On 28 June, 2017 – Stocks retreated in Europe and Asia but rallied in the US

Bond yields rose triggering purchases of bank shares.
United States
Stocks rebounded from Tuesday’s losses with technology shares among the big gainers. Energy companies also were higher along with the price of crude oil. Utilities and real estate companies lagged the broader market rally. The rebound was partly due to bargain hunting, as traders picked up stocks at relatively reduced levels following Tuesday’s declines. The Dow Jones industrials gained 0.7 percent, the S&P added 0.9 percent and the Nasdaq jumped 1.4 percent.
Banks and other financial companies were higher for the second day consecutive day as bond yields and interest rates continued to climb. Higher rates let banks make bigger profits on mortgages and other types of loans. Bank of America, JP Morgan Chase, Capital One Financial and Prudential Financial advanced.
FedEx temporarily halted trading before the company disclosed that an information system virus significantly affected the global operations of its TNT Express subsidiary. In a statement, FedEx said that while TNT’s operations and communications systems were disrupted, “no data breach is known to have occurred.” The company noted that operations of all other FedEx companies were unaffected. General Mills rose after the company reported fourth-quarter earnings and revenue that exceeded expectations. Spectranetics surged after Dutch electronics and health care technology company Philips said it agreed to buy the medical device company for $38.50 per share or $1.68 billion. KB Home climbed after the homebuilder reported strong earnings.
May trade deficit in goods narrowed to $65.9 billion from a revised $67.1 billion in April. Exports were up 0.4 percent on the month while imports were down 0.4 percent. Exports of consumer goods jumped 6.0 percent and exports of vehicles rose 4.8 percent. Exports of capital goods were down 0.4 percent. May pending home sales were down 0.8 percent. Weakness was spread evenly through the regions.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$1.55 to US$1,248.00. Copper futures were up 0.5 percent to US$2.68. WTI spot crude was up 55 US cents to US$44.79. Dated Brent spot crude was up 72 US cents to US$47.37. The US dollar was up against the yen but declined against the euro, pound, and the Canadian and Australian dollars. The currency was unchanged against the Swiss franc. The Dollar Index was down 0.5 percent. The yields on both the US Treasury 30 year bond and the 10 year note were up 2 basis points to 2.77 percent and 2.22 percent respectively.
Europe
Several stock indices retreated Wednesday, adding to Tuesday’s losses. Technology stocks struggled after a worldwide cyber-attack. Investor sentiment suffered after the US Senate decided to postpone voting on a new health-care bill. The move has traders concerned about President Trump’s ability to implement his policies. The FTSE tumbled 0.8 percent while the CAC and DAX were down 0.1 percent and 0.2 percent respectively. The SMI was virtually unchanged (up 3.81 points).
The euro declined against its major counterparts in the European trading session after a media report showed that the market had misinterpreted remarks by the European Central Bank Mario Draghi as a signal towards reducing the monetary stimulus. Draghi was intending to strike a balance between recognizing the bloc’s economic strength and the need for continued monetary support.
Bank of England Governor Mark Carney said that monetary stimulus may need to be withdrawn to some extent in the future, implying interest rates may be raised. Earlier this month the BoE left its interest rate and asset purchases unchanged in a split decision. “Some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.” Carney was speaking during a panel discussion at a European Central Bank forum on central banking in Sintra, Portugal. The pound climbed after Carney said that policymakers could lift rates if business investment rises. A stronger pound weighed on the FTSE.
Legrand rallied after it agreed to buy US infrastructure company Milestone. Saint Gobain was down after a global cyber-attack infected its systems. Hargreaves Lansdown was lower after the Financial Conduct Authority proposed sweeping changes to the £7 trillion asset management industry in order to improve transparency and offer greater protection for investors. Novartis and Roche retreated. Bunzl climbed after reporting a 7 percent increase in first-half revenue at constant exchange rates, boosted by underlying growth and acquisitions.
Philips Electronics declined in Amsterdam after announcing a definitive merger agreement to buy Spectranetics for an enterprise value of €1.9 billion. ABN Amro dropped after the Dutch government reduced its stake in the bank to 63 percent. Nestle advanced in Zurich after launching a 20 billion Swiss franc share buyback program. UBS and Crédit Suisse were higher. Swiss Life, Bâloise and Partners Group advanced.
Asia Pacific
Most Asian stocks declined Wednesday after the US Senate’s move to delay a vote on healthcare bill until after next week’s July 4 holiday triggered concerns whether the Trump administration will be able to deliver pledged tax cuts and infrastructure spending. The euro hit a one-year high as investors digested hawkish comments from ECB President Mario Draghi that the central bank could trim its stimulus this year.
The Shanghai Composite was down 0.6 percent a day after Premier Li Keqiang said that maintaining medium to high-speed long-term growth will not be easy. The Hang Seng was also down 0.6 percent.
The Nikkei was down 0.5 percent and the Topix was 0.3 percent lower, dragged down by tech shares after EU regulators fined Google a record €2.4 billion for violating antitrust rules and a massive global cyber-attack hit IT systems across multiple geographies and business units. Toshiba declined after saying it is suing Western Digital for interfering with the sale of its memory chip business.
The S&P/ASX and All Ordinaries added 0.7 percent and 0.8 percent respectively led by gains in the mining, energy and entertainment sectors. BHP Billiton, Rio Tinto, South32 and Fortescue Metals Group rallied after Chinese iron ore prices hit one-month highs on Tuesday. Woodside Petroleum and Santos were higher after oil prices rose for a fourth straight session on Tuesday on a weaker dollar and amid short-covering after recent steep losses. The big four banks advanced as did Insurance Australia Group.
The Kospi retreated 0.4 percent as foreign investors booked profits in large-cap tech stocks after Fed Chair Janet Yellen reiterated the need to raise interest rates gradually. The Sensex was also down 0.4 percent as worries about provisioning towards large NPA accounts and anxiety ahead of goods and services tax roll-out continued to keep investors on the sidelines.
Looking forward
Japan posts May retail sales. June EC economic sentiment will be released for the Eurozone. In the US, the final estimate of first quarter gross domestic product and corporate profit will be released along with weekly jobless claims, money supply and Fed balance sheet.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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