On 14 July, 2016 – Global stock rally continues

Most major stock indices continue to rise but the FTSE slipped after the Bank of England left its policy unchanged.
United States
US stock indices climbed to new highs after solid earnings reports from several companies. Banks and materials companies gained the most. The Dow Jones industrials were up 0.7 percent, the S&P gained 0.5 percent and the Nasdaq added 0.6 percent. Both the Dow and S&P closed at new record highs. Stocks were boosted by hints that the Bank of England would launch fresh stimulus when it next meets in three weeks.
Yum Brands, the owner of KFC, advanced after its profit beat forecasts. Delta Air Lines were up after reporting second quarter profits that beat expectations. Lower fuel prices have helped airlines post big profits. Boeing said it had won orders and commitments for 182 aircraft worth a total of $26.8 billion at list prices during the course of the Farnborough Air show this week. The new deals included a $1.4 billion order from TUI Group plus commitments from airlines including Xiamen Airlines and Donghai Airlines.
JPMorgan climbed after the bank reported better than expected earnings of $5.67 billion after payments to preferred shareholders, down slightly from a profit of $5.78 billion in the same period a year earlier. On a per share basis, the bank earned $1.55 compared with $1.54 a year earlier as the amount of shares outstanding decreased. Bayer increased its bid for Monsanto as it pursues its goal of creating the world’s largest supplier of seeds and agricultural chemicals. Bayer said in a statement that it had increased its all-cash offer from $122 per share to $125 per share, after receiving additional information about the company in private discussions.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$19.15 to US$1,323.60. Copper futures were up 0.1 percent to US$2.24. WTI spot crude was up 70 US cents to US$45.45. Dated Brent spot crude was up 87 US cents to US$47.13. The US dollar was down against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it advanced against the yen. The Dollar Index was down 0.25 percent. The yield on US Treasury 30 year bond was up 7 basis points to 2.25 percent while the yield on the 10 year note was up 6 basis points to 1.53 percent.
Europe
European stocks with the exception of the FTSE climbed Thursday. The markets rallied in early trading but dropped after the Bank of England surprised investors by leaving its policy unchanged. The markets with the exception of the FTSE managed to recoup their lost ground in the afternoon. The FTSE slipped 0.2 percent while the CAC, DAX and SMI added 1.2 percent, 1.4 percent and 0.4 percent respectively.
The Bank of England left its key interest rate at 0.5 percent where it has been since March 2009 but signaled that there is a likelihood that it will act at its August 4 meeting in just three weeks when data for the post Brexit vote become available from its Quarterly Inflation Report on economic growth and consumer prices. The monetary policy committee left its asset purchase ceiling at £375 billion.
The newly appointed UK Chancellor of the Exchequer Philip Hammond said the country will not have a post-Brexit emergency budget. Speaking to the BBC, Hammond said the new government aims to stabilize and support the economy in the coming months to restore confidence as soon as possible.
Software AG advanced after raising its full-year profit outlook based on the positive business development in the second quarter and the strong project pipeline for the second half. BASF advanced on a Bloomberg report that Monsanto has revived talks with the company about a possible merger of their agrochemicals businesses. Infineon Technologies gained after it announced an agreement with Cree to acquire the Wolfspeed Power and RF division of Cree for a purchase price of $850 million.
Banks including Deutsche Bank, Commerzbank, Société Générale, BNP Paribas and Crédit Agricole gained. Auto makers BMW, Daimler, Volkswagen, Peugeot and Renault all advanced. In London, recruiter Hays jumped after saying it expects full-year operating profit to be ahead of current market expectations. Micro Focus International jumped after reporting a rise in full-year profit and raising dividend.
Asia Pacific
Stocks were mixed Thursday after oil prices tumbled overnight and a mediocre session in the US instilled a sense of caution among traders before the Bank of England announced its policy decision later in the global market day. The Japanese yen continued its weakening trend and London copper traded flat while crude futures rose in Asian trade after tumbling more than 4 percent on Wednesday.
The Shanghai Composite was 0.2 percent lower with metal and mining stocks pacing declines in response to disappointing June merchandise trade data. The Hang Seng was up 1.1 percent.
The Nikkei was up 1.0 percent as the yen dropped to the lower 105 range on expectations that the government will supplement monetary policy with fiscal stimulus. Sony, Sumitomo Metal Mining and Komatsu climbed. Trading house Itochu advanced after reportedly forming an alliance with Brazilian aerospace company Embraer Executive Jets. Airline ANA Holdings gained after crude prices fell sharply in the previous session.
Both the S&P/ASX and All Ordinaries added 0.4 percent after June full-time employment jumped 38,400. The four big banks advanced despite Moody’s warning that they are facing a “growing number of headwinds” due to increasing household leverage and persistently low interest rates. Fortescue Metals Group tumbled even though the company easily beat its annual iron ore export target. BHP Billiton and Rio Tinto also were lower.
The Kospi edged up 0.2 percent as foreign investors continued their buying streak. The won hit a 10-week high against the US dollar after the Bank of Korea left its interest rate unchanged at 1.25 percent as widely expected. The BoK trimmed its growth and inflation forecasts for the year saying the global economy will continue with its weak recovery in the future. The Sensex added 0.5 percent. Gains in rupee on the back of strong capital inflows, hopes of a political consensus for passage of the GST Bill in the monsoon session of Parliament scheduled between July 18 and August 12 and expectations of a recovery in company earnings underpinned sentiment.
Global Stock Markets

Looking forward
China releases second quarter gross domestic product along with June industrial production and retail sales. The Eurozone posts final June harmonized index of consumer prices. In the US, June consumer prices, retail sales and industrial production will be reported. July Empire State Manufacturing survey and preliminary July consumer sentiment will be released along with May business inventories.
*Note — all releases are listed in local time.

Source: Fidelity

Fidelity disclaimer:

The objective of this page is to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by any Fidelity entity or any third-party.

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]