On 08 December, 2016 – Global stocks rallied

The promise of extended bond purchases by the ECB sent investors to stocks.
United States
US stock indices climbed again Thursday and set fresh record highs as a month-long rally following the presidential election of Donald Trump continued. The indices hit fresh highs as the European Central Bank’s decision to trim the scale of its bond purchasing program after March 2017 gave investors further reasons to move into stocks from debt. The Dow was up 0.3 percent, the S&P gained 0.2 percent and the Nasdaq added 0.4 percent. All three closed at record highs.
Stocks initially sold off while the euro strengthened as investors concluded the ECB was tapering its program of quantitative easing, but markets quickly changed direction during President Mario Draghi’s press conference, sending the euro down against the dollar.
Financial companies continued their post-election rally. Energy stocks gained along with oil prices. Goldman Sachs, Exxon Mobil and Apple advanced. Ciena led the networking sector higher after reporting weaker than expected fourth quarter earnings but saying its order backlog is the highest ever.
Weekly initial jobless claims dropped 10,000 to 258,000 from the previous week’s unrevised level of 268,000.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$6.60 to US$1,171.05. Copper futures were down 0.7 percent to US$2.63. WTI spot crude was up US$1.08 to US$50.85. Dated Brent spot crude was up 89 US cents to US$53.89. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollars. However, it declined against the Canadian dollar. The Dollar Index was up 0.9 percent. The yield on US Treasury 30 year bond was up 7 basis points to 3.10 percent while the yield on the 10 year note was up 6 basis points to 2.40 percent.
Europe
Stocks advanced after the European Central Bank announced that bond purchases will be extended till the end of 2017 but the pace of purchases will ease after March. The FTSE was up 0.4 percent, the CAC gained 0.9 percent, the DAX jumped 1.8 percent and the SMI added 0.3 percent.
The ECB left its key interest rates unchanged for a sixth consecutive time. It retained its asset purchases of €80 billion a month until March 2017 but reduced the purchase size beyond that point to €60 billion a month until December 2017. ECB President Mario Draghi asserted that the option of scaling back bond purchases gradually to zero, or ‘tapering’, was not discussed by the governing council, but said the ECB was ready to extend and boost stimulus when needed.
Banks including Société Générale, BNP Paribas, Crédit Agricole, Commerzbank and Deutsche Bank advanced. Utility RWE and E.ON were lower. In Paris, Sanofi slipped. Sports Direct International tumbled in London as the scandal-hit retailer reported a big drop in half-year profits due to unanticipated changes in exchange rates. Capita sank after lowering its 2016 profit guidance.
DS Smith rallied after it reported that its first-half profit before tax climbed 60 percent to £146 million from £91 million a year ago. Glencore gained as a consortium of the commodities trader and Qatar’s sovereign wealth fund acquired a 19.5 percent stake in Russia’s top state-controlled oil company, Rosneft. TUI advanced after the company extended its existing profit target by a year after reporting a rise in fiscal-year profit. William Hill and Ladbrokes Coral Group declined following a media report about a clampdown on betting machines. WPP advanced on a broker upgrade.
Asia Pacific
Stocks here were mostly higher Thursday following solidly higher US and European markets overnight on hopes of a state-backed rescue for struggling Italian lenders and amid optimism that fiscal stimulus measures outlined by President-elect Donald Trump could lift US economic growth. Investors also were waiting for the ECB policy announcement which would be made after markets here were closed for the day.
The Shanghai Composite was down 0.2 percent as trade and forex data painted a mixed picture of the economy. The Hang Seng was up 0.3 percent. While China’s foreign exchange reserves fell nearly US$70 billion last month to hit their lowest level in nearly six years, trade data for November offered some relief, with exports and imports both beating forecasts. In US dollar terms, exports dropped a better than forecast 4.3 percent while imports were up 2.3 percent on the year.
Both the Nikkei and Topix added 1.5 percent as investors shrugged off the downward revision to third quarter gross domestic product. Tepco jumped on reports that the nuclear operator will get $123 billion increased loan from the government to cover the Fukushima clean-up.
The S&P/ASX and All Ordinaries added 1.2 percent and 1.1 percent respectively led by miners and banks. Solid Chinese data helped investors brush off data showing a widening of Australia’s trade deficit in October. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group jumped after iron ore prices surged to a 27-month high on Wednesday. ANZ, NAB and Westpac gained. Santos retreated after announcing a radical shake-up of its operations. Insurance Australia Group rallied after the insurer reaffirmed guidance for the financial year ended 30 June 2017.
The Kospi added 2.0 percent as concerns over the state of Italy’s beleaguered banking sector eased and Samsung Electronics climbed to reach a fresh record high. The Sensex jumped 1.7 percent with rate-sensitive stocks leading the rally, as the RBI’s decision on Wednesday to withdraw the incremental CRR requirement gave banks more room to cut lending rates.
Looking Forward
China posts November consumer and producer price indices. Germany and the UK report October merchandise trade balances. The US releases preliminary December consumer sentiment.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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