On 20 September, 2016 – Global stocks mixed ahead of BoJ and FOMC

Investors calmly waited for the central bank announcements.
United States
Stocks edged up Tuesday with health care companies leading the way. Bank stocks advanced as both the Bank of Japan and the FOMC began their respective monetary policy meetings. The Dow Jones industrials inched up 0.1 percent as did Nasdaq. The S&P was virtually unchanged.
With both the BoJ and FOMC meetings underway, investors are not anticipating a change in policy from the Fed. With new forecasts (and dot plots) along with Chair Janet Yellen’s press conference, there will be plenty of information for investors to parse. The Bank of Japan is expected to unveil further measures to lift the ailing Japanese economy. Possibilities include an increase in its stimulus program or a further cut into negative territory in the deposit rate aimed at encouraging banks to lend rather than hoard money at the central bank.
Gilead Sciences shares gained after the company, which makes a hepatitis C drug, completed a $5 billion debt offering. Gilead said it may use the cash to make an acquisition. Merck also was higher. Ascena Retail Group, the parent of Ann Taylor, Lane Bryant and Dress Barn, dropped to a six-year low. The company reported weak quarterly results and gave a forecast that did not meet investor expectations. Allergan, the maker of Botox, announced another acquisition. It agreed to buy Tobira Therapeutics, the developer of a liver disease drug, for as much as $1.47 billion. Allergan agreed to pay $28.35 per share upfront and could pay another $49.84 per share depending on how the company’s drugs fare in testing. Tobira shares skyrocketed while Allergan retreated.
Shares of the hotel chains Marriott and Starwood rose after regulators in China approved a $14.41 billion deal that will bring them together as the world’s largest hotel chain. Marriott, which is buying Starwood, said it expected to complete the deal on Friday. SeaWorld Entertainment said it would stop paying dividends to shareholders. It said it would pay a dividend of 10 cents in October, down from 21 cents the quarter before, and then save its cash so it could buy back more stock. Attendance and revenue have fallen at SeaWorld as some consumers have grown reluctant to support its shows featuring killer whales and dolphins. Royal Caribbean Cruises rose after the company raised its quarterly dividend to 48 cents from 37.5 cents.
August housing starts declined 5.4 percent to an annualized rate of 1.142 million. Permits were down 0.4 percent to an annualized pace of 1.139 million. The easing followed strong gains in July. These data can be notoriously volatile. However, the volatility hurt housing shares including PulteGroup, Beazer Homes and Lennar.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$1.05 to US$1,313.80. Copper futures were up 0.35 percent to US$2.16. WTI spot crude was up 55 US cents to US$43.85. Dated Brent spot crude was down 6 US cents to US$45.89. The US dollar was up against the euro, pound, and the Canadian dollar. However, it declined against the yen, Australian dollar and the Swiss franc. The Dollar Index was up 0.15 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.43 percent while the yield on the 10 year note slipped 1 basis point to 1.69 percent.
Europe
Stock indices were mixed Tuesday moving sideways for most of the session while investors waited for the Bank of Japan and Federal Reserve monetary policy announcements. Energy stocks struggled after crude oil prices slid towards six-week lows. Crude prices were unable to sustain yesterday’s gains after Venezuelan comments that the oil market remains oversupplied by 10 percent. The FTSE was up 0.3 percent, the DAX gained 0.2 percent and the SMI was 0.5 percent higher at the close. The CAC slipped 0.1 percent.
Bayer gained after the chemical giant increased its earnings and profits forecasts following its proposed takeover of Monsanto. Deutsche Bank and Commerzbank retreated. In Paris, Renault declined after the Renault-Nissan Alliance said it had acquired Sylpheo, a French software development company, as part of a plan to accelerate the expansion of its connected vehicle and mobility services programs. Technip, Total and Tullow Oil were lower.
In London, gambling company GVC Holdings climbed after a strong first-half result. Shire increased after it announced that its wholly-owned subsidiary, Shire Acquisitions Investments Ireland Designated Activity Company had priced its inaugural public offering of $12.1 billion aggregate principal amount of senior notes. Kingfisher was lower despite reporting a 10.6 percent increase in first-half pre-tax profit. Pennon Group rose after saying it is on track to meet management expectations for the 2017 financial year. Burberry climbed on a broker upgrade. Tesco advanced after the latest Kantar grocery sales data showed it had achieved its best 12-week sales performance in more than two years. Sainsbury and Morrisons retreated with both companies reporting lower sales in contrast to Tesco.
Germany’s producer prices declined at a slower pace in August. The PPI was down 1.6 percent on the year after sinking 2 percent in July. Producer prices have been falling since August 2013. Switzerland’s trade surplus increased in August — the decline in imports exceeded the drop in exports.
Asia Pacific
Stocks were mixed here on Tuesday as well as investors waited for the Bank of Japan and Federal Reserve announcements. Oil futures eased in Asian deals on supply glut worries and the Japanese yen strengthened against the dollar, further weighing on investor sentiment.
The Shanghai Composite slipped 0.1 percent in thin trading even though property stocks rose broadly after upbeat home price data. The Hang Seng also was 0.1 percent lower.
The Nikkei retreated 0.2 percent as the yen edged up against the US dollar on doubts about the BoJ’s ability to sustain its stimulus plans. Fast Retailing tumbled triggered by a Bloomberg report that the Bank of Japan will switch to favoring the broader benchmark in its purchases of exchange-traded funds as its use of the Nikkei 225 Stock Average is distorting the market. Takata sank on reports that some bidders for the embattled airbag supplier were considering bankruptcy proceedings for the company to mitigate the liabilities. Banks rebounded after a string of recent losses with Mizuho Financial, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial advancing.
The S&P/ASX added 0.2 percent while the All Ordinaries was 0.1 percent higher. Second quarter residential property prices were up 2 percent in the June quarter across capital cities. The big four banks rose after the minutes of the recent Reserve Bank of Australia meeting indicated the RBA is likely to keep interest rates on hold in the foreseeable future. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group gained even though iron ore prices retreated to their July levels on expectations of additional supply this year.
The Kospi added 0.5 percent on increased buying by foreign investors. The Sensex lost 0.4 percent.
Looking Forward
The Bank of Japan and Federal Reserve announce their respective monetary policy decisions. Japan posts August merchandise trade balance. The UK reports August public sector finances.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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