On 16 September, 2016 – Stocks fade at week’s end
Shares were lower for the week except in the US.
United States
US stocks retreated Friday. Banks pulled down the averages after a larger than expected $14 billion fine against Deutsche Bank was assessed by the US Department of Justice over claims that the German bank mis-sold mortgage backed securities. Investors also focused on Wednesday’s FOMC announcement. The Dow Jones industrials were down 0.5 percent, the S&P declined 0.4 percent and the Nasdaq slipped 0.1 percent. However, on the week, the indices advanced 0.2 percent, 0.5 percent and 2.3 percent respectively. Volume was above average — it was quadruple witching day when futures and options contracts on indices and individual stocks expire.
Both Apple and Oracle declined, but Intel helped to limit losses after it raised its third quarter revenue forecast. Chevron and Exxon Mobil slid. Range Resources dropped. United Technologies retreated after Chief Executive Greg Hayes said the Pratt & Whitney unit will fall short of the 2016 target for deliveries of its new jet engine. W.W. Grainger was lower amid concerns about competition from Amazon.com’s industrial distribution business.
The August consumer price index increased more than expected. The CPI was up 0.2 percent on the month while core — excluding food and energy — was up 0.3 percent. The headline CPI had been expected to increase 0.1 percent and core, 0.2 percent. Compared to the same month a year ago, the headline consumer price index increase accelerated to 1.1 percent from the 0.8 percent growth in July while core accelerated to 2.3 percent from 2.2 percent in the previous month.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.45 to US$1,308.35. Copper futures were virtually unchanged at US$2.16. WTI spot crude was down 88 US cents to US$43.03. Dated Brent spot crude was down 82 US cents to US$45.77. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 1.0 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.45 percent while the yield on the 10 year note slipped 1 basis point to 1.69 percent.
Europe
European markets also declined Friday with bank stocks were under pressure thanks to Deutsche Bank. The US Department of Justice fined the German lender $14 billion to settle claims over a mortgage securities probe. Deutsche has set aside just $5.5 billion to resolve legal issues. The size of the fine caused traders to flee bank stocks, since there are other European banks that are facing similar probes. Energy stocks were weak along with crude oil prices.
The FTSE was down 0.3 percent, the CAC declined 0.9 percent, the DAX dropped 1.5 percent and the SMI retreated 0.7 percent. The indices were also lower on the week. The FTSE lost 1.0 percent, the CAC dropped 3.5 percent, the DAX declined 2.6 percent and the SMI was 1.6 percent lower. Investors were in a cautious mood ahead of the Bank of Japan and Federal Reserve policy meetings.
Deutsche Bank tumbled after it said it has no intention of paying the $14 billion sought by the U.S. Department of Justice to settle civil claims over the bank’s sale of residential mortgage backed securities related to the 2008 financial crisis. E.ON and RWE were down. Auto makers Volkswagen, BMW, Daimler, Peugeot and Renault retreated.
In Paris, Société Générale, BNP Paribas and Crédit Agricole also were lower. Royal Bank of Scotland, Barclays and Standard Chartered were down on the day. Electra Partners jumped after announcing the successful £266 million initial public offering of its portfolio company Hollywood Bowl Group, the UK’s largest ten-pin bowling operator. Unilever finished lower on reports that it is in talks to buy Honest, the consumer products retailer co-founded by actress Jessica Alba, in a deal valued at over $1 billion.
Asia Pacific
Stocks advanced Friday. Markets in China, Hong Kong, Taiwan, South Korea and Malaysia were closed for the Mid-Autumn festival. Stocks advanced helped by gains of Apple’s suppliers.
The Nikkei was up 0.7 percent on the day but declined 2.6 percent on the week. However, investors remained cautious before the Bank of Japan’s monetary policy announcement on Wednesday. Japanese bank stocks made some gains following comments from the head of the Japanese banking industry association on Thursday that the Bank of Japan’s negative interest rates have raised concerns about business sentiment among corporate executives rather than boosting their loan demand. Mitsubishi UFJ Financial Group and Resona Holdings were higher. Murata Manufacturing and TDK gained.
In Australia, both the S&P/ASX and All Ordinaries added 1.1 percent Friday. On the week however, both were down 0.8 percent. Energy stocks led the gains after crude-oil prices gained overnight.
Indian shares were up 0.7 percent but down 0.7 percent on the week. Shares were helped by hopes of further rate cuts by the Reserve Bank of India as inflation slows. Rate-sensitive sectors such as autos and banks advanced.
Looking Forward
Central Bank activities
Sep 20, 21
Japan
Bank of Japan Monetary Policy Board Meeting & Announcement
Sep 20, 21
United States
FOMC Announcement, Forecasts & Chair Press Conference
Sep 22
New Zealand
Reserve Bank of New Zealand Monetary Policy Announcement
The following indicators will be released this week…
Europe
Sep 20
Germany
Producer Price Index (August)
Sep 22
Eurozone
EC Consumer Confidence (September flash)
Sep 23
Eurozone
Composite PMI (September flash)
Germany
Composite PMI (September flash)
France
Composite PMI (September flash)
Gross Domestic Product (Q2.2016 final)
Asia/Pacific
Sep 21
Japan
Merchandise Trade Balance (August)
Sep 23
Japan
Manufacturing PMI (September flash)
Americas
Sep 20
United States
Housing Starts (August)
Sep 22
United States
Initial Unemployment Claims (week ending prior Saturday)
Existing Home Sales (August)
Sep 23
Canada
Consumer Price Index (August)
Retail Sales (July)
United States
Manufacturing PMI (September flash)
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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