On 07 June, 2016 – Global stock indices rallied
Investors reacted favorably to Fed Chair Janet Yellen’s remarks on Monday.
United States
Stocks were mixed Tuesday, as crude oil settled above $50 for first time in ten months. Stocks drifted lower in late afternoon trading. At day’s end, the Dow Jones industrials and S&P added 0.1 percent while Nasdaq lost 0.1 percent. Traders continued to assess Monday’s remarks by Federal Reserve Chair Janet Yellen. In her comments, Yellen expressed concerns about the health of the US jobs market, reinforcing the belief that the Fed will leave interest rates unchanged when they meet next week.
SkyWest, Southwest Airlines, Hawaiian Holdings and Spirit Airlines advanced. Energy companies moved higher in tandem with oil prices. Newfield Exploration, Helmerich & Payne and Marathon Oil along with Chevron and Exxon Mobil climbed. Valeant Pharmaceuticals tumbled. United Natural Foods posted a larger-than-expected profit in its fiscal third quarter, and the company raised its projections for the year.
Zillow Group said it had agreed to pay $130 million to settle a lawsuit over trade secrets brought by Move Inc., the National Association of Realtors and others. Ralph Lauren was lower after it said it would close stores and cut jobs as part of a revamping plan intended to save the company about $200 million a year. It said it expected to take more than $500 million in one-time charges related to the move. Both Biogen and Alexion tumbled. Homebuilders PulteGroup, Lennar and Toll Brothers advanced.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$3.00 to US$1,241.00. Copper futures were down 3.05 percent to US$2.05. WTI spot crude was up 79 US cents to US$50.48. Dated Brent spot crude was up 95 US cents to US$51.50. The US dollar was up against the euro. However the currency retreated against the yen, 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 down 1 basis point to 2.54 percent while the yield on the 10 year note slipped 2 basis points to 1.71 percent.
Europe
European indices rallied Tuesday. Positive regional economic data were boosted by an upward revision to Eurozone first quarter growth and German industrial production increased more than expected. The FTSE was up 0.2 percent, the CAC gained 1.2 percent, the DAX advanced 1.6 percent and the SMI added 0.6 percent.
Energy stocks were among the best performers Tuesday, after crude oil prices rose above $50 a barrel. Automakers and luxury goods companies were also gained. Miners however, were unable to hold early gains. Banks also turned in a solid performance thanks to Monday’s comments from Fed Chair Janet Yellen.
Investors had their first opportunity to react to yesterday’s dovish comments from Dr Yellen. She expressed renewed concerns about the health of the US jobs market after the economy generated just 38,000 jobs in May. Yellen expects that the economy will continue to improve, allowing for “gradual” rate increases as warranted.
BASF gained after postponing its final investment decision regarding the construction of a methane-to-propylene complex in Freeport, Texas. Daimler advanced after saying it would lay off more than 1,200 workers at three plants in the US and one in Mexico. BMW and Volkswagen also finished higher. In Paris, Peugeot and Renault also were higher. Deutsche Bank and Commerzbank were up. ThyssenKrupp and Salzgitter were higher. In Paris, Vivendi declined on a broker downgrade. Kering, LVMH and Burberry increased. Royal Dutch Shell climbed after forecasting higher savings from its mega takeover of smaller British rival BG Group. Tullow Oil and BP advanced.
Household spending boosted the Eurozone economic growth rate in the first quarter of the year to 0.6 percent on the quarter from the original estimate of 0.5 percent. Germany’s industrial production expanded for the first time in three months in April, largely on capital goods output. Industrial output was up 0.8 percent on the month and reversing a revised 1.1 percent drop in March.
Asia Pacific
Asian stocks were up across the board Tuesday as dovish comments from Federal Reserve Chair Janet Yellen eased concerns about possible capital outflows from the region. Crude futures closed at their highest level in more than 10 months in New York overnight in the wake of crippling attacks on Nigeria’s oil industry and the dollar reversed its earlier losses against the yen, helping underpin investor sentiment ahead of Chinese trade and inflation figures due on Wednesday and Thursday, respectively. The Shanghai Composite inched up 0.1 percent while the Hang Seng jumped 1.4 percent.
The Nikkei added 0.6 percent as exporters such as Honda Motor, Sony, Mazda Motor, Panasonic and Sharp closed higher. Technology group Toshiba and oil explorer Inpex also rallied.
Both the S&P/ASX and All Ordinaries were up 0.2 percent after the Reserve Bank of Australia kept its official cash rate at a record low 1.75 percent as widely expected. Major miners BHP Billiton, Rio Tinto and Fortescue Metals advanced as did Oil Search and Santos. Aged care provider Estia Health dropped on reports it has come under increased scrutiny from federal health officials. The big four banks were mixed.
The Kospi was up 1.3 percent thanks to buying by foreign investors after Yellen indicated no rush to raise US interest rates. The Sensex added 0.9 percent after the Reserve Bank of India maintained its accommodative stance.
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 posts May merchandise trade data. Japan releases revised first quarter gross domestic product. Australia reports April home loan data. The UK releases April industrial output. In the US, April JOLTS and the weekly EIA petroleum status report will be reported.
*Note — all releases are listed in local time.
Source: Fidelity
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