On 22 January, 2016 – Stocks gain on Friday

Shares were mixed for the week with most of the declines occurring in Asia.

United States

Stocks made their biggest gain in more than a month Friday as oil prices surged again, lifting energy stocks. Technology stocks also climbed. The Dow Jones industrials were up 1.3 percent on the day and 0.7 percent on the week. The S&P gained 2.0 percent Friday and 1.4 percent from last Friday. The Nasdaq outperformed the Dow and S&P, increasing 2.7 percent and 2.3 percent. This week’s advance was the first in four weeks as the prospect of economic stimulus in Europe helped put investors in a buying mood after a dismal beginning to the New Year. Energy companies soared along with crude prices.

Pipeline operator Kinder Morgan advanced for a second day. Williams, another pipeline company, also gained as did Devon Energy. Apple, Microsoft, Facebook and Alphabet were up. American Express continued to experience fallout from its negative outlook for 2016 and 2017 issued late Thursday. The company expects its earnings per share to fall this year. Gold and copper producer Freeport-McMoRan tumbled. The company has struggled as metals prices dropped, and its decision a few years ago to invest in oil and gas came shortly before those prices collapsed. Schlumberger advanced after the largest oil field services company in the world, said Thursday that it cut 10,000 jobs in the fourth quarter after eliminating some 20,000 earlier in 2015. But the company simultaneously said it would buy back $10 billion of its stock. General Electric declined after its quarterly revenues missed estimates.

Crude prices, recently under pressure from a global glut, recovered as harsh winter weather boosted demand for heating oil and traders cashed in short positions following a steep drop this month.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 25 US cents to US$1,096.25. Copper futures were up 0.3 percent to US$2.00. WTI spot crude was up US$2.66 to US$32.19. Dated Brent spot crude was up US$2.93 to US$32.18. The US dollar was up against the euro, yen and the Swiss franc. However it declined against the pound and the Canadian dollar. The currency was unchanged against the Australian dollar. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was up 2 basis points to 2.82 percent while the yield on the 10 year note was up 3 basis points to 2.05 percent.

Europe

European markets also continued their rally Friday, adding to the gains from the previous session. Thursday's gains were sparked by dovish comments from Mario Draghi, who hinted that further stimulus measures could be implemented in March. Investors shrugged off the weaker than expected Eurozone flash PMI data. The FTSE was up 2.2 percent, the CAC gained 3.1 percent, the DAX advanced 2.0 percent and the SMI added 2.9 percent. On the week, the indices gained 1.7 percent, 3.0 percent, 2.3 percent and 2.0 percent respectively.

A strong recovery in crude oil prices also had investors in a positive mood. Crude oil prices, which slumped to a 12-year low earlier this week, rebounded to over US$31 a barrel on Friday. The global rally began with strong gains in Asia overnight. China's Vice President Li Yuanchao said on Thursday that market forces will guide the movement of the yuan and China will keep intervening in the stock market to avoid excessive volatility.

European Central Bank President Mario Draghi said on Thursday that there were no limits on what policy tools the bank can deploy to achieve its inflation goal and to boost euro area growth, and hinted that more stimulus measures may come in March as the downside risks such as global uncertainty, market volatility and geopolitics have increased.

Banks including Commerzbank, Deutsche Bank, Société Générale, Crédit Agricole and BNP Paribas finished higher. In Paris, Air Liquide climbed 2after the industrial and medical gases maker said it recently signed a new long-term contract with Xinneng Energy, a unit of ENN Ecological Holdings. Technip and Total gained. Kering, LVMH and Carrefour surged. In London, Royal Dutch Shell, BG Group, BP and Tullow Oil increased. Barclays HSBC, Lloyds Banking Group and Standard Chartered rallied. Philips advanced in Amsterdam, after a planned $2.8 billion sale of its lighting components business to a consortium of Asian buyers fell apart.

Asia Pacific

Asian shares advanced Friday thanks to a rebound in the US overnight following an uptick in oil prices and dovish comments from the European Central Bank (ECB). ECB President Mario Draghi on Thursday signaled that the governing council may provide more stimulus at its next meeting in March amid growing concerns over faltering global economic growth, which have spooked investor sentiment worldwide. Worries about possible competitive devaluations also receded after China clarified it has no plan to pursue a policy of yuan devaluation.

The Shanghai Composite ended a volatile trading session up 1.3 percent while the Hang Seng jumped 2.9 percent higher led by Chinese oil and coal producers after Premier Li Keqiang called for supply-side reforms and cutting overcapacity in the steel and coal industries. Chinese shares traded in Hong Kong rebounded from a six-year low. On the week, the Shanghai Composite added 0.5 percent but the Hang Seng lost 2.3 percent.

The Nikkei soared 5.9 percent (but lost 1.1 percent on the week) with sentiment buoyed by a weaker yen, the bounce in oil prices and speculation that the Bank of Japan may announce fresh monetary stimulus when it meets on Thursday and Friday to fend off the threat of deflation. Exporters Sony, Panasonic, Toshiba and Honda Motor advanced as the dollar gained against the yen after comments ECB President Draghi’s comments. Sharp rallied on talk of Foxconn Technology Group showing interest in taking over the company. Energy explorer Inpex and JX Holdings advanced. Fast Retailing and mobile carrier Softbank jumped. According to the flash January manufacturing PMI, activity continued to expand but at a slower pace.

Both the S&P/ASX and All Ordinaries added 1.1 percent. BHP Billiton, Rio Tinto and Santos gained. Gold miner Newcrest dropped as gold fell from a two week high. Medical device maker ResMed climbed on reporting a 7 percent increase in second quarter revenue. Insurance giant Medibank Private climbed after upgrading its profit forecast. Winemaker Treasury Wine Estates soared after its half-year earnings exceeded expectations. On the week, the S&P/ASX and All Ordinaries added 0.4 percent and 0.4 percent respectively.

The Kospi was up 2.1 percent, the biggest gain in four and a half months but virtually unchanged on the week. The Sensex was up 2.0 percent Friday but slipped 0.1 percent from a week ago.

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.