unchanged at a record low zero percent. The deposit rate was held steady at minus 0.40 percent, following a 10 basis points reduction in March. The marginal lending facility rate remained at 0.25 percent, after a five basis point-cut in March. The ECB announced that it will start making purchases under the corporate sector purchase program (CSPP) on June 8. The ECB will also conduct the first operation in its new series of targeted longer-term refinancing operations (TLTRO) on June 22. The ECB also raised its growth and inflation projections and expressed concern over “Brexit”.
Volkswagen, BMW, Daimler, Peugeot and Renault advanced. RWE and E.ON gained. In Paris, Technip and Total retreated. In London, Johnson Matthey climbed after the specialty chemicals maker forecast better results in the coming year after reporting a 22 percent drop in full fiscal year pretax profit. Wolseley declined on broker downgrades. Cobham sank after launching a rights issue at a deep discount to its closing price on May 31.
Asia Pacific
Stocks were mixed. Yen strength persisted and oil prices drifted lower ahead of the OPEC and ECB meetings. Investors here were also waiting for Friday’s US employment report as they look forward to the FOMC meeting on June 14 and 15.
The Nikkei dropped 2.3 percent as “Brexit” fears and disappointment over the lack of fresh stimulus plans to boost growth lifted the yen to a two week high against the US dollar. Prime Minister Shinzo Abe disappointed investors by failing to provide details of a fiscal stimulus package when he announced his widely-expected decision to delay the planned sales tax increase for a second time. Automakers Honda Motor, Mazda and Nissan declined. SoftBank tumbled after saying it would not use any of the funds raised from the sale of Alibaba Group Holding shares to buy assets put up for sale by Yahoo.
Both the All Ordinaries and the S&P/ASX retreated 0.8 percent. Concerns over the state of China’s economy and diminishing hopes of a rate cut by the Reserve Bank of Australia when it meets next week dampened sentiment. Economic reports were mixed with April retail sales growth missing expectations, rising 0.2 percent, while the trade deficit narrowed for a fourth consecutive month in April on the back of lower imports and higher export volumes. BHP Billiton and Rio Tinto were lower after iron ore prices hit a new three-month low overnight. Energy stocks Santos and Origin Energy also retreated. Packaged foods supplier Patties Foods advanced after accepting a takeover proposal from private equity firm Pacific Equity Partners.
The Shanghai Composite was up 0.4 percent while the Hang Seng added 0.5 percent. The Kospi edged up 0.1 percent thanks to foreign buyers. The Sensex added 0.5 percent — the rupee stabilized after hitting a one-week low in the previous session. Investors are concerned about whether Reserve Bank of India Governor Raghuram Rajan will return for another term in September.
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*
Japan’s May composite PMI will be released along with China’s general services PMI and India’s services PMI. Composite PMIs for the Eurozone, Germany and France will be reported. Services PMI will be posted for the UK and US. Canada and the US report April international trade data. April factory orders will be released in the US along with the May employment situation report.
*Note — all releases are listed in local time.
Source: Fidelity
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