On 17 March, 2016 – Most stock indices gained
Shares rallied after the FOMC reduced the number of probable rate increases in 2016.
United States
Stocks advanced sending the Dow Jones industrials and S&P higher for 2016, wiping out the losses from a terrible start to the year. The Dow was up 0.9 percent, the S&P added 0.7 percent and the Nasdaq was 0.2 percent higher. Materials and energy companies rose as the price of gold and silver and oil increased.
Williams-Sonoma retreated after the company disclosed disappointing fourth quarter results and gave a weaker than expected outlook for 2016. FedEx rose after it reported strong holiday season sales, helped by continued growth in online shopping. FedEx also raised its projections for the year. Newmont Mining and Owens-Illinois advanced as did Air Products & Chemicals. Health care stocks continued to slump as Congress scrutinized drug pricing practices. Investors worry that it will get harder for drug companies to raise their prices and bolster their profit and revenue. Mallinckrodt and Mylan were down.
Mondelez International retreated after Pershing Square, the hedge fund run by the investor William A. Ackman, said it had sold 20 million shares. Pershing Square remains a major shareholder in Mondelez, which makes products including Oreo cookies, Cadbury chocolates and Trident gum. Jabil Circuit declined after it posted weaker than expected results in the fourth quarter and its guidance was also beneath expectations. SeaWorld Entertainment gained after it said it would immediately stop breeding orcas after years of controversy over keeping them in captivity.
Weekly jobless claims were up 7,000 but remained at levels consistent with a healthy job market. The Philadelphia Fed’s general conditions index has emerged from a long negative run with a March reading of plus 12.4. The strength was confirmed by new orders which surged to plus 15.7 from minus 5.3 in February.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$38.00 to US$1,266.50. Copper futures were up 2.4 percent to US$2.2. WTI spot crude was up US$1.73 to US$40.19. Dated Brent spot crude was up US$1.08 to US$41.41. 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 dropped 1.3 percent. The yield on US Treasury 30 year bond was down 4 basis points to 2.69 percent while the yield on the 10 year note slipped 1 basis point to 1.90 percent.
Europe
Stocks were mostly lower with only the FTSE and Ibex advancing on the day. Early strength was attributed to rising commodity prices, which provided a boost to energy and mining stocks. However, bank stock weakness drove the markets into the red. The FTSE and Ibex were up 0.4 percent and 0.2 percent respectively. The CAC was down 0.5 percent, the DAX retreated 0.9 percent and the SMI lost 0.7 percent.
Bank of England as expected maintained its interest rate at 0.5 percent and the asset purchase program at £375 billion amid heightened uncertainty ahead of the EU referendum in June. The decision marked the seventh anniversary of the key rate at 0.5 percent. The Swiss National Bank retained its negative interest rate and repeated that it will be active in the foreign exchange market as the Swiss franc remains significantly overvalued. The interest rate on sight deposits at the SNB was maintained at minus 0.75 percent, and the target range for the three-month libor between minus 1.25 percent and minus 0.25 percent. Switzerland’s growth projections were downgraded to 1.4 percent this year, instead of 1.5 percent projected in December. For 2017, the outlook was trimmed to 1.8 percent from 1.9 percent.
Deutsche Lufthansa sank after the airline group issued a cautious outlook for 2016. Banks including Commerzbank, Deutsche Bank, BNP Paribas, Société Générale and Crédit Agricole finished lower. Automakers including BMW, Daimler, Renault and Peugeot also declined. Technip and Total advanced. Miners benefitted from rising commodity prices. Anglo American, Glencore, Antofagasta, Fresnillo, BHP Billiton and Randgold Resources rallied. InterContinental Hotels Group retreated on a broker downgrade. LafargeHolcim was up after the company maintained its dividend after posting a fourth quarter loss of CHF2.86 billion, hit by write-down and other charges.
Asia Pacific
Most Asian shares advanced thanks to rising oil prices and the Federal Reserve’s announcement indicated that it would probably increase the fed funds rate twice in 2016 rather than the previously announced four times.
The Nikkei retreated 0.2 percent after the dollar briefly hit a three week low against the yen. Exporters were mixed with Canon declining while Sony and Sharp Corp gained. Japanese exports fell for a fifth straight month in February, although the pace of decline slowed from the previous month. Okamura advanced after raising its annual operating forecast. Advantest and Inpex also gained.
Both the S&P/ASX and All Ordinaries were 1.0 percent higher. Investors cheered new clarity from the Federal Reserve. However, the February labour report said that only 300 new jobs were created while the unemployment rate slid to 5.8 percent from 6.0 percent in January. BHP Billiton, Rio Tinto and Fortescue Metals Group rallied after commodity prices rose overnight. Banks ANZ and Commonwealth along with energy stocks such as Oil Search, Origin Energy and Santos climbed.
The Shanghai Composite was up 1.2 percent, led by gains in technology stocks. The Hang Seng also climbed 1.2 percent. The Kospi added 0.7 percent after the Federal Reserve’s decision. The Sensex was virtually unchanged.
Global Stock Markets
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.
Looking forward*
Germany posts February producer prices. Canada reports February consumer prices and January retail sales. The US releases preliminary March consumer sentiment.
*Note — all releases are listed in local time.
Source: Fidelity
Fidelity disclaimer:
The objective of this page is to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by any Fidelity entity or any third-party.
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]