On 22 August, 2016 – Global stocks were mixed in quiet August trading
Investors are waiting for Friday’s speech from Fed Chair Janet Yellen.
United States
Stocks fluctuated between small gains and losses. At day’s end, the Dow Jones industrials and S&P edged down 0.1 percent while the Nasdaq edged up 0.1 percent. Mining and materials stocks retreated as the prices of copper and other metals declined. Major stock markets around the world were mostly lower as investors looked ahead to the Federal Reserve’s meeting in Jackson Hole on Friday for clues on timing for a possible interest rate increase.
Medivation soared after Pfizer announced it would buy the company for $14 billion or $81.50 per share. The Medivation deal pushed other biotechnology stocks higher as well. Regeneron Pharmaceuticals, Vertex Pharmaceuticals and Alexion Pharmaceuticals all rallied. Syngenta jumped after a United States national security panel cleared its acquisition by the China National Chemical Corporation. The state-owned company, known as ChemChina, said the $43 billion deal still required approval from antitrust regulators. Marathon Oil and Halliburton retreated thanks to sliding oil prices.
On Sunday, Fed Vice Chairman Stanley Fischer was optimistic about the economy’s short-term outlook, calling inflation within “hailing distance” of the bank’s 2 percent target and noting economic growth is expected to pick up in the coming quarters. Fischer gave no indication of when a rate increase will occur.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$10.50 to US$1,335.90. Copper futures were down 1.2 percent to US$2.15. WTI spot crude was down US$1.47 to US$47.05. Dated Brent spot crude was down US$1.70 to US$49.18. The US dollar was up against the yen, euro, Swiss franc and the Canadian dollar. However, it declined against the pound and Australian dollar. The yield on US Treasury 30 year bond was down 5 basis points to 2.24 percent while the yield on the 10 year note declined 4 basis points to 1.54 percent.
Europe
Markets were quiet Monday as many traders and investors remained on holiday. The indices were mixed. Early gains disappeared on concerns about the global economy and lower commodity prices. The FTSE was 0.4 percent lower while the SMI was 0.4 percent higher at the close. The CAC lost 0.2 percent while the DAX retreated 0.5 percent. The MIB and IBEX were up 0.4 percent and 0.2 percent respectively.
Syngenta International soared after the US Committee on Foreign Investment cleared ChemChina’s planned $43 billion takeover of the Swiss agriculture company. Automakers were advanced as the dollar extended gains against the euro for a second day on bets for another US interest rate increase this year. Volkswagen said that production at several plants has been interrupted as a result of a halt in component deliveries by external suppliers.
Kingspan Group was higher after the Irish building materials company reported a record half-yearly performance and increased its dividend payment. UK housebuilder Persimmon advanced ahead of its earnings results which will be reported on Tuesday. Swedish medical technology group Getinge retreated after replacing its chief executive Alex Myers following a difference of opinion over the direction of the company. Miners Anglo American, BHP Billiton, Glencore and Rio Tinto were down in London after commodities slipped on a stronger dollar. Fresnillo slumped after gold prices hit a two-week low on the prospects of a US rate increase.
Asia Pacific
Most Asian stocks indices declined Monday as oil prices pulled back after surging in the last two weeks and hawkish comments from another Federal Reserve official revived talk of a US rate increase as soon as September.
The Shanghai Composite was down 0.7 percent after the yuan hit a two-week low against the US dollar on global dollar strength. The Hang Seng added 0.3 percent.
The Nikkei was 0.3 percent higher thanks to a weaker yen after BoJ Governor Haruhiko Kuroda said there is “sufficient chance” the central bank will add to its unprecedented easing at next month’s policy meeting. Exporters Hitachi, Honda Motor, Panasonic, Sharp, Sony and Toyota Motor advanced. Renesas Electronics tumbled on a Nikkei report that the chip maker is in late-stage talks to acquire US-based chipmaker Intersil for up to ¥300 billion. Seafood products maker Nippon Suisan Kaisha plunged on fund raising reports.
Both the S&P/ASX and All Ordinaries were down 0.2 percent in choppy trading after a mixed bag of earnings results. Iron ore miner Fortescue Metals declined despite posting robust full-year results and sharply lifting its dividend. BHP Billiton and Rio Tinto were lower. Oil & gas producer Santos and Beach Energy retreated as a rally in oil prices faded. Banks ANZ, Westpac and Commonwealth closed lower.
The Kospi declined 0.7 percent on selling by foreign and institutional investors as the local currency fell sharply on concerns over a possible US rate increase. The Sensex was 0.3 percent lower. There was little reaction to the announcement that the current Reserve Bank of India Deputy Governor Urjit Patel would take over as the next central bank chief on September 4.
Looking forward
Flash August manufacturing PMIs will be reported for Japan and the US. Flash composite PMIs will be released for France, Germany and the Eurozone. August flash EC consumer confidence will be reported. UK August CBI industrial trends survey will be released. In the US, July new home sales and August Richmond Fed manufacturing index will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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