On 14 February, 2017 – Global stocks mostly lower during the Tuesday global market day

Asia and Europe were mostly lower as they waited for Fed Chair Janet Yellen’s testimony.
United States
After showing a lack of direction in early trading, US indices once again closed at record highs. The Dow Jones industrials were up 0.5 percent, the S&P gained 0.4 percent and the Nasdaq added 0.3 percent. Investors listened attentively to Fed Chair — she gave the first of two days of testimony to Congress. Banks rallied after Dr Yellen said it would be unwise to wait too long to raise interest rates.
Apple climbed to an all-time high. Banks including Goldman Sachs and Bank of America advanced. General Motors gained after Peugeot owner PSA Group said it is in talks to buy GM’s European Opel business. The prospects of sector consolidation sent Fiat higher while Ford also gained. Xoma and Cara Therapeutics both jumped. Airline stocks came under pressure on the day.
Fed Chair Janet Yellen testified Tuesday before the Senate Banking Committee. She reiterated that the Fed is staying with its data dependent strategy, saying further fed funds interest rate increases will be based on the economy’s performance. She said further gradual interest rate increases would be “appropriate” should employment and inflation move in line with expectations. She warned again that waiting too long to raise rates would be “unwise” and would pose the risk of future imbalances and possible recession.
Though she did not offer any details on unwinding the Fed’s balance sheet, in response to a Senator’s question she said she wanted normalization to be well underway and the economy “solid” before ending reinvestment. In the long run, she expects the balance sheet to be substantially smaller than it is now and consist of all Treasuries, in a remark that highlights the Fed’s large ongoing holdings of mortgage-backed securities. She would like the Fed’s portfolio to be runoff gradually and she warned against using balance sheet fluctuations as a monetary policy tool.
On fiscal policy and the prospect of increased stimulus under the Trump administration, she repeated that it’s still “too early” to know the impact of future changes and she repeated that fiscal policy is only one factor of many that affect Fed policy. Yellen did, however, suggest that fiscal policy should concentrate on long-term improvement in the nation’s growth.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$8.50 to US$1,230.75. Copper futures were down 1.5 percent to US$2.74. WTI spot crude was up 24 US cents to US$53.17. Dated Brent spot crude was up 30 US cents to US$55.89. The US dollar was up against the yen, euro, pound and Swiss franc. The currency declined against the Australian and Canadian dollar. The Dollar Index was up 0.2 percent. The yield on US Treasury 30 year bond was up 3 basis points to 3.06 percent while the yield on the 10 year note was up 4 basis points to 2.47 percent.
Europe
Trading was relatively flat Tuesday with the indices fluctuating between small gains and losses. Traders appeared reluctant to make any big moves while Federal Reserve Chair Janet Yellen testified before the US Congress. Traders were also disappointed by Germany’s GDP data as well as the Eurozone as a whole. Corporate financial results also proved a mixed bag. The FTSE slipped 0.1 percent, the DAX was virtually unchanged (down 2.62 points) and the SMI lost 0.4 percent. The CAC was 0.2 percent higher.
Heidelberg Cement declined after its fourth quarter revenue was 4 percent lower from last year, hit by bad weather in southern Germany and parts of North America. Bilfinger advanced after the industrial services group proposed a share buyback. In Paris, electric utility EDF declined after its fiscal year 2016 profit fell short of expectations. Michelin climbed after saying that an upturn in the mining sector will help to lift its earnings this year.
In London, Rolls Royce Holdings dropped after it posted a hefty 2016 loss, reflecting currency fluctuations and a one-time charge for bribery settlements with US, British and Brazilian authorities. TUI rallied after the tour operator agreed to sell its specialty travel company Travelopia for about $407 million to investment firm KKR. Next was higher after the company appointed Michael Roney as its next chairman. Credit Suisse Group advanced in Zurich after the banking giant narrowed its fourth-quarter loss and said it is well positioned to capture profitable growth opportunities and benefit from improved market conditions.
December Eurozone industrial production declined 1.6 percent after rising in the previous two months. Flash fourth quarter gross domestic product climbed 0.4 percent on the quarter. German fourth quarter GDP was up 0.4 percent on the quarter as well. The February ZEW survey declined to 10.4 from 16.6 in January. UK January inflation accelerated to the highest level in more than two years in January. The consumer price index was up 1.8 percent on the year — the highest since June 2014.
Asia Pacific
Most Asian stock indices retreated before Federal Reserve Chair Janet Yellen’s testimony before Congress Tuesday and Wednesday. Investors wanted to know if Yellen would offer clues to the timing of the next interest rate increase amid signs of inflation steadily firming.
The Shanghai Composite was virtually unchanged (up 1.09 points) after January’s consumer price index accelerated to a 32-month high and producer prices climbed at the fastest pace since 2011, reinforcing market expectations the central bank will continue with its tightening policies. The Hang Seng was also virtually unchanged (down 7.97 points). January consumer prices were up an annual 2.5 percent after increasing 2.1 percent in December. The producer price index climbed an annual 6.9 percent and up sharply from 5.5 percent in the previous month.
The Nikkei and Topix dropped 1.1 percent and 1.0 percent respectively. Nikon tumbled after the company widened its net loss forecast for fiscal 2016. Toshiba slid after delaying the release of financial results. Kirin Holdings retreated after the company agreed to sell its struggling Brazilian beer and soft drink business to Heineken International for about ¥77 billion.
The S&P/ASX slipped 0.1 percent while the All Ordinaries was virtually unchanged (down 2.0 points) as banks gave up early gains. Upbeat business confidence data, rallying iron ore and copper prices and a rebound in oil prices during Asian trading helped limit the downside. Miners were mixed even as the surge in iron ore prices continued to defy market expectations. BHP Billiton retreated while Rio Tinto advanced. SeaLink Travel Group, Ridley, Treasury Wine Estate and Cochlear dropped after reporting their first-half results.
The Kospi was down 0.2 percent thanks to selling by foreign investors. The Sensex was virtually unchanged (down 12.31 points).
Looking Forward
The UK releases January labour market report. The Eurozone posts December merchandise trade balance. In the US, January consumer price index, retail sales, and industrial production along with the February Empire State manufacturing survey and housing market index will be released. December business inventories and Treasury international capital also will be released. Fed Chair Janet Yellen will offer her second day of Congressional testimony, this time to the House of Representatives Financial Services Committee.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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