On 17 June, 2016 – Investors’ fears calm
Stocks advanced in Europe and Asia but retreated in the US.
United States
US stocks were down Friday and for the week as investors continued to monitor the Brexit debate in the UK. Technology stocks were among the biggest decliners. The Dow Jones industrials were down 0.3 percent on the day and 1.1 percent for the week. The S&P also retreated 0.3 percent but were down 1.2 percent from a week ago. The Nasdaq declined 0.9 percent on the day and slumped 1.9 percent on the week. Trading was somewhat subdued.
Apple was down as a patent dispute in China threatened to jeopardize future sales of iPhones in the country. Elizabeth Arden advanced after Revlon said it would buy the company for $14 per share or $419.3 million. Oracle advanced after better-than-expected quarterly revenue.
May housing starts were down 0.3 percent on the month to a seasonally adjusted annual rate of 1.2 million units.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$20.05 to US$1,290.70. Copper futures were up 0.15 percent to US$2.05. WTI spot crude was up US$1.77 to US$47.98. Dated Brent spot crude was up US$1.98 to US$49.17. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.5 percent. The yield on US Treasury 30 year bond was up 3 basis points to 2.42 percent while the yield on the 10 year note was up 4 basis points to 1.61 percent.
Europe
Uncertainty surrounding the UK referendum weighed on stocks last week. However, share markets here managed to end Friday in positive territory. However, they all were lower for the week. The FTSE was up 1.2 percent Friday but tumbled 1.5 percent for the week. The CAC was up 1.0 percent Friday and was down 2.6 percent on the week. The DAX added 0.8 percent but lost 2.1 percent and the SMI was up 1.0 percent on the day and retreated 2.6 percent from a week ago. A rebound in crude oil prices and an increase in investor risk appetite contributed to the positive mood on Friday. Anxiety over the potential “Brexit” also eased at the end of the trading week. Banks, which have been under intense pressure recently, were among the best performing stocks Friday.
Britain’s politicians suspended the Brexit referendum campaign for a second day, following the death of Labour MP Jo Cox, a strong advocate for voting to stay in next week’s referendum. International Monetary Fund Managing Director Christine Lagarde said Friday the European Union membership helped the UK to transform into a dynamic and vibrant economy and the country will continue to benefit by staying in the group.
Siemens advanced after the company announced an agreement to merge its wind power operations with Spain’s Gamesa Corporación Tecnológica. Banks including Deutsche Bank, Commerzbank, Société Générale, Crédit Agricole and BNP Paribas rallied. Utilities RWE and E.ON advanced. Technip and Total were higher. In London, Standard Life jumped after the insurance firm announced that HDFC Standard Life Insurance, Max Life Insurance and Max Financial Services have initiated talks for a possible merger. HDFC Standard Life Insurance Company is a partnership between HDFC and Standard Life. HSBC climbed after its HSBC Finance unit agreed to pay US$1.575 billion to settle 14-year shareholder class action based on events that took place prior to HSBC’s acquisition of Household International in 2003. Lloyds Banking Group, Standard Chartered, Barclays and Royal Bank of Scotland increased. Randgold Resources and Fresnillo retreated.
Asia Pacific
Most Asian stocks advanced Friday after US stocks gained on Thursday. Oil prices were higher and the yen weakened after both official groups in the EU referendum campaign suspended activities out of respect for the late Labor MP Jo Cox. The yen weakened after Japanese Finance Minister Taro Aso toughened his currency rhetoric, saying the government would respond urgently if necessary to prevent “one-sided, rapid and speculative” currency moves.
The Shanghai Composite was up 0.4 percent but 1.4 percent lower on the week. Concerns lingered about slowing growth and the weak yuan, which declined on concerns that capital outflows may accelerate. The Hang Seng was up 0.7 percent but 4.1 percent lower on the week.
The Nikkei was up 1.1 percent but tumbled 6.0 percent from a week ago as the yen steadied against the US dollar after surging to a 22-month high Thursday in the wake of the Bank of Japan’s decision to leave its monetary policy unchanged. Exporters Canon, Mazda Motor, Nissan, Panasonic and Toyota rallied along with Inpex and JX Holdings.
Both the S&P/ASX and All Ordinaries added 0.3 percent Friday. The former was down 2.8 percent on the week while the latter lost 2.7 percent on Brexit worries and BoJ disappointment. The big banks advanced along with miners.
The Kospi edged up 0.1 percent and was down 2.1 percent on the week. The Sensex gained 0.4 percent and was virtually unchanged on the week. Over the weekend, Governor Raghuram Rajan of the Reserve Bank of India announced that he would leave when his term ends in September. He is popular with investors but had faced opposition from India’s ruling party.
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 following indicators will be released this week…
Europe
June 20
Germany
Producer Price Index (May)
June 21
Germany
ZEW Survey (June)
June 22
Eurozone
EC Consumer Confidence Survey (June flash)
June 23
Eurozone
Manufacturing, Services & Composite PMI (June flash)
Germany
Manufacturing, Services & Composite PMI (June flash)
France
Manufacturing, Services & Composite PMI (June flash)
June 24
Germany
Ifo Survey (June)
France
Gross Domestic Product (Q1.2016 final)
Asia/Pacific
June 20
Japan
Merchandise Trade (May)
June 23
Japan
Manufacturing PMI (June flash)
Americas
June 22
Canada
Retail Sales (April)
United States
Existing Home Sales (May)
June 23
United States
Initial Unemployment Claims (week ending prior Saturday)
New Home Sales (May)
Manufacturing PMI (June flash)
June 24
United States
Durable Goods Orders (May)
Consumer Sentiment (June)
*Note — all releases are listed in local time.
Source: Fidelity
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Jesmond Mizzi Financial Advisors Disclaimer:
This article, does not intend to give investment advice and the contents therein should not be construed as such. Jesmond Mizzi Financial Advisors Limited is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Jesmond Mizzi Financial Advisors Limited at 67, Level 3, South Street, Valletta, or on Tel: 21224410, or email [email protected]