On 07 September, 2016 – Global stocks mixed

Investors await Thursday’s European Central Bank announcement.
United States
Stocks gyrated around the unchanged mark Wednesday as weak economic data weighed on sentiment. The soft data have reduced expectations that the Federal Reserve will raise interest rates again soon — a potential boon for stocks. However, worries over the economy have elevated fears about the outlook and the earning power of companies, which are negatives stocks. The Dow Jones industrials slipped 0.1 percent while the S&P was virtually unchanged (down 0.33 point). The Nasdaq however, added 0.2 percent.
Shares were weighed down by supermarket chains and other consumer-focused companies. Materials stocks also declined while energy companies moved higher as crude oil prices rose. Sprouts Farmers Market stock dropped after the company cut its guidance, citing falling food prices and rising discounts. Whole Foods Market and Kroger retreated. Dave & Buster’s Entertainment declined after the company reported weaker than anticipated sales. The company also reduced its same store sales growth outlook for the rest of the year.
Chipotle Mexican Grill climbed after Pershing Square said it had acquired a 9.9 percent stake in the struggling restaurant chain. Apache rose after the company said it would start working this year to extract crude oil from a newly discovered major field in Texas. Western Digital and Seagate Technology advanced. Airlines including American Airlines, United Continental Holdings, Delta Air Lines and Southwest Airlines climbed. Apple advanced after launching the new iPhone.
The Federal Reserve published its Beige Book in preparation of its FOMC meeting on September 21 and 22. Modest and moderate were the two words used to describe growth and the outlook for the US economy. Other than upward pressure on wages, inflationary pressures were described as no better than slight. The Fed said many districts reported increased wage pressures for highly skilled workers and difficulty filling job vacancies for such positions especially for technology specialists, engineers and selected construction workers.
Consumer spending here was described as little changed with auto sales down. But manufacturing gets a small upgrade, to slightly higher from mixed in the prior Beige Book. The report notes that home sales are moving higher but gains are being held down by lack of supply. The energy sector continues to be weak as it has been all year. The Beige Book was prepared by the San Francisco Fed.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$11.10 to US$1,348.35. Copper futures were up 0.4 percent to US$2.10. WTI spot crude was up 61 US cents to US$45.44. Dated Brent spot crude was up 61 US cents to US$47.87. The US dollar was up against the pound and the Canadian and Australian dollars. However, it declined against the yen. The currency was unchanged against both the euro and Swiss franc. The Dollar Index was up 0.1 percent. Yields on both the US Treasury 30 year bond and 10 year note were down 1 basis point to 2.23 percent and 1.53 percent respectively.
Europe
Stocks advanced Wednesday after fluctuating between small gains and losses in early trading. The early struggles were due in part to an unexpected drop in German industrial production. Traders were also in a cautious mood ahead of the US Federal Reserve’s Beige Book which would be reported after markets here are closed for the day and Thursday’s European Central Bank meeting. Both the DAX and CAC added 0.6 percent while the FTSE and SMI advanced 0.3 percent and 0.2 percent respectively.
Volkswagen was up on a Bloomberg report that it is in advanced talks with Anhui Jianghuai Automobile about jointly producing electric passenger vehicles in China. Daimler and BMW also were higher. In London, Ashtead Group gained after the company lifted its full-year guidance after reporting a 4 percent increase in first-quarter pretax profit. Weir Group climbed after a broker upgrade. Sports Direct International sank after the retailer forecast profit below expectations following a turbulent year. Barratt Developments dropped despite posting record pre-tax profits in the year to June, in line with its previous guidance. Just Eat tumbled after Amazon said it would launch a free one-hour restaurant delivery service for Prime members in London. Firmer oil prices lifted shares in Royal Dutch Shell and BP in London. Berkeley Group and Barratt Developments were down, as investors remained unconvinced that the sector could escape the after effects of Brexit.
Germany’s July industrial production declined the most in nearly two years in July as weak demand from China and concerns about the ‘Brexit’ vote weighed on manufacturing activity. Output declined 1.5 percent on the month — the biggest decline since August 2014 when production slid 2.5 percent. France’s July foreign trade deficit increased more than expected as exports fell and imports rose. UK industrial production edged 0.1 percent higher on the month in July after staying flat in June. Manufacturing declined 0.9 percent on a sharp decline in pharmaceutical production.
Asia Pacific
Shares were mixed Wednesday despite easing concerns over a Federal Reserve interest rate increase. While surprisingly poor U.S. services data weakened the case for a US rate increase this month, widespread oil price volatility and a firmer yen served to cap overall gains.
The Shanghai Composite was virtually unchanged (up1.22 points) after China’s State Council pledged to step up proactive fiscal policy efforts to lift domestic demand. The Hang Seng was 0.2 percent lower. People’s Bank of China data showed that China’s foreign exchange reserves fell to $3.19 trillion in August, touching the lowest level since December 2011.
The Nikkei was down 0.4 percent thanks to a soaring yen after weak US service sector data and doubts over BoJ policy easing. Exporters were mostly lower, with Sharp, Panasonic and Mazda Motor pacing declines. Fast Retailing, Inpex and Mitsubishi UFJ Financial tumbled. Internet company Rakuten jumped on news it would join the Nikkei index.
Both the S&P/ASX and All Ordinaries were 0.2 percent higher. Second quarter gross domestic product was up 0.5 percent on the quarter and 3.3 percent from the same quarter a year ago. The big four banks rose a day after the central bank kept rates on hold. Wesfarmers and Myer Holdings advanced. Gold miners Newcrest, Regis Resources, Evolution Mining and Northern Star Resources jumped after gold futures rallied to log their highest settlement in nearly three weeks overnight. Fortescue Metals Group and oil & gas producer Santos retreated.
The Kospi was 0.2 percent lower as investors locked in some recent gains. The Sensex also lost 0.2 percent after rallying sharply to hit 18-month highs the previous day on receding expectations of a Federal Reserve rate increase. Rupee appreciation against the dollar in currency markets helped to limit overall losses to some extent.
Looking forward
Japan posts revised second quarter gross domestic product. Australia releases July merchandise trade data. The European Central Bank announces its monetary policy decision. In the US, weekly jobless claims, EIA petroleum status report, money supply and Fed balance sheet will be reported.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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