Download Week Ahead: Global Stocks Mixed as US Cheer Vies With Europe

8 Jul 2013
Week Ahead: Global Stocks Mixed as US
Cheer Vies With Europe Gloom
The week ahead in business and finance
US – Last Friday it was announced that the US economy added 195,000 new jobs in June, which is
30,000 more than the consensus forecast. This is good news for the US jobs market and the broader US
economy. Even the US equity market welcomed this jobs growth, as it wasn’t so strong as to hasten the
end of quantitative easing. Nonetheless, the US Fed Chairman Ben Bernanke’s speech on Wednesday
will be studied closely along with the release of the FOMC’s minutes from its last policy meeting. The
Michigan Consumer Sentiment Index, which comes out on Friday, is also significant as it is an important
indicator of consumers’ perceptions of the US economy. The expectation is that the indicator will
continue to rise from 84.1 in June to 85.0 in July.
The political crisis in Portugal that erupted last week also appears to have resolved itself.
Portugal’s Prime Minister has established bi-partisan talks to resolve the crisis following the resignation
of his Finance Minister and Foreign Minister. Even so, the situation in Portugal will likely be discussed
during meetings between eurozone (Mon) and EU (Tue) finance ministers this week. The subjects of
bridging Greece’s financing gap and coming to an agreement about its labour reforms are also likely to
feature in talks.
Europe –
Asia – On Tuesday China releases June consumer and producer price indices and merchandise trade
balance. On Wednesday Japan posts June corporate goods price index and May tertiary industry
index. Later in the week, the Bank of Japan announces its monetary policy decision and Australia
posts its June labour force survey and May home loans data.
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
Summary of key economic events
8 July
9 July
10 July
11 July
12 July
Japan
Bank lending
Japan
Current account and trade balance
Taiwan
Total exports/imports and trade balance
Germany
Industrial production
Japan
Money supply M2 and M3
China
CPI
China
PPI
UK
Manufacturing output, industrial production
South Korea
Export and import price index
South Korea
Unemployment rate
Japan
Consumer confidence index
China
Imports, Exports and trade balance
US
FOMC minutes
France
Industrial production
Australia
Consumer inflation expectations
Australia
Unemployment rate
Japan
Monetary policy statement
US
Weekly jobless claims
Singapore
GDP data
Australia
Home loans
Japan
Industrial production
US
Michigan consumer sentiment
Source: Bloomberg
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
Performance of major stock market indices
End
Index
2013
Daily
2012
20 Jun
21 Jun
Change
Percent Change
Daily
2013
Yr/Yr
North America
United States
Canada
Dow
13104.1
*
15135.84
147.3
1.0
15.5
18.5
NASDAQ
3019.5
*
3479.38
35.7
1.0
15.2
18.5
S&P 500
1426.2
*
1631.89
16.5
1.0
14.4
20.5
12433.5
12166.7
12134.91
-31.8
-0.3
-2.4
4.1
-46.1
-0.7
8.1
12.6
S&P/TSX Comp
Europe
UK
FTSE 100
5897.8
6421.7
6375.5
France
CAC
3641.1
3809.3
3753.9
-55.5
-1.5
3.1
18.5
Germany
XETRA DAX
7612.4
7994.3
7806.0
-188.3
-2.4
2.5
21.8
Italy
MIB
16273.4
15808.2
15533.7
-274.5
-1.7
-4.5
13.1
Spain
Ibex 35
8167.5
8002.0
7868.4
-133.6
-1.7
-3.7
16.8
Sweden
OMX Stockholm 30
1104.7
1175.2
1167.5
-7.7
-0.7
5.7
14.0
Switzerland
SMI
6822.4
7831.6
7782.0
-49.6
-0.6
14.1
25.8
Asia/Pacific
Australia
All Ordinaries
4664.6
4781.0
4826.4
45.4
0.9
3.5
14.9
Japan
Nikkei 225
10395.2
14018.9
14310.0
291.0
2.1
37.7
58.6
Hong Kong
Hang Seng
22656.9
20468.7
20854.7
386.0
1.9
-8.0
5.3
S. Korea
Kospi
1997.1
1839.1
1833.3
-5.8
-0.3
-8.2
-1.3
Singapore
STI
3167.1
3147.1
3169.7
22.6
0.7
0.1
6.4
China
Shanghai Comp
2269.1
2006.1
2007.2
1.1
0.1
-11.5
-9.7
19426.7
19410.8
19495.8
85.0
0.4
0.4
11.3
India
Sensex 30
*Market closed a year ago
Data Source — Haver Analytics
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
US markets
Stocks rallied in the US after the release of the June employment situation report. The report
offset concerns about Egypt and Portugal. The Dow Jones industrials, S&P and Nasdaq gained 1.0
% each on Friday. Trading was choppy and light. For the holiday shortened week, they were up
1.5 %, 1.6 % and 2.2 % respectively. June employment increased 195,000 — the consensus was
expecting an increase of 161,000. April and May employment gains were revised upward by
70,000. Despite the stronger than expected job growth, the unemployment rate was unchanged
at 7.6 %. While the strong employment growth generated some optimism about the economic
outlook, the report did not seem to raise concerns about the Federal Reserve's stimulus program
because the unemployment rate was unchanged.
Buying interest was also generated in reaction to the remarks European Central Bank President
Mario Draghi delivered while the US markets were closed for Independence Day on Thursday. In
a press conference after the ECB announced its decision to leave interest rates unchanged,
Draghi said rates are likely to remain low for an extended period of time. Banking stocks
including Key, Zions Bancorp and SunTrust Banks advanced as did Bank of America and
Citigroup. Brokerage stocks were also higher. Trucking, oil service and biotechnology stocks also
gained, moving to the upside along with most of the other major sectors. However, gold stocks
moved sharply lower on the day. Annaly Capital Management, a real estate investment trust that
invests in mortgage backed securities, slid as the yield on the benchmark 10-year US Treasury
note jumped above 2.7 %.
Gold at the afternoon London fixing dropped US$39.00 to US$1,212.75. Copper futures dropped
3.3% to US$3.07. WTI spot crude was up US$2.35 to US$103.59. Dated Brent spot crude was up
US$2.19 to US$107.73. The US dollar was up against all of its major counterparts including the
euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up
0.8%. The yield on US Treasury 30 year bond was up 22 basis points to 3.71% while the yield on
the 10 year note jumped 24 basis points to 2.74%.
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.
European markets
Stocks retreated Friday but advanced on the week. Friday’s declines cut into gains driven by
signs major European central banks will keep their monetary policies accommodative. The indices
extended losses after US employment data reinforced expectations the Federal Reserve will move
in coming months to scale back its stimulus. The FTSE declined 0.7 % and was 2.6 % higher on
the week. The CAC dropped 1.5 % and edged up 0.4 % for the week while the SMI was down 0.6
% but was up 1.3 %. However, the DAX was down 2.4 % on the day thanks to a surprise drop in
May manufacturing orders. The index shed 1.9 % for the week.
Some investors thought European markets overdid the rally on Thursday that came after
European Central Bank President Mario Draghi said in a news conference that interest rates in
the region will remain low or could go even lower for an extended period. Before Draghi, the
Bank of England with new Governor Mark Carney triggered the biggest increase for UK stocks
since the autumn of 2011 after a statement from the BoE — in itself an unusual move — also
eased fears stimulus will be taken away soon. Portugal's Prime Minister Pedro Passos Coelho
appears to have kept the coalition government from collapsing, though many say the
government remains in a fragile state after four days of political upheaval sparked by the
departure of two ministers
Sky Deutschland jumped on a broker upgrade as did Seadrill. However, mining stocks including
BHP Billiton, Glencore Xstrata, Rio Tinto, Anglo American and Antofagasta weighed on the
market. Bayer and BASF also retreated. Whitbread dropped on a broker downgrade. Standard
Chartered and Royal Bank of Scotland Group were down. British Land was up after saying it
bought buildings and development sites near London’s Paddington Station from Aviva and other
investors. The company said it will own about 1 million square of Paddington Central’s 1.6 million
square feet space once the development is completed.
FIL Limited and its subsidiaries are commonly referred to as Fidelity or Fidelity Worldwide
Investment. Fidelity only gives information about its products and services. Any person
considering an investment should seek independent advice on the suitability or otherwise of
the particular investment. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide
Investment logo and the F symbol are trademarks of FIL Limited.