On 18 August, 2016 – Global shares mixed after FOMC minutes
Asian and European markets reacted to both the FOMC and ECB minutes of their most recent meetings.
United States
US stocks edged up Thursday — health care stocks slid but the continuing rebound in oil prices gave energy companies a lift. Investors have resisted making big moves in recent days. The Dow Jones industrials inched up 0.1 percent while both the S&P and Nasdaq added 0.2 percent.
Walmart stock climbed after the company raised its annual estimates after reporting strong results for the second quarter. The company is revamping stores and has won back some customers. Walmart has been increasing pay for its employees and it says that makes for happier employees and customers who get better service. Walmart, which has lost sales to sites like Amazon as people make more purchases online, is also buying the online retailer Jet.com for $3 billion as it fights for more online shoppers.
Cisco Systems was lower after it reported unimpressive quarterly results and said it would lay off 5,500 employees, or about 7 percent of its staff. Its customers have been switching to remote data centers for computing instead of maintaining networks on their premises. Cisco now is focusing on equipment for big data centers along with software and security. Agilent Technologies retreated after investors were disappointed with the company’s cautious projections for the current quarter. Portola Pharmaceuticals stock sank after regulators did not approve its drug AndexXa, which is designed to reduce severe bleeding during surgery by counteracting blood thinners.
Harley-Davidson was lower after the government sued the motorcycle maker saying it made illegal devices that could cause its vehicles to emit higher amounts of some types of air pollutants. Later in the day, the Justice Department said Harley-Davidson had agreed to settle the case by buying back and destroying the devices. It will also pay a $12 million penalty and spend $3 million on a project that will help mitigate air pollution. L Brands, the parent of Victoria’s Secret and Bath & Body Works, climbed after its results were better than expected and it raised its projections for the year.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$6.70 to US$1,350.05. Copper futures were up 0.7 percent to US$2.18. WTI spot crude was up US$1.43 to US$48.22. Dated Brent spot crude was up 95 US cents to US$50.80. The US dollar was down against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was down 0.8 percent. The yield on US Treasury 30 year bond was unchanged at 2.26 percent while the yield on the 10 year note slipped 1 basis point to 1.54 percent.
Europe
European markets advanced Thursday after declining the two days before. Investors reacted positively to the FOMC minutes that were published after markets in Europe were closed on Wednesday. Solid regional data also contributed to the positive mood. The FTSE inched up 0.1 percent, the DAX gained 0.6 percent and both the CAC and SMI were 0.4 percent higher.
Minutes of the most recent European Central Bank governing council meeting held on July 20 and 21 said that more time was needed to assess the impact of the Brexit vote and it was premature to discuss any possible monetary policy reaction at this stage.
ThyssenKrupp and Salzgitter advanced. Premier Oil climbed after posting turnaround results for the first half of the current year. Thomas Cook jumped after signing a strategic sourcing partnership agreement with Sunhotels. Kingfisher was up after reporting higher sales in its second quarter with improved performance mainly in the UK, France and Poland. Nestle advanced in Zurich. The company reiterated its full-year guidance despite reporting its slowest first-half sales growth since 2009.
Telecommunication services firm Swisscom was lower despite lifting its 2016 guidance. Vestas Wind Systems jumped in Copenhagen after the wind turbine manufacturer lifted its revenue guidance for the year and launched a share buyback program. Antofagasta, Anglo American, BHP Billiton and Glencore rallied. Companies which went ex-dividend and traded without entitlement to their latest dividend payment including Pearson, British American Tobacco and Legal & General declined.
July harmonized index of consumer prices were up 0.2 percent on the year. Headline inflation has been below the European Central Bank’s target of ‘below, but close to 2 percent’ since early 2013. French ILO unemployment rate for metropolitan France declined to 9.6 percent from 9.9 percent. The latest figure was the lowest since the third quarter of 2012, when it was 9.4 percent. UK retail sales rebounded 1.4 percent in July after sinking 0.9 percent in June.
Asia Pacific
Stocks were mixed Thursday as investors reacted to the FOMC minutes which were released after markets here were closed on Wednesday.
The Shanghai Composite slipped 0.1 percent while the Hang Seng added 1.0 percent after an official survey showed China home price growth moderated in July. In Hong Kong, index heavyweight Tencent rallied after the online entertainment and social network company reported a 47 percent jump in second-quarter profits.
The Nikkei retreated 1.6 percent to hit its lowest level in nearly two weeks as the yen firmed and disappointing merchandise trade data signaled continued weak demand. Japan’s exports tumbled 14 percent while imports plunged 24.7 percent from a year ago — their fastest pace since 2009. The yen climbed back above the ¥100 per dollar mark after St. Louis Fed President James Bullard — a voting member of the Federal Open Market Committee — said in a speech on Wednesday that a single rate increase will likely suffice for the “foreseeable future.” Mitsui Fudosan, Kansai Electric Power, Mazda Motor and Olympus declined. SoftBank tumbled after Bloomberg reported CEO Masayoshi Son is still holding out hope for a deal to merge Sprint with T-Mobile.
The S&P/ASX retreated 0.5 percent and the All Ordinaries was 0.4 percent lower after solid employment data took pressure off the Reserve Bank of Australia to cut interest rates further. While the total number of people with jobs rose by 26,200 in July, the unemployment rate dropped to 5.7 percent, the lowest level in almost three years. The big four banks declined.
The Kospi was up 0.6 percent thanks to buying by foreign investors. The Sensex added 0.4 percent. Moody’s Investors Service today retained India’s growth forecast at 7.5 percent for 2016, saying the outlook will be determined by domestic factors.
Looking forward
Germany posts July producer price index. Canada releases July consumer price index and June retail sales.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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