On 04 August, 2016 – Most share indices advanced

With Bank of England’s stimulus program unveiled, investors looked forward to Friday’s US employment report.
United States
US shares were virtually unchanged Thursday after the Bank of England’s stimulus package was announced and following disappointing US factory orders for June. Investors also were waiting for Friday’s all important July employment report. The Dow Jones industrials were down 2.95 points while the S&P was up 0.46 point. The Nasdaq edged 0.1 percent higher.
Square rose after it reported strong second-quarter results and raised its projections for the year. The hamburger chain Jack in the Box jumped after it reported better-than-expected results and raised its forecasts for the year. TripAdvisor was lower after it reported lower revenue growth and profit margins in the second quarter. The company also said terrorism was one thing making it harder to predict how its business will perform. MetLife tumbled after the insurer reported a $2 billion charge tied to a savings product popular with baby boomers. Prudential Financial and Lincoln Financial Group also declined after reporting lower premiums and fees.
The Bank of England cut interest rates for the first time since 2009 in a widely anticipated move to cushion the fallout from the Brexit decision. The BoE also plans to expand its balance sheet through the purchase of government and corporate bonds, as well as a lending program for banks.
Applications for unemployment aid were up 3,000 to 269,000, a level close to historical lows and a positive sign for the job market. June factory orders however were weak, declining 1.5 percent.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.85 to US$1,362.75. Copper futures were down 1.1 percent to US$2.17. WTI spot crude was up 93 US cents to US$41.76. Dated Brent spot crude was up US$1.07 to US$44.17. The US dollar was up against the euro, pound and Swiss franc. It was lower against the Canadian and Australian dollars. It was virtually unchanged against the yen. The Dollar Index was up 0.3 percent. The yields on both the US Treasury 30 year bond and the 10 year note slipped 3 basis points to 2.26 percent and 1.51 percent respectively.
Europe
Stocks advanced Thursday after the Bank of England cut its key interest rate and announced a comprehensive stimulus package to counteract the negative reaction to the Brexit vote. The FTSE was up 1.6 percent while both the CAC and DAX gained 0.6 percent and the SMI was 0.9 percent higher.
The BoE cut its Bank Rate for the first time since March 2009 by 25 basis points to 0.25 percent. In addition, the Bank increased its asset purchase program to £435 billion from £375 billion. The BoE also introduced the Term Funding Scheme which will have a capacity of £100 billion and “provide funding for banks at interest rates close to Bank Rate”, supporting lenders in their efforts to pass on lower rates to their customers. The Bank also drastically downgraded its growth projections as the “Brexit” vote heightened uncertainty and the sharp depreciation in sterling triggered an upward revision to the inflation forecast. The Bank slashed its GDP growth outlook for 2017 to 0.8 percent from 2.3 percent. Similarly, the projection for 2018 was trimmed to 1.8 percent from 2.3 percent.
Siemens climbed after lifting its full-year earnings guidance for the second time this year. Rheinmetall jumped after the defense contractor backed its FY16 outlook after posting higher operating profit and sales for the first half of 2016. Hannover Re Group sank after its Group net income for the first six months declined 8.6 percent from a year earlier. Société BIC jumped after confirming its 2016 financial outlook.
In London, Aviva advanced after the insurer raised its dividend after delivering a double digit increase in operating profits during the first half. Betting firm Ladbrokes rose after it swung to a pretax profit in the first half of 2016 due to strong growth in staking and favorable sporting results. Randgold Resources sank after its second-quarter net income fell to $49 million from $53.6 million last year. Hikma plunged after lowering its profit target for its generic business.
Asia Pacific
Asian stocks advanced as oil prices rebounded from four-month lows and the ADP US private employment indicated that labor market was holding up despite slowing in small business hiring. Traders eyed a Bank of England meeting later in the day amid expectations the Bank would cut interest rates for the first time since 2009 in a bid to ward off the negative impact of Brexit.
The Shanghai Composite inched up 0.1 percent after the People’s Bank of China reiterated it would continue its prudent monetary policy in the second half of the year and fine-tune it as necessary. The Hang Seng was up 0.4 percent.
The Nikkei added 1.1 percent in volatile trading as the yen failed to maintain earlier gains on comments by Bank of Japan Deputy Governor Kikuo Iwata that the BoJ hasn’t set a future direction for policy. Financials advanced thanks to well-received earnings reports from some of Europe’s largest banks. Lenders Mizuho Financial, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial Group advanced as did Nomura Holdings. Suzuki Motor jumped on reporting a 7 percent rise in Q1 operating profit. Maruha Nichiro rallied on a Nikkei report that the fisheries company might report a record first-quarter pre-tax profit. Medical equipment maker Olympus retreated after its first-quarter profit missed estimates.
Both the S&P/ASX and All Ordinaries were 0.2 percent higher. Mining and energy stocks rallied as iron ore prices held steady near a three month high and global crude prices extended overnight gains. Stocks, however, finished off their day’s high after retail sales edged up only 0.1 percent in June.
The Kospi was up 0.3 percent as the rebound in oil prices spurred buying in oil refiners and chemical stocks. Foreign investors turned net buyers after the recent slide. The Sensex added 0.1 percent.
Looking forward
Germany releases June manufacturers’ orders. France posts June merchandise trade balance. Canada reports July labour force survey and June merchandise trade balance. The US reports the July employment situation and June international trade balance.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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