On 16 November, 2016 – Global stocks were mostly lower

Investors paused and took profits on recent gains.
United States
Stocks were mixed Wednesday. The Dow Jones industrials and S&P were down 0.3 percent and 0.2 percent respectively while the Nasdaq added 0.4 percent. Financial stocks retreated, ending a seven-day rally with a sharp drop while technology shares advanced.
Banks took the biggest losses with JPMorgan Chase, Morgan Stanley, Zions Bancorp, Fifth Third Bancorp, Capital One and Bank of America all declining. Lowe’s declined after the company said traffic in stores was low during the third quarter. Lowe’s reported a smaller third-quarter profit because of big charges connected to the end of its Hydrox joint venture, write-downs of canceled projects and good will and impairment charges. Home Depot was also lower. Lockheed Martin and General Dynamics declined as did airlines. Apple paced a rally in technology companies.
Traders also reacted to a batch of economic data showing that conditions were largely steady prior to last week’s election. October producer price index was unchanged on the month after increasing 0.3 percent in September. Core PPI which excludes food and energy was down a monthly 0.2 percent after climbing 0.2 percent the month before. October industrial production was flat on the month thanks to a steep drop in utilities output which offset a jump in mining. Manufacturing was up 0.2 percent on the month.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.25 to US$1,229.20. Copper futures were down 1.6 percent to US$2.46. WTI spot crude was down 35 US cents to US$45.46. Dated Brent spot crude was down 49 US cents to US$46.46. The US dollar was up against the euro, pound, Swiss franc, yuan and the Australian dollar. However, it declined against the yen and Canadian dollar. The Dollar Index was up 0.4 percent. The yield on US Treasury 30 year bond was down 6 basis points to 2.91 percent while the yield on the 10 year note slipped 2 basis points to 2.22 percent.
Europe
Stocks retreated Wednesday following two days of gains. Investors took profits but also were more cautious before Federal Reserve Chair Janet Yellen’s testimony before the US Congress on Thursday morning US ET. Traders expect that the Federal Reserve will raise interest rates at their December 13 and 14 meeting. The FTSE was down 0.6 percent, the CAC declined 0.8 percent and the DAX lost 0.7 percent. The SMI inched up 0.1 percent.
The European Commission recommended a fiscal expansion of up to 0.5 percent of GDP next year for the euro area that is expected to contribute to a balanced policy mix, to support reforms and to strengthen the recovery. The recommendation also highlights the need to pursue structural reforms and improve the quality of public finances.
Bayer dropped after the company announced plans to raise €4 billion via convertible notes to help finance the $66 billion Monsanto deal. Hugo Boss sank after the company announced at its Investor Day presentation that it expects to return to growth in 2018. Leoni plunged after the cable and harnessing manufacturing firm reported a drop in nine-month profit on lower sales. Wirecard jumped after the financial services and technology company backed its full-year EBITDA view. Volkswagen was lower on a Bloomberg report that the automaker has reached an agreement with US environmental regulators to fix or buyback around 80,000 polluting Audi, VW and Porsche vehicles with tainted 3-liter diesel engines.
In Paris, Bouygues climbed after the industrial group confirmed its 2016 outlook after reporting better-than-expected profit for the first nine months of the year thanks to an improved performance at its telecom unit. In London, Aggreko tumbled after the portable power provider reported a 7 percent drop in third-quarter underlying revenues, but expects full-year results to be broadly in line with expectations. British Land fell after the retail property giant swung to pretax loss for the first half of fiscal 2017. Rolls-Royce declined after keeping its 2016 outlook for revenue, profit and cash unchanged. Barratt declined after it said it had to cut the price of some of its most expensive London homes by up to 10 percent, the latest sign that the market is cooling after Brexit and property tax increases.
The UK unemployment rate dropped to the lowest in 11 years in the third quarter, but the pace of growth in employment eased. The ILO unemployment rate declined to 4.8 percent in the third quarter from 4.8 in the previous period — the lowest since July to September 2005.
Asia Pacific
Asian markets were mixed Wednesday. Both energy producers and financials advanced. Oil prices climbed on hopes for an OPEC deal and investors speculated that higher US interest rates can boost bank profits. While the US bond selloff stalled, oil prices extended gains in Asia after rallying overnight.
Shanghai Composite slipped 0.1 percent as the yuan hit a fresh eight-year low amid concerns about possible capital outflows. Commodity related stocks bore the brunt of the selling as a renewed rush into Chinese commodities futures prompted calls for tighter regulation. The Hang Seng was 0.2 percent lower.
Japanese shares hit a 9-1/2-month high as a weaker yen lifted exporters’ shares and surging Japanese yields prompted investors to buy bank stocks. The Nikkei was up 1.1 percent and the Topix was 1.3 percent higher. Automakers Toyota Motor, Nissan Motor and Mazda climbed as the US dollar traded in the upper 108 yen range. Fast Retailing advanced along with energy stocks such as JX Holdings, Inpex and Japan Petroleum. Nintendo was up after the gaming giant announced plans to launch its highly anticipated mobile game “Super Mario Run” on December 15.
Both the S&P/ASX and All Ordinaries were virtually unchanged in choppy trading. Weak wage growth for the September quarter, retreating iron ore prices and continuing yuan weakness triggered profit taking at higher levels. Westpac ended unchanged but other banks rose. Gold miners Newcrest and Evolution Mining rose as did Santos, Woodside Petroleum, Origin Energy and Oil Search. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group dropped after spot iron ore prices slumped.
The Kospi rallied 0.6 percent as the local currency strengthened against the US dollar as sharp gains in oil prices and encouraging US economic data helped improve investors’ appetite for risk. The Sensex was virtually unchanged on the day. With WPI inflation falling to a four-month low in October and the consumer price inflation easing to a 14-month low, expectations are building for a rate cut from the Reserve Bank of India next month.
Looking Forward
Australia posts October labour force survey. The UK releases October retail sales. The Eurozone reports final October harmonized index of consumer prices. The European Central Bank publishes minutes from its latest meeting. In the US, October consumer prices and housing starts along with the Philadelphia Fed survey for November will be released. Weekly jobless claims, 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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