On 22 June, 2016 – Global stocks mixed
Investors were waiting for the outcome of the Brexit vote Thursday.
United States
Stocks pared gains Wednesday to end the day lower on the eve of the UK Brexit vote. The Dow Jones industrials were down 0.3 percent and the Nasdaq and the S&P lost 0.2 percent.
Health care stocks climbed. Bristol-Myers Squibb rose as did cancer drug maker Celgene. Tesla offered to buy the solar panel maker SolarCity for up to $2.8 billion in an attempt to create a one-stop shop for cleaner energy. The offer values SolarCity at $26.50 to $28.50 a share. Home builder KB Home gained after its profit surpassed estimates and sales were far stronger than expected. Adobe Systems was lower after it announced a larger-than-expected quarterly profit, but disappointed with its projections for the current quarter. FedEx reported solid quarterly results but gave a cautious outlook as it spends more money on expanding its groundwork and acquires more aircraft to keep up with the e-commerce boom. HP retreated after it forecast strong results in its fiscal third quarter but announced some changes in its marketing strategy. The company said it would not offer as many discounts on its products and would carry reduced supplies.
May existing home sales climbed 1.8 percent to an annualized rate of 5.530 million — the best since February 2007.
Fed Chair Janet Yellen testified today before the House of Representatives Financial Services Committee. After repeating her prepared testimony from Tuesday’s Senate hearing, Ms Yellen described recent economic developments as mixed with consumer spending a strength but business investment, hit by trouble in drilling & mining, a weakness. She described the labour market as in “pretty healthy condition” and continuing to improve. She expects wage growth to pick up. In response to a question about the stock market, she said it is not a third pillar of monetary policy (along with employment and inflation). Yellen said the FOMC will base its rate decisions on the trajectory of the economy, and although she expects rates to rise gradually as the economy recovers, she said higher rates don’t necessarily point to a lower stock market.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$7.75 to US$1,264.85. Copper futures were up 0.8 percent to US$2.13. WTI spot crude was down 75 US cents to US$49.10. Dated Brent spot crude was down 75 US cents to US$49.87. The US dollar was down against the yen, euro, pound, Swiss franc and the Australian dollar. However, it gained against the Canadian dollar. The Dollar Index was down 0.4 percent. The yield on US Treasury 30 year bond was unchanged at 2.50 percent while the yield on the 10 year note slipped 2 basis points to 1.68 percent.
Europe
Stocks were mostly positive on the eve of the UK Brexit vote. Insurance stocks were among the best performers and banks extended their recent recovery. However, energy stocks reversed early gains after US data showed a smaller than expected drop in oil inventories. Investors continued to keep an eye on Federal Reserve Chair Janet Yellen’s testimony before the House Financial Services Committee. The FTSE and DAX added 0.6 percent, the CAC was up 0.3 percent and the SMI gained 0.5 percent.
Deutsche Bank and Commerzbank advanced along with RWE and E.ON. Both Fresenius Medical Care and Fresenius were up. In Paris, Air France-KLM Group gained after its pilots cancelled a strike scheduled for Friday. In Paris, Société Générale, Crédit Agricole and BNP Paribas climbed. In London, Rio Tinto advanced on rumors of an incoming $9 billion BHP-style spinoff. Storage company Safestore Holdings was up on a broker upgrade. Debenhams retreated after reporting a slight drop in like-for-like sales in the 15 weeks to June 11. Barclays, Standard Chartered, Royal Bank of Scotland and HSBC advanced. Insurance stocks including Old Mutual, Standard Life and RSA Insurance finished higher. House builders Taylor Wimpey, Persimmon, Berkeley Group and Barratt Developments rallied.
Eurozone consumer confidence deteriorated for the first time in three months in June. The flash consumer confidence index declined to minus 7.3 from minus 7 in May.
Asia Pacific
Stocks in the Asia Pacific were mixed — a relatively strong yen combined with concerns over North Korea’s latest missile launch kept investors on edge. The looming British referendum on its European Union membership also dampened spirits.
The Shanghai Composite added 0.9 percent as Federal Reserve Chair Janet Yellen played down the risk of a US recession in her testimony before Congress and the People’s Bank of China said it would allow qualified foreign companies to issue shares on the mainland. The Hang Seng was up 0.6 percent.
The Nikkei retreated 0.6 percent thanks to the US dollar’s weakness following cautious comments by Fed Chair Yellen on Capitol Hill dented the outlook for exporters’ profitability. Hitachi, Panasonic, Sony, Honda Motor and Toshiba declined along with Fast Retailing and robot maker Fanuc. SoftBank rallied after the mobile carrier agreed to sell its 72.2 percent stake in Finnish game maker Supercell to China-based Tencent Holdings in a $7.3 billion deal. Mitsubishi Motors climbed despite forecasting a net loss of ¥145 billion for the current fiscal year, its first annual loss in eight years in the wake of its fuel efficiency scandal.
Both the S&P/ASX and All Ordinaries slipped 0.1 percent. Gold miners Evolution, Newcrest, Northern Star Resources and Regis Resources were lower after gold futures ended near a two-week low overnight. Banks were mixed with Commonwealth, Westpac and NAB closing slightly lower while ANZ advanced.
The Kospi was up 0.5 percent despite North Korea firing two mid-range ballistic missiles from its eastern coast. The Sensex was 0.2 percent lower in lackluster trading prior to the UK referendum vote Thursday.
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 UK votes on the Brexit referendum. Flash June PMIs will be reported for Japan, the Eurozone, France, Germany and the US. In the US, May new home sales and weekly jobless claims, money supply and Fed balance sheet will be released.
*Note — all releases are listed in local time.
Source: Fidelity
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