On 21 February, 2017 – Global stocks mostly higher

Flash February PMIs indicate stronger growth in Japan and the Eurozone.
United States
US stock indices continued their climb into record territory. The Dow Jones industrials and S&P were up 0.6 percent while the Nasdaq added 0.5 percent after the long holiday weekend. Markets were closed Monday for the Presidents Day holiday.
Both Kraft Heinz and Unilever declined after Kraft withdrew a $143 billion offer to buy Unilever. Mondelez, which was once part of Kraft, gained as did Smucker, General Mills and Kellogg. Colgate-Palmolive, Clorox and Kimberly-Clark advanced. Hess and Transocean were higher. Restaurant Brands International, owner of the Burger King and Tim Hortons fast-food chains, said on Tuesday it would acquire Popeyes Louisiana Kitchen for $1.8 billion in cash.
Macy’s reported net income attributable to its shareholders fell to $475 million or $1.54 per share in the fourth quarter ended January 28, from $544 million or $1.73 per share a year earlier. The company’s net sales fell 4 percent to $8.52 billion. It earned $675 million in cash proceeds from its real estate transactions. Walmart was higher after it said that its US comparable sales increased 1.8 percent — growth was faster than its guidance of between 1 percent and 1.5 percent and faster than its third-quarter pace of 1.2 percent. Ecommerce sales surged 29 percent, after a third quarter pace of 20.6 percent. Amazon also was higher. Scripps Networks (the parent of Food Network, Travel Channel and HGTV) climbed after the company reported better ratings and stronger ad sales. Discovery Communications (parent of TLC and Animal Planet) and the News Corp (Fox cable channels) were higher.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$4.10 to US$1,233.20. Copper futures were up 1.25 percent to US$2.76. WTI spot crude was up 66 US cents to US$64.06. Dated Brent spot crude was up 51 US cents to US$56.69. The US dollar was up against the yen, euro, Swiss franc and the Canadian and Australian dollars. The currency declined against the pound. The Dollar Index was up 0.5 percent. The yields on US Treasury 30 year bonds and 10 year notes were up 2 basis points from Friday’s close to 3.04 percent and 2.43 percent respectively.
Europe
Most European markets advanced Tuesday. The exception was the FTSE — it struggled because of mixed corporate earnings and concerns over the upcoming French Presidential election. Europe’s indices advanced after favorable February flash composite PMIs and a rebound in crude oil prices. The FTSE was down 0.3 percent while the CAC gained 0.5 percent, the DAX was up 1.2 percent and the SMI added 0.6 percent.
In testifying before a parliamentary committee, Governor Mark Carney said the Bank of England will not hesitate to change policy if deemed appropriate. He defended the Bank’s estimate on unemployment when the chairman of Parliament’s Treasury Committee questioned the bank’s estimate of spare capacity.
Greece and its lenders reached an agreement to allow a team of experts to work out structural reforms for the country’s tax and pensions systems, thus easing a critical standoff between the government and its global creditors that had elevated concerns over a possible exit of the country from the euro area.
Automakers were higher after the euro hit a six-day low in early European trade on rising expectations of an US interest rate increase at the March FOMC meeting. Daimler, BMW, Volkswagen, Peugeot and Renault advanced. BHP Billiton was higher after the company announced a bigger than expected dividend. A rebound in iron ore and petroleum prices helped the company return to profit in its fiscal first half.
Anglo American retreated even though the company turned its first annual profit in five years. Intercontinental Hotels Group advanced after it announced a special dividend and share consolidation after posting a jump in full-year operating profit. HSBC Holdings dropped blaming “largely unexpected economic and political events” for a 62 percent decline in annual pre-tax profit. John Wood Group was lower after the company reported a 62 percent drop in its 2016 profit amid challenging conditions in its core oil & gas market.
February flash Eurozone composite PMI reading was 56.1, up from 54.8 in January — the highest reading since April 2011. Germany’s composite PMI rose to a 34-month high of 56.1 from 54.8 in January. In France, the composite PMI climbed to a 69-month high of 56.2 in February from 54.1.
Asia Pacific
Asian stocks were mixed Tuesday. A combination of a weaker yen, higher oil prices and some progress on Greek bailout deal lent positive support to investors. But gains were capped by lingering concerns about the looming French election and uncertainties over US fiscal and monetary policies.
The Nikkei was up 0.7 percent and the Topix gained 0.6 percent. Comments from a Federal Reserve official that a rate increase next month is not “off the table at this point” bolstered the US currency. Japan’s February flash manufacturing PMI expanded at the quickest pace in nearly three years in February, with output, new orders, employment all increasing at faster rates in the month. Nippon Paper Industries jumped on a Nikkei report that the company plans to raise the prices of printing paper for the first time since February 2015. Sumitomo Mitsui Financial Group and Resona Holdings advanced. Toshiba was lower after reports that it is looking to raise at least ¥1 trillion from the sale of its memory chip business.
Both the S&P/ASX and All Ordinaries were down 0.1 percent on disappointing earnings. Oil Search was lower on reporting a 70 percent drop in annual core profit. Seek declined after half-year results disappointed investors. Fairfax Media were placed in a trading halt amid speculation that the company is exploring a spin-off of its lucrative real estate business Domain. Banks ended mixed while miners After the markets closed, BHP Billiton announced a bigger than expected dividend as a rebound in prices for iron ore and petroleum helped the company swing back to profit in its fiscal first half. The Reserve Bank of Australia published minutes of its meeting held earlier this month. At that meeting the policy interest rate remained unchanged at 1.50 percent. This meant that current policy settings were consistent with sustainable growth and achieving the inflation target “over time”.
The Shanghai Composite was up 0.4 percent to the highest level in nearly three months after reports that the first wave of pension funds are ready to be released into China’s capital markets. The Hang Seng however retreated 0.8 percent. The Kospi was up 0.9 percent as Samsung Electronics continued to rebound from a recent retreat following the arrest of Vice Chairman Lee Jae-yong on suspicion of bribery. The Sensex was up 0.3 percent.
Looking Forward
Germany posts February Ifo survey. The UK releases the second estimate of fourth quarter gross domestic product. The Eurozone reports final January harmonized index of consumer prices. Canada releases December retail sales. The US reports January existing home sales. The Federal Reserve publishes minutes from the most recent FOMC meeting.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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