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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.