On 20 December, 2016 – Global stocks mixed as holidays near
Geopolitical worries fail to dampen stock rally.
United States
US stocks rose Tuesday with the Nasdaq and Dow Jones industrials hitting intraday highs. Both indices also finished at fresh closing highs. The risk-on sentiment continued on Tuesday despite geopolitical uncertainty, following an attack in Berlin, and more muted trading volumes ahead of the Christmas holiday. The Dow and Nasdaq advanced 0.5 percent while the S&P was 0.4 percent higher. Expectations for higher-growth and prospects of an inflationary environment since Election Day have sent bond yields higher.
TripAdvisor jumped after it announced a new partnership with online travel booking site Expedia Tuesday. General Mills slid after it announced quarterly earnings that missed estimates, as demand for its Yoplait yogurt slumped. Goldman Sachs, Wells Fargo and Citigroup advanced. Caterpillar gained. Nike was higher during the trading session and in after hours trading. Nike reported fiscal second quarter earnings of 50 cents per share on revenue of $8.18 billion which was higher than anticipated.
Acadia Pharmaceuticals gained after announcing positive top-line results from its Phase II exploratory study of pimavanserin in patients with Alzheimer’s disease psychosis. US Steel, AK Steel and Cliffs Natural Resources rallied. Airline stocks also saw considerable strength with SkyWest and Hawaiian Holdings rallying.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$10.55 to US$1,125.70. Copper futures were up 0.1 percent to US$2.50. WTI spot crude was up 11 US cents to US$52.23. Dated Brent spot crude was up 46 US cents to US$55.38. The US dollar was up against the yen, euro, pound and Swiss franc. The currency retreated against the yuan and the Canadian and Australian dollars. The Dollar Index was up 0.1 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 3 basis points to 3.14 percent and 2.56 percent respectively.
Europe
Most stock indices advanced Tuesday after struggling in early trading due to geopolitical concerns. Investors were cautious after an apparent terrorist attack on a Berlin Christmas market and the assassination of the Russian ambassador to Turkey. However, the markets managed to shrug off those early concerns and climbed firmly into positive territory around midday. Bank stocks were among the best performing stocks after the Italian government revealed that it is seeking parliamentary approval to borrow €20 billion to prop up its most fragile banks. The FTSE was up 0.4 percent, the CAC gained 0.6 percent, the DAX advanced 0.3 percent and the SMI edged up 0.1 percent.
In Frankfurt, real estate company Vonovia increased after the company announced that it has surpassed minimum acceptance threshold of 50 percent plus 1 share for takeover offer for Conwert Immobilien Invest, Vienna at the end of the initial acceptance period. Deutsche Bank, Commerzbank, Crédit Agricole, BNP Paribas and Société Générale all finished higher on the day. In Paris, Total advanced after it announced that it is acquiring about 23 percent of Tellurian Investments for $207 million. Vivendi gained after it said it would increase its investment in Italy’s Mediaset by acquiring additional shares depending on market conditions within the limits of 30 percent of share capital and voting rights.
Lloyds Banking Group climbed after it agreed to acquire MBNA Ltd., a UK consumer credit card business, from FIA Jersey Holdings Limited (a subsidiary of Bank of America). Barclays and Royal Bank of Scotland also were higher. Novartis rose in Zurich after signing a licensing deal to co-develop a fatty liver disease drug with Conatus Pharmaceuticals. Carnival was up after reporting higher than expected quarterly revenue and profit, helped by an increase in ticket prices and on-board spending. Fresnillo and Randgold Resources were lower with the price of gold.
Asia Pacific
Stocks were mixed Tuesday — Japanese shares led regional gains after the Bank of Japan announced its rate decision. Chinese and Hong Kong shares, however, retreated on waning hopes for additional monetary stimulus and concerns surrounding a tighter regulatory environment. While a weaker yen, steadier oil prices and upbeat comments from Federal Reserve Chair Janet Yellen supported underlying sentiment, gains were tempered by a series of terror attacks in Europe.
The Nikkei added 0.5 percent while the Topix gained just 0.2 percent. Kawasaki Kisen Kaisha, Chugai Pharma, West Japan Railway, Tokyo Electron, Advantest and Asahi Group all climbed. Softbank rallied after the telecommunications conglomerate agreed to invest $1 billion in a US satellite start-up. Nintendo rebounded after dropping Monday following the launch of its latest mobile game, Super Mario Run. The Bank of Japan kept its monetary policy unchanged as widely expected. The BoJ said the economy continues to recover moderately.
The Shanghai Composite retreated 0.5 percent to its lowest level since early November, after the People’s Bank of China said it would tighten supervision of shadow banking businesses by including off-balance sheet wealth management products into its risk-assessment framework next year. The Hang Seng also lost 0.5 percent as investors assessed geopolitical risk in Europe and rising tensions between the US and China.
Both the S&P/ASX and All Ordinaries added 0.5 percent led by financials and retailers after the Reserve Bank of Australia minutes from its December policy meeting showed that the Bank was cautiously optimistic about the economy despite some concerns over low wage growth. The big four banks rose along with retailers Wesfarmers and Woolworths.
The Kospi was up 0.2 percent. The Sensex declined for a fifth consecutive session as top banks retreated and rising geopolitical tensions across the globe instilled a sense of caution among traders.
Looking Forward
France posts November producer prices. The Eurozone releases December EC consumer confidence. In the US, November existing home sales will be released along with the weekly EIA petroleum status report.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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