On 03 April, 2017 – Stocks in the US and Europe retreated

Investors were cautious in anticipation of a heavy week of market moving events.
United States
Stocks retreated Monday — March auto sales disappointed and investors questioned whether the Trump administration would deliver on its pro-business economic stimulus. The Dow Jones industrials were down 0.1 percent, the S&P declined 0.2 percent and the Nasdaq was 0.3 percent lower. Also weighing on investors was an explosion in a St Petersburg, Russia in a train tunnel in what Russian authorities called a probable terrorist attack.
The major indices tumbled early in the day after some US states accused President Donald Trump’s administration of illegally suspending energy efficiency standards. The challenge came barely two weeks after Republican’s had to pull healthcare reform bill due to a lack of support. Also on Monday, Democrats amassed enough support to block a confirmation vote for Trump’s Supreme Court nominee.
Tesla gained to a record high after the electric car maker reported record first-quarter vehicle deliveries. But, other automakers including GM, Fiat Chrysler and Ford declined after March sales that came in below market expectations. Imagination Technologies Group plunged after its largest customer and minority stakeholder Apple decided not to use its intellectual property in new products. Panera Bread soared to a record high in midday trade Monday after Bloomberg reported that the restaurant chain was exploring a possible sale.
The March ISM manufacturing survey reading was 57.2, slightly lower than February’s 57.7. February construction spending was up 0.8 percent after dropping a revised 0.4 percent in January. The gain was led by residential construction. March vehicle sales declined to a seasonally adjusted annual rate of 16.62 million from 17.58 million in February.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$2.40 to US$1,247.25. Copper futures were down 1.7 percent to US$2.61. WTI spot crude was down 33 US cents to US$50.27. Dated Brent spot crude was down 39 US cents to US$53.14. The US dollar was up against the pound and the Canadian and Australian dollars. The currency declined against the yen. The US dollar was unchanged against the euro, Swiss franc and yuan. The Dollar Index was up 0.1 percent. The yield on US Treasury 30 year bond was down 4 basis points to 2.97 percent while the yield on the 10 year note was down 6 basis points to 2.33 percent.
Europe
European stock markets retreated after fluctuating between small gains and losses for much of the session. Investors were cautious because of a number of major events that will take place later this week. US President Trump and Chinese President Xi Jinping will hold their highly anticipated meeting later this week. The Federal Reserve will release the minutes of their March meeting Wednesday and the European Central Bank will release the minutes of their March meeting Thursday. The March US employment report will be released Friday morning. The FTSE and DAX were down 0.5 percent, the CAC retreated 0.7 percent and the SMI lost 0.3 percent.
According to European Central Bank Executive Board member Benoit Coeure, the functioning of euro area financial markets is not being hampered by the ECB’s massive stimulus and factors that are driving short-term bond yields to record lows are likely to be temporary. He also noted that the reduction in ECB monthly asset purchases to €60 billion from €80 billion beginning this week will provide some relief.
Deutsche Bank and Commerzbank along with Barclays and Royal Bank of Scotland were lower. Schneider Electric slipped after announcing an agreement for the sale of Telvent DTN to TBG AG. Burberry Group advanced after announcing a strategic partnership with Coty to accelerate the growth and development of its beauty business. Broadcaster ITV tumbled after climbing in late trading on Friday on bid speculation. Chip designer Imagination Tech plummeted after Apple announced it would stop using its intellectual property in new products.
BP was down after the company said it has agreed to sell its Forties pipeline business to Ineos for $250 million. Royal Dutch Shell also was lower. Reckitt Benckiser slid after saying it is looking at a possible sale of its food business. UBS Group declined after the bank’s board proposed Julie Richardson for election as a new member of the Board of Directors for a one-year term.
March manufacturing PMIs grew at the fastest pace in almost six years with the Eurozone PMI rising to a 71-month high of 56.2. The euro area unemployment rate dropped to the lowest level in nearly eight years. The jobless rate fell marginally to 9.5 percent in February from 9.6 percent in January. This was the lowest rate since May 2009. UK March manufacturing PMI slipped to 54.2 from 54.5 the month before.
Asia Pacific
Asian stocks advanced with gains remaining somewhat muted after the release of March manufacturing PMIs and prior to Chinese President Xi Jinping’s visit to the US on April 6 and 7. The US dollar initially was down as investors waited for key economic data that will be released during the week from Europe and the US. Markets in China and Taiwan were closed for public holidays. The Hang Seng was up 0.6 percent.
The Nikkei was up 0.4 percent and the Topix gained 0.3 percent despite the strength of the yen after the latest Bank of Japan Tankan survey of manufacturing and service companies showed an improvement in corporate sentiment in the first quarter of 2017. Toshiba shares tumbled after reports that the struggling company would likely miss another deadline to release results for the last quarter of 2016. The March manufacturing PMI reading declined to 52.4, down from 53.3 in February.
Both the S&P/ASX and All Ordinaries inched up 0.1 percent. Economic news was mixed with approvals to build new home rising unexpectedly last week, job advertisements increasing in March and a private measure of consumer inflation rising in the month. However, retail sales dipped in February, adding to concerns about constraints on consumer spending.
The Kospi was up 0.3 percent after exports rose for the fifth straight month in March. The Sensex rallied 1.0 percent. India’s manufacturing sector expanded at the quickest pace in five months in March, driven by stronger rises in output and new business, according to the March manufacturing PMI.
Looking Forward
Australia posts February merchandise trade balance. The Reserve Bank of Australia announces its monetary policy decision. March UK construction PMI is released. Eurozone reports February retail sales. Canada and the US post February international trade balances. The US releases February factory orders.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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