On 16 March, 2017 – Global stocks were mostly higher
However, US stocks slipped after Wednesday’s gains.
United States
Shares were mostly lower Thursday. Healthcare and utilities stocks declined while financials advanced along with bond yields. Traders reversed their initial reaction to the US Federal Reserve’s policy statement, which was more dovish than expected. The Dow Jones industrials slipped 0.1 percent and the S&P retreated 0.2 percent. The Nasdaq was virtually unchanged (up 0.71 point). Investors were taking profits after Wednesday’s advances.
Oracle surged after the business software maker issued a better-than-expected quarterly profit. Tesla advanced after the electric carmaker said it would raise about $1.15 billion as the company speeds up the launch of its Model 3 sedan. Tyson Foods retreated on news that a form of bird flu that is highly lethal for poultry had infected a second commercial chicken flock. Biogen tumbled on broker downgrades. PTC Therapeutics and Inovio Pharmaceuticals also declined.
In economic news, weekly jobless claims declined 2,000. February housing starts were up 3.0 percent to an annualized pace of 1.288 million. March Philadelphia Fed business conditions index reading was 32.8. January job openings came in at 5.626 million. Hiring was up 2.6 percent to 5.440 million for one of the best readings of the economic cycle.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$30.55 to US$1,229.35. Copper futures were up 0.7 percent to US$2.68. WTI spot crude was down 5 US cents to US$48.81. Dated Brent spot crude was down 7 US cents to US$51.74. The US dollar was up against the Canadian and Australian dollars. The currency declined against yen, euro, pound and Swiss franc. The Dollar Index was down 0.2 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 3 basis points to 3.14 percent and 2.53 percent respectively.
Europe
Most European stock indices advanced Thursday in choppy trading. Traders were encouraged by the results of the Dutch elections, where voters rejected populism. The elections were seen as a litmus test ahead of the upcoming elections in France in April and May and in Germany in September. The FTSE, CAC and DAX all added 0.6 percent but the SMI retreated 0.2 percent. The main drag on the SMI was Roche — it began trading ex-dividend.
Investors had their first opportunity to react to the Federal Reserve’s interest rate increase on Wednesday which occurred after markets here were closed for the day. The decision triggered a weakening of the US dollar, which provided a boost to mining and energy stocks. Banks also gained ground on expectations that they will benefit from higher interest rates.
The Bank of England’s monetary policy committee kept its Bank Rate at 0.25 percent as anticipated. The vote was 8 to 1. Kristin Forbes voted to lift the bank rate by 25 basis points.
The Swiss National Bank kept its expansionary monetary policy unchanged on Thursday, as widely expected. The interest rate on sight deposits at the central bank was kept unchanged at minus 0.75 percent and the target range for the three-month Libor was retained between minus 1.25 percent and minus 0.25 percent. The SNB reiterated that the Swiss franc is ‘still significantly overvalued’ and vowed to remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration.
HeidelbergCement was lower after reporting a 30 percent fall in fourth-quarter profit. Lufthansa was up despite the airline warning its profits would fall this year due to pressure on ticket revenues and rising fuel costs. Renault declined after its entire senior management team was implicated in an investigation into emissions test cheating. Vedanta Resources jumped on news that Indian billionaire Anil Agarwal will invest $2.44 billion in the mining firm.
Mining stocks turned in a solid performance as the US dollar weakened following the Fed’s decision to raise interest rates. Anglo American, Glencore, Randgold Resources, Fresnillo, Rio Tinto and BHP Billiton all rallied. Royal Dutch Shell and BP advanced. J Sainsbury dropped after reporting a fall in supermarket sales in the first nine weeks of the year. Insurer Generali Group climbed in Milan after reporting a rise in its fiscal 2016 net profit.
According to the European Automobile Manufacturers Association, Europe’s car registrations grew for the fourth successive month in February, though at a slower rate than in the previous three months. Total passenger car registrations rose 2.2 percent on the year in February, much slower than the 10.2 percent surge in January.
Asia Pacific
Asian stock indices were higher Thursday after the US Federal Reserve lifted its fed funds rate range by 25 basis points to 0.75 percent to 1.0 percent as expected. It also indicated that there are likely to be two more such increases this year and three in 2018. The FOMC said the economy is doing well. Investors who had feared a much faster pace of increases were relieved after the Fed emphasized further rate increases would only be “gradual.” A rebound in oil prices and Dutch Prime Minister Mark Rutte’s victory over anti-Islam lawmaker Geert Wilders in a parliamentary election also boosted sentiment.
Oil prices extended gains in Asian deals after climbing more than 2 percent overnight, helped by government data confirming a surprise drawdown in US oil inventories and figures from the International Energy Agency (IEA) that suggested OPEC cuts should create a crude deficit in the first half of 2017.
The Shanghai Composite jumped 0.8 percent after the People’s Bank of China lifted interest rates by 10 basis points on both medium-term lending facility loans and reverse repurchase agreements in a bid to avoid downward pressure on the yuan and counter capital outflows. The PBoC’s monetary policy interest rate remains at 4.35 percent where it has been since October 2015. The Hang Seng jumped 2.1 percent.
Both the Nikkei and Topix inched up 0.1 percent even as the dollar fell against the yen and the Bank of Japan kept its monetary stimulus unchanged, as widely expected, saying the economy is on a moderate recovery trend. Fast Retailing dropped on a Nikkei report that its rivals were planning to expand aggressively to new markets.
Both the S&P/ASX and All Ordinaries were 0.2 percent higher as a weak US dollar lifted commodity prices, helping investors shrug off the weaker than expected Australian employment data. The February unemployment rate jumped to 5.9 percent from 5.7 percent the month before. Employment slid 6,400 jobs — analysts expected an increase in employment and for the jobless rate to remain unchanged at 5.7 percent. Surging copper and steel prices fueled demand for mining stocks, with BHP Billiton, Rio Tinto and Fortescue Metals Group rallying. Gold miners also climbed after gold hit a one-week high overnight. Evolution, Newcrest, Northern Star and Regis Resources advanced. However, Banks fell sharply amid overnight losses among their US peers.
The Kospi was up 0.8 percent after the Federal Reserve’s rate move.
Elsewhere, India’s Sensex was rising half a percent while benchmark indexes in Indonesia, Malaysia, Singapore and Taiwan were up around 1 percent each. The Sensex added 0.6 percent. Investor sentiment was also buoyed by encouraging exports data and continued strength in rupee on the back of heavy foreign capital inflows amid hopes that the BJP’s win in state elections will facilitate further reforms.
Looking Forward
Italy and the Eurozone post January merchandise trade. Canada posts January manufacturing sales. In the US, February industrial production and leading indicators along with preliminary March consumer sentiment will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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