On 01 February, 2017 – Global stocks rebounded from losses on Monday and Tuesday
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On 01 February, 2017 – Global stocks rebounded from losses on Monday and Tuesday

February 2, 2017
|In Global Round Ups
|By Jesmond Mizzi Financial Advisors

Earnings helped lift the indices but so did the lack of action by the Federal Reserve.
United States
Stocks treaded water Wednesday with the Dow Jones industrials edging up 0.1 percent while the S&P remained virtually unchanged (up 0.68 point). The Nasdaq however, was up 0.5 percent thanks to a surge in Apple and after the Federal Reserve kept interest rates unchanged. Some investors and analysts pointed to solid economic data and improved corporate earnings as providing a lift to the indices.
According to payroll processor ADP, private employment jumped 246,000 jobs in January after climbing by a revised 151,000 jobs in December. January ISM manufacturing index rose to 56.0 from a revised 54.5 in December.
Facebook revenue and earnings soared in the fourth quarter despite concerns that sales could slow as it hits the limit on how many advertisements it puts in the newsfeed. Facebook reported non-GAAP earnings of $1.41 compared to the expected $1.31 per share. Net income was $3.5 billion in the three months until December and $10.2 billion for the full year 2016. Revenue rose 51 percent to $8.8 billion.
As universally expected, the Federal Reserve left its fed funds interest rate range at 0.5 percent to 0.75 percent. The FOMC said the nation’s slow and steady economic expansion continued into the New Year, with little sign of flagging or acceleration. There was little changed in the statement. No mention was made of the next interest rate increase. However, there will be ample opportunity for FOMC members to voice their opinions between now and the next meeting on March 15. Fed Chair Janet Yellen for example, will be giving her semi-annual testimony to the Senate and House of Representative committees this month. In its post-meeting statement the Fed noted improvements in consumer and business sentiment and said it expected inflation to rise to its 2 percent target as it makes further, gradual adjustments to interest rates.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$9.15 to US$1,203.65. Copper futures were down 0.6 percent to US$2.71. WTI spot crude was up 76 US cents to US$53.57. Dated Brent spot crude was up 93 US cents to US$56.51. The US dollar was up against the yen, euro, Swiss franc and the Canadian dollar. However, it declined against the pound. The currency was unchanged against the Australian dollar and yuan. The Dollar Index was up 0.2 percent. The yield on US Treasury 30 year bond was up 4 basis points to 3.09 percent while the yield on the 10 year note was up 3 basis points to 2.48 percent.
Europe
Stocks rebounded Wednesday from declines on both Monday and Tuesday thanks to some positive corporate news. Positive news from Siemens, Roche and Volvo all contributed to the upbeat mood among investors along with the strong earnings report from Apple. However, investors also were in a cautious mood prior to the FOMC announcement after markets closed for the day and tomorrow’s Bank of England announcement. The FTSE edged up 0.1 percent, the CAC was up 1.0 percent, the DAX gained 1.1 percent and the SMI added 0.5 percent.
After markets here closed for the day, PM Theresa May won a historic House of Commons mandate to start Britain’s divorce from the EU amid warnings that the looming exit negotiations could descend into a diplomatic “fist fight”. Mrs May is on course to start the two-year Brexit process in March after MPs voted by 498 to 114, a government majority of 384, for the bill that gives her the power to invoke the EU treaty’s Article 50 exit clause.
According to the National Institute of Economic and Social Research (NIESR) the UK economy will grow at a slower rate in 2017. The think tank expects the economy to grow 1.7 percent this year and 1.9 percent next year, slower than the 2 percent estimated for 2016.
Siemens jumped after raising its 2017 profit forecast. Wacker Chemie declined after the chemical firm reported a 21 percent decline in fiscal 2016 net profit. Banks Deutsche Bank, Commerzbank, BNP Paribas and Société Générale advanced. TalkTalk Telecom rallied after the company announced that Chief Executive Dido Harding will step down after seven years in the position. Rolls-Royce Holdings and Smiths Group both were higher on broker upgrades.
Julius Baer Group climbed in Zurich after its 2016 adjusted net profit more than doubled. Roche Holding rose on a Bloomberg report that it is considering options for its diabetes-care business including a sale. Volvo jumped in Stockholm — the auto maker lifted its dividend after reporting a sharp rise in fourth-quarter net profit on top of healthy sales. Electrolux retreated after the home appliances giant proposed a higher dividend for the year 2016 after posting a decline in organic sales for the fourth quarter. Hikma, Shire and AstraZeneca all were higher. Shares in Fresnillo, Antofagasta and BHP Billiton also advanced.
January Eurozone manufacturing PMI climbed to 55.2 from 54.9 in December. In Germany, the manufacturing PMI climbed to 56.4 from 55.6 and in France, the PMI was 53.6, up from 53.5 the month before. In the UK< the manufacturing PMI eased to 55.9 from 56.1.
Asia Pacific
Stocks were mostly higher as the yen stabilized, Apple’s quarterly earnings came in better than expected and Chinese manufacturing and services sector data suggested that China’s recent recovery remained largely intact at the start of the New Year. Comments from the Trump administration that the U.S. will combat currency manipulation to support American companies coupled with caution ahead of the U.S. Federal Reserve’s latest monetary policy decision due later in the day served to limit overall gains across the region. Markets in China, Malaysia and Taiwan remained closed for public holidays.
The Hang Seng returned from its Lunar New Year holiday and declined 0.2 percent. January CFLP manufacturing PMI was 51.3, up slightly from 51.2 in December while the services sector PMI edged up to 54.6 from 54.5.
The Nikkei was up 0.6 percent and the Topix gained 0.4 percent after Prime Minister Shinzo Abe told parliament that the Bank of Japan’s ultra-loose monetary policy is not aimed at devaluing the yen, clearly rejecting the assertion by U.S. President Donald Trump that three key US trading partners were engaged in devaluing their currencies to the harm of American companies. January manufacturing PMI was 52.7, up from 52.4 in December. Mitsubishi Motors jumped after the company said it expects a smaller annual net loss than previously forecast. JFE Holdings and Omron climbed after raising their full-year operating profit forecasts. Toshiba gained on a Wall Street Journal report that it is exiting the nuclear construction business. Ricoh and Fujifilm Holdings tumbled after disappointing earnings updates. Nintendo declined after the company lowered its full-year operating profit forecast by ¥10 billion.
The S&P/ASX was up 0.6 percent and the All Ordinaries gained 0.5 percent. Higher iron ore and copper prices lifted miners including BHP Billiton and Fortescue Metals Group. Gold miners Evolution, Northern Star, Newcrest and Regis Resources jumped after gold held firm after hitting a one-week high overnight.
The Kospi was up 0.6 percent despite mixed domestic economic data. The Sensex rallied 1.8 percent as Finance Minister Arun Jaitley unveiled his annual budget, with promises to ramp up spending on rural areas, infrastructure and poverty and adhere to fiscal prudence.
Looking Forward
Australia posts December merchandise trade balance. The Bank of England announces its monetary policy and publishes its quarterly Inflation Report. The US releases fourth quarterly productivity and costs report and 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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Jesmond Mizzi Financial Advisors Disclaimer:

This article, does not intend to give investment advice and the contents therein should not be construed as such. Jesmond Mizzi Financial Advisors Limited is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact Jesmond Mizzi Financial Advisors Limited at 67, Level 3, South Street, Valletta, or on Tel: 21224410, or email [email protected]