On 25 January, 2017 – Global stocks rallied

The three US indices hit new record closing highs.
United States
Stocks rallied Wednesday. The Dow Jones industrials finally crossed the 20,000 mark for the first time. The index was up 0.8 percent. The S&P also added 0.8 percent closing at another all-time high along with the Nasdaq — it soared 1.0 percent. Most professional investors are sceptical the Dow at 20,000 will have much effect on the market. They more often look to the S&P as a benchmark, because they consider it a better representation of the broad market.
Financial and industrial stocks were leading the gainers, while real estate, phone companies and other high-dividend stocks were among the biggest laggards as bond yields rose. Wednesday’s rally comes against a backdrop of optimism on Wall Street that executive actions and policy goals announced by the Trump administration this week on trade, manufacturing and business deregulation will be good for corporate America.
Boeing climbed on a favourable earnings report. Seagate’s latest quarterly snapshot drove its shares higher. Rockwell Automation and Logitech both soared. But some companies posted earnings that failed to impress. Textron dropped after the defence contractor’s fourth-quarter revenue missed estimates. The company also announced it is buying snowmobile maker Arctic Cat in a deal valued at about $247 million. Freeport-McMoRan retreated after its quarterly results that missed estimates. Caterpillar, which makes construction and mining equipment, advanced. JPMorgan and Goldman Sachs gained. Boeing, Caterpillar and the two banks have been among the biggest contributors to the Dow’s rise since Election Day.
AT&T reported quarterly revenue below estimates as it struggles to cope with intense competition in the wireless market. Net income attributable to the company fell to $2.44 billion or 39 cents per share in the fourth quarter ended December 31 from $4.01 billion or 65 cents per share a year earlier. Total revenue fell marginally to $41.84 billion.
Qualcomm’s profits fell by more than half in its latest quarter following an $868 million fine from Korea’s antitrust authorities. The company posted slightly better-than-expected earnings while revenues came in a touch below estimates. First-quarter revenues grew 4 percent to $6.0 billion. Earnings, after adjusting for certain items, were up 23 percent to $1.19. Net income dropped by 54 percent to $0.7 billion, largely due to a one-off charge related to its investigation by the Korean Federal Trade Commission, which was announced in late December.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$21.80 to US$1,195.00. Copper futures were up 0.3 percent to US$2.72. WTI spot crude was down 36 US cents to US$52.82. Dated Brent spot crude was down 24 US cents to US$55.20. The US dollar was up against the yuan and the Australian dollar. It declined against the yen, euro, pound, Swiss franc and the Canadian dollar. The Dollar Index was down 0.3 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 6 basis points to 3.10 and 2.52 percent respectively.
Europe
Europe’s stock markets were higher Wednesday. Banks were among the best performing stocks after Spain’s Banco Santander posted strong quarterly results. Investors were also in a positive mood after US President Donald Trump signed executive orders to advance completion of two controversial pipelines — the Keystone XL pipeline and Dakota Access Pipeline. The FTSE was up 0.2 percent, the CAC gained 1.0 percent, the DAX advanced 1.8 percent and the SMI jumped 1.7 percent.
Deutsche Bank, Commerzbank, Société Générale, BNP Paribas and Crédit Agricole all finished higher. Royal Bank of Scotland and Lloyds Banking Group also advanced. Utility EDF gained after its Board approved closure of the country’s oldest nuclear plant. BHP Billiton increased after releasing its production report for the six months to December 31. Vedanta Resources climbed after pricing its $1 billion bond offering.
WH Smith rallied after the company said that as a result of the strong sales performance in Travel, it expected Group profit growth for the year to be slightly ahead of plan. Novartis jumped in Zurich after announcing a $5 billion share buyback. Banco Santander surged in Madrid after it reported a 4 percent rise in its 2016 net profit, beating estimates. Logitech hit its highest since late 2008 after reporting a jump in quarterly earnings and raising its outlook. It also recorded a forecast-beating 13 percent sales increase, the highest in its 35-year history.
January Ifo business climate index dropped unexpectedly to 109.8 from 111.0 in December. This was the lowest since September, when the reading was 109.5. French manufacturing confidence remained stable at the highest level in more than five years in January. The manufacturing sentiment index was unchanged at 106 in January — the highest since August 2011.
Asia Pacific
Asian stocks were mostly higher Wednesday helped by positive economic data from Japan and South Korea along with overnight gains in US shares on optimism for economic growth. Oil prices eased in Asian trading ahead of EIA’s weekly inventory data and amid indications of increased drilling in the United States.
The Shanghai Composite was up 0.2 percent. The People’s Bank of China increased interest rates on medium-term loans ahead of Lunar New Year holidays. The Hang Seng was up 0.4 percent.
The Nikkei was up 1.4 percent and the Topix added 1.0 percent after December merchandise trade data showed that exports were up for the first time in 15 months, helping Prime Minister Shinzo Abe’s efforts to revive the economy. Exporters Canon, Hitachi, Honda Motor and Toyota jumped even though the US dollar reversed some of its advance against the yen in late Asian trading. Takata was higher after recent steep losses on fears of a drawn-out bankruptcy restructuring. Toshiba was lower ahead of its board meeting on Friday to consider sale of part of its semiconductor business.
The S&P/ASX was up 0.4 percent while the All Ordinaries gained 0.3 percent. Shares rose along with those for iron ore. Fourth quarter consumer price index was up 1.5 percent from a year ago. The less than expected result raised speculation that the Reserve Bank of Australia might lower its interest rate when it meets on February 7.  BHP Billiton rallied after it reported record half-year production at its Western Australia iron ore division. Rio Tinto advanced after it agreed to sell its Australian coal assets to China’s Yancoal for A$3.2 billion. The big four banks were higher.
The Kospi was up 0.1 percent after GDP figures for the final quarter of 2016 came in slightly higher than expected. The Sensex was 1.2 percent higher. Encouraging quarterly results from HDFC Bank, Kotak Mahindra Bank, Biocon and Crompton Greaves coupled with a steadier trend in rupee on expectations of an investor-friendly budget also offered some support.
Looking Forward
The UK releases its initial estimate of fourth quarter gross domestic product. The US releases December international trade in goods, January flash services PMI, December new home sales and weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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