On 04 January, 2017 – Global stocks mostly advanced

US stocks did not falter after the release of the December FOMC minutes.
United States
US stocks advanced Wednesday with many of the largest gains going to auto companies and retailers. Auto makers General Motors and Ford jumped as car companies reported their December sales. The Dow Jones industrials were up 0.3 percent, the S&P jumped 0.6 percent and the Nasdaq rallied 0.9 percent. Investors bought consumer-focused stocks that haven’t done much celebrating since the election, such as discount and apparel retailers.
Gap, Dollar Tree, Kohl’s, Nike and Delphi Automotive advanced. General Motors said its total sales climbed 10 percent from a year ago as Chevy sales increased. Ford also climbed. Electric car maker Tesla Motors also traded higher even though it reported disappointing fourth-quarter deliveries. Rental car company Hertz Global Holdings climbed after investor Gamco Asset Management increased its stake in the company to 5.1 percent. A number of other activist investors own stock in Hertz including Carl Icahn. Freeport-McMoRan advanced as the price of copper jumped. Chemicals maker LyondellBasell Industries and Mosaic also were higher. Uniform provider UniFirst skidded after the company had a weak first quarter and lowered its projections for the rest of the year. UniFirst said it lost customers in the North American energy market and demand was down.
The Federal Reserve published the minutes of its December 13 and 14 FOMC meeting. At that time, the committee increased its fed funds rate range by 25 basis points to 0.50 percent to 0.75 percent. Minutes of the meeting revealed just how unclear the path of monetary policy now is given that Fed officials do not know what details will emerge from negotiations in Congress over the coming months. The possibility of a further surge in the dollar also re-emerged as an important risk factor.
Many committee members said the Fed could be forced to lift rates more frequently than expected if Congress passes economy-boosting tax cuts next year. About half of the committee members said that the risks of growth surpassing their forecasts had grown because of the possibility of more “expansionary” fiscal policy under president-elect Donald Trump and the Republican-controlled Congress.
However policymakers also stressed that it was too soon to jump to firm conclusions about what fiscal policy would actually look like. “Participants agreed that it was too early to know what changes in these policies would be implemented and how such changes might affect the economic outlook,” according to the minutes.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$13.25 to US$1,164.25. Copper futures were up 2.7 percent to US$2.56. WTI spot crude was up 76 US cents to US$53.09. Dated Brent spot crude was up 80 US cents to US$56.27. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.6 percent. The yield on US Treasury 30 year bond was down 1 basis point to 3.03 percent while the yield on the 10 year note was unchanged at 2.44 percent.
Europe
Stocks were mixed Wednesday as retailers struggled following the release of some mixed sales data. Bank stocks were among the best performers. The FTSE added 0.2 percent and the SMI was 0.5 percent higher on the day. Both the CAC (0.07 point) and DAX (0.07 point) were virtually unchanged.
Deutsche Bank and BNP Paribas increased. In London, Next tumbled after the retailer cut its profit guidance for the current financial year thanks to a drop in sales over the key Christmas period. Associated British Foods and Marks and Spencer Group also retreated. Burberry and Debenhams also were lower. B&M European Value Retail soared after it delivered its “best-ever” Christmas trading, logging 7.2 percent growth in UK like-for-like sales in its third quarter. Credit Suisse climbed on a broker upgrade. Novartis and Novo-Nordisk were lower on a broker downgrades. Housebuilders including Barratt Developments, Taylor Wimpey and Persimmon advanced helped by mortgage approvals in November reaching an eight-month high, indicating a post-Brexit recovery.
Eurozone December inflation rose at the fastest pace in more than three years on higher energy and food prices. According to the flash harmonized index of consumer prices, inflation increased 1.1 percent on the year, up from 0.6 percent in November. The euro area private sector logged its fastest growth since May 2011. The composite output index rose to 54.4 in December from 53.9 in November. British construction activity in December expanded at the quickest pace in nine months, driven by an accelerated upturn in new work according to the construction PMI.
Asia Pacific
Asian stocks closed mostly higher Wednesday, with Japanese shares leading regional gains as trading resumed after a long holiday weekend. Upbeat economic reports from the US, China and Europe bolstered optimism about the 2017 economic outlook.
The Shanghai Composite was up 0.7 percent as concerns over liquidity eased somewhat. The Hang Seng edged down 0.1 percent.
The Nikkei and Topix were up 2.5 percent and 2.4 percent respectively as the yen softened in the wake of upbeat global economic data and the latest manufacturing PMI hit a one-year high in December with both production and new orders contributing to the climb. Toshiba however ended lower after a report that Japan’s security watchdog suspects the Japanese conglomerate of misreporting profits by ¥40 billion over three years. Shinsei Bank and Mitsubishi UFJ gained. Honda Motor and Mitsubishi Motors were higher on the day. Takata surged to its daily limit for the third consecutive session on the possibility that it was nearing a settlement with US prosecutors to resolve allegations of criminal wrongdoing. Hopes for an early settlement have sent the stock up 66% since last Wednesday’s close to a 14-month high today.
Both the S&P/ASX and All Ordinaries edged up 0.1 percent. The big four banks closed higher as did miners BHP Billiton and Fortescue Metals Group. Energy stocks closed on a mixed note despite oil prices falling more than 2 percent overnight. Miner and metals producer Alumina dropped after flagging A$136 million in write-downs.
The Kospi edged up 0.1 percent after South Korea’s finance minister vowed to make all-out efforts to frontload budget spending in the first quarter to deal with strong headwinds inside and outside the country. The Sensex was virtually unchanged (down 10.11 points).
Looking Forward
The Eurozone posts November producer prices. The UK and US report December services PMIs. In the US, ADP releases its December private employment report. ISM releases December nonmanufacturing index. Weekly EIA petroleum status and natural gas reports along with jobless claims, money supply and Fed balance sheet will also be reported.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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