On 17 November, 2016 – Global stocks were mixed

Investors were waiting for guidance from Fed chair Janet Yellen on a possible interest rate increase.
United States
United States markets were higher on Thursday as banks resumed a steep upward climb. Federal Reserve Chair Janet Yellen emphasized that the Fed planned to raise interest rates. Her comments sent bond yields higher and gave banks a lift. The Dow Jones industrials were up 0.2 percent, the S&P added 0.5 percent and the Nasdaq advanced 0.7 percent. All three indices ended near all-time highs while bond prices declined as investors cemented the possibility of the Federal Reserve raising interest rates soon thanks to positive economic data and Fed chair Janet Yellen’s remarks. Ms Yellen suggested that a rate hike could “become appropriate relatively soon“.
Ms Yellen said again that the Federal Reserve was more likely to raise interest rates soon. In prepared remarks for the Joint Economic Committee of Congress, Ms Yellen sketched a picture of an improving economy. The Fed is widely expected to raise rates when policy makers meet in mid-December. Ms. Yellen added that if the Fed delayed and later raised rates too quickly, the risk of a recession would increase.
Consumer companies also rose, but companies that make and sell food and household goods lagged after Walmart and Smucker announced disappointing sales. Walmart declined after it announced disappointing sales in its third quarter. Profit also fell as it invested more money in its stores and its online business. J. M. Smucker declined after it disclosed weak sales. Tyson Foods also declined. Amazon and Home Depot advanced but Costco and Kroger retreated. Bank of America, Citigroup and PNC Financial Services climbed. Best Buy advanced after it reported a strong third quarter and the company forecast a larger fourth-quarter profit than expected.
Cisco Systems fell after the company’s earnings forecast disappointed. Cisco forecast a smaller-than-expected profit for its second fiscal quarter which canceled out a strong first-quarter report. NetApp was higher after it reported a bigger profit than expected for the fiscal second quarter and gave a very strong outlook for the current quarter. Tesoro will buy Western Refining for $37.30 per share, a deal the companies valued at $4.1 billion. Western Refining and Tesoro shares rose on the news.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.45 to US$1,226.75. Copper futures were up 0.7 percent to US$2.49. WTI spot crude was down 63 US cents to US$44.94. Dated Brent spot crude was down 56 US cents to US$46.07. The US dollar was up against the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. However, it was unchanged against the yuan. The Dollar Index was up 0.8 percent. The yield on US Treasury 30 year bond was up 9 basis points to 3.00 percent while the yield on the 10 year note was up 6 basis points to 2.28 percent.
Europe
Stocks advanced Thursday as traders were largely focused on central bank news. The European Central Bank released the minutes from their most recent meeting and Federal Reserve Chair Janet Yellen testified before the Joint Economic Committee of the US Congress. The FTSE was up 0.7 percent, the DAX gained 0.2 percent and both the CAC and SMI added 0.6 percent.
The European Central Bank published minutes of its October governing council meeting. At that time it was widely agreed that it was better to wait until December to get a clearer picture of the inflation outlook to form a policy view. Growth was seen as moderate but, while resilient in the face of heightened uncertainties abroad, still subject to downside risks. It was agreed that it would take time for earlier monetary measures to have their full impact and members were wary about boosting market expectations for fresh action. Even so, it was seen as important to reemphasize the ECB’s commitment to maintaining a substantial degree of monetary accommodation and to underline both its willingness and capacity to act again if necessary.
Henkel declined after the company unveiled a new 2020 strategy, with an aim to achieve an average organic sales growth between 2 and 4 percent over the next four years. Sodexo declined even though the company confirmed its medium-term goals. Barratt Developments gained after the house builder released a trading update, saying demand for new homes remains strong despite waning demand in London.
Royal Mail sank after posting a decline in interim profit. Rio Tinto advanced after sacking two top executives over a probe in a $10.5 million payment scandal related to an iron ore project in Guinea. Anglo American climbed after the global miner suspended all operations at its Los Bronces copper mine in Chile after protests at the site. Zurich Insurance advanced after the company said it aims to cut costs by $1.5 billion from 2015 through 2019 under its recently-installed chief executive Mario Greco.
UK retail sales grew at the fastest pace in three months in October as cold weather boosted winter clothing demand and supermarkets benefited from Halloween. Sales volume jumped 1.9 percent on the month.
Asia Pacific
Stocks were mixed as investors waited for Fed Chair Janet Yellen’s testimony to the Joint Economic Committee of the US Congress which would occur later in the global market day. Lower oil prices also weighed on shares.
The Shanghai Composite edged up 0.1 percent after China’s foreign direct investment grew in the first 10 months of the year. FDI rose an annual 4.2 percent in the January to October period. The Hang Seng retreated 0.1 percent.
The Topix inched up 0.1 percent while the Nikkei was virtually unchanged after the Bank of Japan offered to buy an unlimited amount of Japanese government bonds using “fixed-rate method” for the first time since the launch of a new policy framework. While financial stocks succumbed to selling pressure after recent sharp gains, Central Japan Railway, Japan Tobacco, Mitsubishi Electric, Nippon Yusen KK and Ajinomoto all advanced.
Both the S&P/ASX and All Ordinaries were up 0.2 percent Thursday. Shares recovered from early losses after Telstra reaffirmed its financial guidance for 2017 and monthly data showed a surge in full time jobs in October. Building material maker James Hardie jumped after announcing half-year results. Rio Tinto advanced after sacking two top executives for their role in a payment scandal related to an iron ore project in Guinea.
The Kospi was virtually unchanged. The Sensex lost 0.3 percent as concerns that an ongoing cash crunch could affect economic growth. Expectations of higher inflation and interest rates in the US continued to rattle markets.
The Bank of Japan announced that it was prepared to buy an unlimited amount of certain government bonds at fixed rates. Yields on two year and five year Japanese government bonds fell after the BoJ’s announcement. The 10-year yield also briefly fell to 0.010% after hitting as high as 0.025% earlier in the morning.
Looking Forward
Germany posts October producer price index. Canada reports October consumer price index. The US releases October leading indicators.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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