Declining oil prices and falling bond yields weighed on stocks.
United States
Stocks retreated wiping out most of the gains from earlier in the week. The Dow Jones industrials lost 0.7 percent, the S&P retreated 0.9 percent and the Nasdaq was down 1.3 percent. For the week, the Dow added 0.3 percent but the S&P and Nasdaq were down 0.1 percent and 1.0 percent respectively. Energy companies declined thanks to lower oil prices while banks retreated again on shrinking bond yields. Investors were cautious as they awaited the Federal Reserve’s FOMC meeting mid-week and Britain’s referendum on its membership in the European Union on June 23.
ConocoPhillips, Schlumberger and Chevron were down. Citigroup, JPMorgan Chase and Bank of America retreated. However, Verizon Communications advanced. Mylan declined after an analyst said the company might come under scrutiny from regulators because it made some “exceptionally large price increases” on its drugs this year. Amazon and Netflix were lower.
Urban Outfitters slumped after the company said that sales at established stores had continued to fall in the second quarter so far. Those sales are considered an important measurement of retailer performance. Westlake Chemical said it would buy the chemical maker Axiall for $33 per share or $2.33 billion. Both companies increased. H&R Block rallied after it posted a bigger profit and more revenue than expected. Mattress Firm Holding declined after it reported a bigger loss and less revenue than expected and cut its estimates for the year.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$11.60 to US$1,275.50 Copper futures were down 0.4 percent to US$2.03. WTI spot crude was down US$1.49 to US$49.07. Dated Brent spot crude was down US$1.41 to US$50.54. 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 yield on US Treasury 30 year bond was down 2 basis points to 2.45 percent while the yield on the 10 year note declined 4 basis points to 1.64 percent.
Europe
Stocks retreated for a third day with financials hardest hit due to a drop in bond yields. Sovereign debt yields from Japan to Germany fell to record lows. The FTSE and SMI were down 1.9 percent, the CAC declined 2.2 percent and the DAX dropped 2.5 percent. On the week, all indices retreated. The FTSE lost 1.5 percent, the CAC was down 2.6 percent, the DAX dropped 2.7 percent and the SMI was 2.8 percent lower.
The European Central Bank’s decision to begin purchasing corporate bonds weighed on the rates of investment-grade corporate debt. Bond market weakness was also attributed to nervousness ahead of Britain’s referendum on whether to stay in the European Union. The Federal Reserve meeting also contributed to the downward pressure.
Mining and resource stocks declined Friday. An increase in the US dollar drove the price of most metals lower. Energy stocks declined with crude oil prices. Lufthansa sank after it announced that its Chief Financial Officer is stepping down to pursue individual career options. Axel Springer retreated after acquiring 93 percent of the shares in US digital market data analyst eMarketer for about $242 million. Banks including Deutsche Bank, Commerzbank, Société Générale, BNP Paribas and Crédit Agricole retreated.
ThyssenKrupp and Salzgitter were lower. Dassault Aviation gained after Airbus Group said it would dispose of its remaining stake in the French commercial and military aerospace firm, raising about €2.38 billion. Airbus declined. Both Total and Technip were lower. Tesco was down after confirming the proposed sale of its 95.5 percent controlling stake in the Kipa business in Turkey to Migros. In London, banks including Standard Chartered, Barclays, Lloyds Banking Group, Royal Bank of Scotland and HSBC all closed lower.
Asia Pacific
Asian stocks fell broadly in thin holiday trading as uncertainty over the Brexit referendum and caution ahead of a slew of Chinese data over the weekend combined with central bank meetings in the US and Japan next week kept investors on edge. Mining and energy stocks paced declines as a stronger US dollar weighed on commodity prices. Markets in mainland China and Taiwan remained closed for the Dragon Boat Festival. The Hang Seng declined 1.2 percent on the day and was up 0.45 percent on the week. The Shanghai Composite was down 0.4 percent on the week.
The Nikkei was 0.4 percent lower on the day and declined 0.2 percent for the week. Japanese shares retreated as the yield on 10-year government bonds fell to a fresh record low and the yen strengthened on safe-haven bids ahead of the FOMC and Bank of Japan meetings during this week. Panasonic, Sharp and Sony were down. MS&AD Insurance Group Holdings and Dai-ichi Life Insurance were down on a Nikkei report that non-life insurers are discontinuing savings-type products due to the Bank of Japan’s negative interest rate policy.
Australian shares declined as risk aversion resurfaced ahead of the FOMC meeting and the UK’s EU referendum on June 23. The benchmark S&P/ASX was down 0.9 percent while the All Ordinaries retreated 0.8 percent. On the week, the former slipped 0.1 percent while the latter was virtually unchanged. BHP Billiton tumbled after Brazilian police levelled accusations of wilful misconduct against Samarco, a joint venture with Vale. Rio Tinto lost 3 percent and Fortescue Metals Group declined. Gold miner Newcrest gained after gold futures rose overnight to close at their highest levels since mid-May on worries about global growth and this month’s Brexit vote on EU membership. The big four banks were lower.
The Kospi was down 0.3 percent but gained 1.6 percent on the week. The Sensex lost 0.5 percent on the day and 0.8 percent on the week.
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

June 14,15

United States

Federal Reserve Monetary Policy Announcement

June 15

Fed Chair Quarterly Press Conference

June 16

Japan

Bank of Japan Monetary Policy Announcement

UK

Bank of England Monetary Policy Announcement

Switzerland

SNB Monetary Policy Assessment

The following indicators will be released this week…

Europe

June 14

Eurozone

Industrial Production (April)

UK

Consumer Price Index (May)

Producer Price Index (May)

June 15

Eurozone

Merchandise Trade (April)

UK

Labour Market Report (May)

June 16

Eurozone

Harmonized Index of Consumer Prices (May final)

UK

Retail Sales (May)

Asia/Pacific

June 13

India

Consumer Price Index (May)

June 16

New Zealand

Gross Domestic Product (Q1.2016)

Americas

June 14

United States

Retail Sales (May)

Import/Export Prices (May)

June 15

Canada

Manufacturing Sales (April)

United States

Industrial Production (May)

June 16

United States

Initial Unemployment Claims (week ending prior Saturday)

Consumer Price Index (May)

Philadelphia Fed Survey (June)

June 17

United States

Housing Starts (May)

Canada

Consumer Price Index (May)

*Note — all releases are listed in local time.

Source: Fidelity

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