US markets rose on strong earnings, European equities were supported by positive economic data from the UK and China, and Asian markets advanced on cues from the US.
United States
US stock indices reached new all-time highs for the second day in a row Friday. The Dow Jones industrials were up 0.5 percent, the S&P gained 0.4 percent and the Nasdaq added 0.3 percent. On the week, the indices advanced 1.0 percent, 0.8 percent and 1.2 percent respectively. Strong company earnings and investor optimism over the Trump administration’s promises of tax cuts, less government regulation and other policies helped fuel the market’s gains much of the week. News that OPEC is largely adhering to a recent pact to cut crude oil production has also helped lift markets.
Miners and other raw materials companies advanced and rising crude oil prices also gave energy companies a boost. Consumer goods stocks were essentially flat. Skechers and CBRE Group climbed. Activision Blizzard a maker of video games jumped. Yelp tumbled after the online reviews company’s revenue forecasts disappointed analysts. Cerner retreated after the health care information technology company lowered its earnings and revenue guidance for the year.
Soaring copper prices gave gold and copper miner Freeport-McMoRan a lift. Sears’ advanced as investors welcomed the company’s huge cost-savings initiative. Mead Johnson Nutrition was higher after the baby formula maker agreed to be bought by British household products company Reckitt Benckiser for $90 a share or $16.6 billion. Mead Johnson shares also climbed.
January import prices rose by more than expected in January thanks to another jump in fuel prices. Import prices increased by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December. At the same time, export prices inched up 0.1 percent after rising 0.4 percent in December. February preliminary consumer sentiment reading slid to 95.7 from January’s final of 98.5.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$8.50 to US$1,228.30. Copper futures were up 4.3 percent to US$2.77. WTI spot crude was up 86 US cents to US$53.86. Dated Brent spot crude was up US$1.07 to US$56.70. The US dollar was up against the yen, euro, pound, Swiss franc and yuan. It was down against the Canadian and Australian dollars. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond unchanged at 3.01 percent while the yield on the 10 year note was up 1 basis point to 2.41 percent.
Europe
Most European stock market indices advanced with the exception of the MIB and IBEX. Earnings remained in focus but sentiment also received a boost from positive data out of both the UK and China. The FTSE was up 0.4 percent and the DAX and SMI were both up 0.2 percent. The CAC was virtually unchanged (up 2.08 points). For the week, the FTSE was 1.0 percent higher, the CAC and DAX inched up 0.1 percent and the SMI added 1.3 percent.
According to ECB Executive Board member Yves Mersch, the European Central Bank cannot cut interest rates to an unlimited extent and its communication has to be adjusted without delay to drop the guidance on lowering rates further to protect the bank’s credibility. He said that from a certain level, it becomes more attractive to keep cash — despite the associated costs — than to pay negative interest rates.
Global airport management company Fraport gained after reporting a rise in passenger traffic in January. Commerzbank declined on a broker downgrade. Renault gained after the automaker reported record annual revenues on the back of new product launches and the success of low-cost models. Kering was higher after reporting a 17 percent rise in 2016 net profit, driven by strong sales at two of its flagship brands. L’Oréal retreated after the company said it is considering selling The Body Shop retail chain which it acquired in 2006.
Just Eat was lower after its CEO decided to step down from the role at the end of the fourth quarter due to “urgent family matters.” Reckitt Benckiser Group declined after it agreed to buy U.S. baby formula maker Mead Johnson for $16.6 billion. Rio Tinto climbed after announcing a board shake-up. Shares in Anglo American, Antofagasta, Glencore and BHP Billiton advanced.
French December industrial production declined 0.9 percent after increasing 2.4 percent in November. UK December industrial output climbed 1.1 percent. UK December trade deficit narrowed to £3.304 billion from £3.559 billion in November. Both exports and imports were at record highs.
Asia Pacific
Asian stocks advanced Friday and for the week. Japanese shares led the rally after US President Donald Trump promised a “phenomenal” tax plan to lower the burden on American businesses. Trump also issued belated well-wishes to China for the Lunar New Year and sought to work with President Xi Jinping to “develop a constructive relationship” that benefits both countries.
The Shanghai Composite was up 0.4 percent (1.80 percent on the week). January exports rose an annual 7.9 percent in US dollar terms on stronger global demand, rebounding from the previous month’s contraction, while imports rose by 16.7 percent. Russian President Vladimir Putin confirmed his readiness to take part in the ‘One Belt, One Road’ summit in Beijing in May this year also boosted morale. The Hang Seng added 0.2 percent and 1.9 percent on the week.
The Nikkei jumped 2.5 percent and the Topix added 2.2 percent as the yen weakened against the US dollar before Prime Minister Shinzo Abe’s meeting with Mr Trump. Media reports suggested that Abe will put forward an economic co-operation package including a $150 billion five-part investment package in US infrastructure when they met on Friday. Exporters were among the best performers with Honda, Toyota and Panasonic climbing as the yen hit its lowest level against the US dollar since February 1. Banks Mitsubishi UFJ Financial and Sumitomo Mitsui Trust Financial rose along with oil majors Inpex, JX Holdings and Japan Petroleum.
Australian shares rose for a fourth straight session. The All Ordinaries was up 0.9 percent and the S&P/ASX advanced 1.0 percent. In its quarterly statement on monetary policy, the Reserve Bank of Australia slashed its economic growth forecasts but flagged a possible return to above-trend growth by the end of 2017. Banks ANZ, Commonwealth and Westpac were higher. Oil Search, Origin Energy and Santos climbed as oil prices held steady in Asia deals prior to the IEA and OPEC monthly reports due on Friday and Monday, respectively. On the week, the S&P/ASX was up 1.8 percent and the All Ordinaries was 1.7 percent higher.
The Kospi added 0.4 percent and inched up 0.1 percent on the week. The Sensex was virtually unchanged (up 4.55 points) and was 1.8 percent higher on the week.
Looking Forward

The following indicators will be released this week…

Europe

Feb 14

Eurozone

Gross Domestic Product (Q4.2016 preliminary)

Industrial Production (December)

Germany

Gross Domestic Product (Q4.2016 preliminary)

ZEW Survey (February)

Italy

Gross Domestic Product (Q4.2016 preliminary)

UK

Consumer Price Index (January)

Producer Price Index (January)

Feb 15

Eurozone

Merchandise Trade (December)

UK

Labour Market Report (January)

Feb 16

France

ILO Unemployment (Q4.2016)

Feb 17

UK

Retail Sales (January)

Asia Pacific

Feb 13

Japan

Gross Domestic Product (Q4.2016 first estimate)

India

Consumer Price Index (January)

Feb 14

China

Consumer Price Index (January)

Producer Price Index (January)

Feb 16

Australia

Labour Force Survey (January)

Americas

Feb 14

United States

Producer Price Index (January)

Feb 15

Canada

Manufacturing Sales (December)

United States

Retail Sales (January)

Consumer Price Index (January)

Industrial Production (January)

Empire State Survey (February)

Feb 16

United States

Initial Unemployment Claims (week ending prior Saturday)

Housing Starts (January)

Philadelphia Fed Survey (February)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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