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Asian Markets at Close Report

European Markets at Close Report

Feb 26, 2017

European & U.S. Stock Markets closing on February 24, 2016



marketwatch.com
 
Carla Mozee
 
Stocks in Europe dropped by the most in three weeks, finishing Friday’s session by stepping back from 14-month highs as investors questioned the prospects for U.S. tax policy changes under U.S. President Donald Trump.
The Stoxx Europe 600 SXXP, -0.76%  closed down by 0.8% at 370.01, the biggest decline since Jan. 30, FactSet data showed. The index lost as much as 1.4% intraday and only the telecom sector closed higher.
Among major national indexes, Germany’s DAX 30 DAX, -1.20%  slid 1.2% to end at 11,804.03.
The moves pushed the Stoxx 600 into the red for the week. It notched a decline of 0.1% after earlier this week hitting its strongest levels since December 2015.
“European equities are on the back foot into the weekend, continued profit-taking dragging indices from recent highs. This stems from more tempered optimism towards Trump tax changes,” with “pudding wanted for proof,” by investors, said Mike van Dulken, head of research at Accendo Markets, in a note.
Skepticism over quick passage of a tax-code overhaul backed by Trump has been growing. U.S. Treasury Secretary Steven Mnuchin said Thursday the administration wants a tax overhaul enacted by August, but analysts have said that goal looks ambitious given the complexities of working out reform with lawmakers.
Read: Doubts persist about Trump’s tax timing
Europe’s losses accelerated as the euro hit an intraday high of $1.0619 against the U.S. dollar. The euro EURUSD, +0.0663%  later traded at $1.0583, compared with $1.0590 late Thursday in New York.
“A weaker USD…hinders Europe via reciprocal GBP and EUR strength,” despite election risk for the euro stemming from France’s upcoming presidential election, said van Dulken.
This week, far-right French presidential candidate Marine Le Pen began widening her lead over her two main competitors. Many investors consider Le Pen a risk to the euro as she’s called for France to leave the shared currency and to exit from out of the European Union.
Van Dulken also noted the euro came under pressure after “less hawkish” minutes from the Federal Reserve’s most recent meeting, released this week.
Next week, the markets face potential risks from a speech by Federal Reserve Chairwoman Janet Yellen and Trump’s appearance at a joint session before Congress.
Movers: Vivendi SA VIV, -3.49%  shares dropped 3.9% following reports that Italian prosecutors have opened an investigation of Chairman Vincent Bollore over alleged market manipulation in the media company’s accumulation of a stake in Italian broadcaster Mediaset MS, -1.34% Mediaset shares ended 1.3% lower.
BASF shares BASF, -3.06% BASFY, -2.66%  fell 2.9% after the German chemicals heavyweight said it’s “cautiously optimistic for 2017”. The company posted a rise in fourth-quarter net profit of 689 million euros ($728.84 million), above expectations of €624 million.
Royal Bank of Scotland PLC RBS, -4.49% RBS, -5.59%  sank 4.5% after the 70% U.K.-owned lender said its annual net loss more than tripled to 6.96 billion pounds ($8.73 billion), after it put aside billions of pounds to cover conduct issues.
Saipem SpA SPM, -6.80%  dropped 6.8% after Italian oil-services contractor’s fourth-quarter adjusted profit of €26 million fell short of a Thomson Reuters consensus estimate of €57 million.
But shares of British Airways parent International Consolidated Airlines PLC IAG, +4.46% ICAGY, +4.34%  perked up 4.5% after the group posted a 29% rise in net profit and announced a €500 million share buyback ($529.7 million), in a sign of improving profitability.
Indexes: France’s CAC 40 PX1, -0.94%  lost 0.9% at 4,845.24. The U.K.’s FTSE 100 UKX, -0.38% declined 0.4% to 7,243.70 and Italy’s FTSE MIB I945, -1.18%  fell 1.2% to 18,596.66 at the close.
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Wall Street
 
Ryan Vlastelica
 
U.S. stocks staged a last-minute rally on Friday, with major indexes turning positive ahead of the closing bell and the Dow extended its record-setting streak as investors shrugged off concerns the rally was overdone.
Both the S&P 500 and the Nasdaq rose for a fifth straight week, while the Dow brought its string of weekly gains to three.
The Dow Jones Industrial Average DJIA, +0.05% rose 9.1 points, or less than 0.1%, to end at 20,819.84. The blue-chip average rose for an 11th straight day for the first time since 1992, as well as its 11th straight record closing high—the longest such streak since 1987. The Dow had traded in negative territory for essentially the entire session, only breaking into the green with seconds to spare.
“There was concern that the market was getting tired and that we were losing momentum, but there are still significant inflows, because now even the pessimists want a piece of the action. It’s momentum driven, not fundamentally driven,” said Lawrence Glazer, managing partner at Mayflower Advisors.
The S&P 500 SPX, +0.15%  rose 3.4 points, or 0.2%, to end at a record of 2,367.28. The Nasdaq Composite COMP, +0.17%  rose 9.8 points to end at 5,845.31, a rise 0.2%.
The day’s gains were broad, with nine of the 11 primary S&P 500 sectors ending higher. The only two that fell did so heavily, with financials down 0.8% and energy stocks down 0.9%. Both groups have been among the biggest postelection gainers.
Among the top drags on the Dow, Goldman Sachs Group Inc. GS, -1.53%  fell 1.5% while J.P. Morgan Chase & Co. JPM, -0.88%  fell 0.9%. The third- and fourth-largest decliners were Exxon Mobil XOM, -0.86% XOM, -0.86% XOM, -0.86% and Chevron Corp CVX, -0.81%  which lost 0.8% on the day.
“A lot of the inflows are just blindly into passive vehicles, which pushes the major averages higher. But there is weakness in the Trump-leadership stocks,” Glazer said. “Financials are notably weak, Goldman is notably weak. That’s due to both profit-taking and high valuations.”
For the holiday-shortened week, major indexes posted gains. The Dow rose 1% on the week while the S&P added 0.7% and the Nasdaq rose 0.1%. That marked the fifth straight weekly advance for the S&P and the Nasdaq, and the third straight for the Dow.
The Dow is up nearly 9.1% over the past three months, with investors attributing gains largely to Trump’s November election victory. Investors are betting that Trump’s policies on taxes and regulation will accelerate economic growth and boost corporate earnings, but concerns are growing over the administration’s ability to deliver on the tax plans.
Markets saw little impact from a speech Trump gave at the Conservative Political Action Conference, where he said that the U.S. tax code would be made more fair.
Investors are also looking ahead to an address that Trump is scheduled to make to Congress on Feb. 28, where he is expected to provide details on his highly anticipated tax reform proposals.
Read: Here’s how analysts say you should trade Trump’s speech to Congress
Separately, Federal Reserve Chairwoman Janet Yellen and Fed Vice Chairman Stanley Fischer are slated to speak on Friday next week. Investors will scour the comments for any hints as to when the central bank will raise interest rates.
Read: Mnuchin in no rush to label China a currency manipulator
And see: Doubts persist about tax timing as Trump meets with CEOs
Read: Why oil experts think OPEC’s U.S. headache won’t go away this year
Crude oil CLJ7, +0.09%  fell but held on to a weekly gain after data showed a further rise in the number of U.S. rigs drilling for crude. The U.S. benchmark on Thursday posted its highest close in more than a year and a half.
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In the latest economic data, consumer sentiment fell from a 13-year high in February, while new-home sales posted a strong rebound in January.
Stock movers: Shares of Hewlett Packard Enterprise Co. HPE, -6.89%  slumped 6.9% after the IT company late Thursday reported lower sales than expected and cut its earnings projections for the fiscal year.
Shares of RH RH, +24.41% the company formerly known as Restoration Hardware, jumped 24% a day after it forecast higher-than-expected quarterly results.
Nordstrom Inc. JWN, +5.74%  rallied 5.7% after the department store chain late Thursday reported earnings that beat forecasts. The retailer has been in focus following a recent decision by the company to drop Ivanka Trump’s fashion label, citing poor sales. President Trump had tweeted that the company was treating his daughter “so unfairly,” although the tweet didn’t have a lasting negative impact on the stock.
Foot Locker Inc. FL, +9.38%  gained 9.4% after the shoe retailer reported profit that beat forecasts.
J.C. Penney Co. Inc. JCP, -5.83%  tumbled 5.8%, also after releasing results.
Other markets: Asian stock markets closed mostly lower, with Europe SXXP, -0.76%  following the same trend in the early going.
Metals rose across the board, with silver SIH7, +0.11%  on track for a ninth straight weeks of gains.
The ICE Dollar index DXY, -0.14%  rose 0.1%.