On 12 January, 2017 – Most global stock indices retreated
Investors were disappointed with President-elect Donald Trump’s press conference.
United States
US stocks retreated Thursday with financial, energy and technology leading the declines while phone companies, real estate and health care stocks edged higher. The losses came as investors began to look ahead to earnings season which begins Friday. Mr Trump’s press conference disappointed investors after it failed to offer specifics on his trade and tax policies. The Dow Jones industrials and Nasdaq slipped 0.3 percent while the S&P was 0.2 percent lower.
Cincinnati Financial, PNC Financial Services Group and Zions Bancorporation were down. Hess declined after the oil company said it will take a $3.8 billion charge in the fourth quarter. Mylan was down on news that rival CVS slashed its price on a lesser-known treatment similar to EpiPen. The version that CVS will sell costs about a sixth of the price of Mylan’s EpiPen. Fiat Chrysler tumbled on news that the US government is accusing the automaker of violating vehicle emission laws. The Environmental Protection Agency said Thursday that Fiat Chrysler failed to disclose software in some of its vehicles with diesel engines that allows them to emit more pollution than allowed under the Clean Air Act. Tiffany gained. Merck advanced on several broker upgrades. Both Microsoft and Apple retreated.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$26.50 to US$1,205.05. Copper futures were up 2.3 percent to US$2.67. WTI spot crude was up 81 US cents to US$53.06. Dated Brent spot crude was up 97 US cents to US$56.07. The US dollar was up against the pound and Swiss franc. However, the currency declined against the euro, yen, yuan and the Canadian and Australian dollars. The Dollar Index was down 0.4 percent. The yields on both the US Treasury 30 year bond and the 10 year note were unchanged at 2.96 percent and 2.36 percent respectively.
Europe
Stocks were mostly lower Thursday. It was European investors first opportunity to react to U.S. President-elect Donald Trump’s Wednesday press conference. They also reacted to the European Central Bank’s account of its December 7 – 8 governing council rate setting meeting. The FTSE was virtually unchanged (up 1.88 points), the CAC declined 0.5 percent, the DAX lost 1.1 percent and the SMI was 0.6 percent lower.
The ECB’s governing council was divided in the decision to extend asset purchases in the December rate-setting session with those having reservations about the stimulus measure opposing the extension, suggesting that the split may continue as inflation accelerates. The ECB Chief Economist Peter Praet presented two options during the session — to continue asset purchases from April 2017 at the current pace of €80 billion for an additional six months, or to extend the program by nine months until the end of December 2017 at a monthly pace of €60 billion. Very broad support emerged among members for the second option, the minutes said.
Pharmaceutical stocks declined Thursday, in reaction to Trump’s opening statements. He called for new bidding procedures for the drug industry in order to lower prices. Novartis and Roche declined along with Galenica, Lonza and Sonova. Actelion finished higher. Negotiations on a potential takeover of the company by Johnson & Johnson are ongoing. A deal could reportedly be reached this month. However, luxury goods companies turned in a solid performance after a strong sales report from Swiss company Richemont. Südzucker climbed after lifting its fiscal year operating result outlook. In Paris, Sodexo dropped after the company reported a drop in first quarter consolidated revenues reflecting weakness in its energy and resources unit. In London, Barratt Developments tumbled after the homebuilder reported that it had completed 367 homes in London during the six months ended December, down 56 percent from the same period last year.
Associated British Food retreated after the company reported a drop in like-for-like sales over the Christmas trading period at discount fashion store Primark in Germany and the Netherlands. Tesco was lower despite reporting a rise in Christmas sales. JD Sports Fashion jumped after the firm said it expects full-year headline pre-tax profit to be ahead of market expectations by up to 15 percent. Debenhams advanced after it beat forecasts with a five percent rise in like-for-like sales during the seven-week Christmas period. Marks & Spencer was up after reporting the first sales growth from its clothing arm in almost two years. Richemont soared in Zurich after the luxury goods group posted 6 percent growth in third-quarter sales from the previous year. Fiat Chrysler tumbled in Milan after the US EPA accused the company of diesel emissions violations.
Eurozone industrial production grew 1.5 percent in November after edging up 0.1 percent in October.
Asia Pacific
Stocks were mixed Thursday. Investor sentiment was dampened by a strengthening yen, oil price volatility and a lack of clarity from US President-elect Donald Trump on his proposed fiscal spending plans. While energy shares gained ground following an overnight rebound in oil prices, healthcare stocks suffered heavy losses after Trump said he is going to negotiate drug pricing.
The Shanghai Composite declined for a third day, this time by 0.6 percent. In the past, Chinese investors tend to take a cautious approach as Lunar New Year nears given the risk of liquidity stresses in the financial system. The Hang Seng was down 0.5 percent.
The Nikkei dropped 1.2 percent and the Topix was 1.0 percent lower as a stronger yen weighed on exporters’ shares. Drug makers also declined following Trump’s negative comments on drug pricing. Automakers Mazda, Nissan and Toyota retreated as the yen strengthened against the US dollar for the fourth day. Takeda Pharmaceutical and Astellas were lower. Toshiba tumbled on a report that it is facing heavier losses at its US nuclear unit.
The S&P/ASX was down 0.1 percent while the All Ordinaries were virtually unchanged (down 2.12 points). Losses in the healthcare and consumer staple sectors offset gains among mining and energy stocks. Oil majors Woodside Petroleum and Santos rose after oil prices rebounded on Wednesday. Miners BHP Billiton, Rio Tinto and Fortescue Metals advanced after Chinese steel and iron ore futures gained for a third session.
The Kospi added 0.6 percent as foreign investors extended their buying streak for the 12th consecutive session. The Sensex was up 0.4 percent as expectations surrounding third quarter earnings and the upcoming Union Budget offset negative trends from elsewhere.
Looking Forward
China releases December merchandise trade balance. The US posts December producer price index and retail sales along with November business inventories and January preliminary consumer sentiment.
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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