On 28 March, 2017 – Most global indices rebounded
Better than anticipated US economic data supported the rally.
United States
US shares rebounded Tuesday. The Dow Jones industrials and S&P jumped 0.7 percent and the Nasdaq was 0.6 percent higher. The Dow’s gain ended an eight day losing streak. The indices were propelled higher by the Conference Board’s consumer confidence index showing that the index was at its highest since 2000. There was also renewed investor optimism that Congress and the administration are focused now on tax cuts and other business-friendly policy proposals.
General Motors gained after its board voted to reject a proposal from investor David Einhorn to split the automaker’s stock into two classes. Darden Restaurants jumped after the owner of Olive Garden reported strong quarterly results and said it will buy the Cheddar’s Scratch Kitchen chain for $780 million. Red Hat climbed after the open-source software company reported strong sales and solid guidance for the current quarter. Carnival advanced after announcing solid first-quarter results and a better-than-expected estimate for the second quarter.
In other economic data, the S&P Case-Shiller home price index indicated that home prices rose at the fastest pace in more than two years in January.
Federal Reserve vice chair Stanley Fischer said on Tuesday that two more rate increases in 2017, following the one earlier this month, would be “about right”. Mr Fischer said in an interview on CNBC that the Fed is also watching fiscal policy “very closely”, but that taking a wait-see-approach on how government policy will affect the economic outlook is “the sensible thing to do”.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 30 US cents to US$1,257.25. Copper futures were up 1.35 percent to US$2.67. WTI spot crude was up 64 US cents to US$48.37. Dated Brent spot crude was up 57 US cents to US$51.32. US dollar was up against the yen, euro, pound, Swiss franc and the Canadian dollar. The currency declined against the Australian dollar. The Dollar Index was up 0.5 percent. The yields on both the US Treasury 30 year bond and 10 year note were up 4 basis points to 3.02 percent and 2.41 percent respectively.
Europe
Shares rebounded from Monday’s declines and advanced on Tuesday. Concerns over the ability of the Trump administration to implement its policies began to ease following the failure of the healthcare reform bill late last week. Investors have begun to shift their attention to the start of the Brexit process that will occur on Wednesday when UK Prime Minister Theresa May is expected to trigger Article 50. The government will deliver a letter to the European council president Donald Tusk, the mechanism for starting the Brexit process. The FTSE was up 0.7 percent, the CAC advanced 0.6 percent, the DAX rallied 1.3 percent and the SMI was unchanged (up 2.48 points).
Evotec jumped after reporting its fiscal 2016 results. The company said it expects significant improvement in core profit in 2017. Wirecard gained after the company said it had acquired all shares of payment service provider MyGate Communications in Cape Town, South Africa. Wolseley climbed after the company announced a rebranding alongside plans to exit its struggling Nordic business after reporting a fall in interim net profit.
Homebuilder Redrow advanced after withdrawing its takeover offer for rival Bovis. Tesco rose after two of its biggest shareholders urged the supermarket to withdraw a £3.7billion bid for wholesaler Booker. Thomas Cook retreated after reiterating its FY underlying EBIT guidance. Aviva increased after reports that it is looking to sell its Friends Provident International unit in a deal that could fetch up to $750 million.
Asia Pacific
Most Asian stocks advanced after investors shrugged off US President Donald Trump’s loss on health care and were hopeful that the administration would take a leading role in crafting legislation to overhaul the US tax code.
The Shanghai Composite was 0.4 percent lower after the People’s Bank of China skipped open market operations for the third consecutive session. The Hang Seng was up 0.6 percent however.
The Nikkei gained 1.1 percent and the Topix added 1.3 percent as Japanese shares rebounded from a six-week low as oil prices edged up in Asian trading and the US dollar recovered from its lowest level since November against the yen on hopes Trump would be able to enact promised tax cuts and infrastructure spending. Exporters closed mostly higher with Canon, Mazda Motor, Panasonic and Toyota advancing. Banks Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial also were higher. Fujitsu rallied on a Nikkei report that the company and China’s Lenovo Group have postponed their target date for a final deal on their personal computer business tie-up to sometime in the first half of 2017.
The S&P/ASX was up 1.3 percent and the All Ordinaries added 1.2 percent despite a mixed performance by commodity prices. The country’s consumer confidence improved during the week ended March 26 after declining in the previous three weeks according to a weekly survey compiled by the ANZ bank and Roy Morgan Research. Miners BHP Billiton, Rio Tinto and Fortescue Metals as well as oil majors Woodside Petroleum, Origin Energy and Santos all rallied.
The Kospi was up 0.4 percent after revised readings showed the domestic economy grew slightly more than previously thought in the final quarter of 2016, mainly due to increases in private and government consumption and the expansion of construction investment growth. The Sensex added 0.6 percent. Underlying sentiment remained supported after the Modi government on Monday introduced four bills on the Goods and Services Tax (GST) in the lower house of parliament, paving the way for its implementation from July 1.
Looking Forward
Japan releases February retail sales. In the US, February pending home sales and weekly EIA petroleum status report will be released.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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