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Feb 22, 2017

Asian, European & U.S. Stock Markets Closing Reports on February 22, 2017

Kenan Machado
Asia-Pacific stocks rose broadly Wednesday, ahead of the release of minutes from this month’s U.S. Federal Reserve meeting.
But gains on some of the region’s key benchmarks were muted.
“Markets [in Asia] are in a cautious phase,” said Ric Spooner, chief market analyst at broker CMC Markets.
While most investors aren’t anticipating a rate rise from next month’s Fed meeting, future increases are widely expected to exceed the quarter-points of 2015 and 2016.
“The rhetoric on inflation has turned among Fed officials, with many now expecting the firming to continue,” said Sue Trinh, head of Asia forex strategy at RBC Capital Markets. The Fed’s last statement flagged the turn, she added, and a similar vibe is expected from this month’s.
Hong Kong’s Hang Seng Index HSI, +0.99%  was a leader, up 0.99%. The index was hit Tuesday by an afternoon selloff stoked by a downbeat fourth-quarter report from HSBC 0005, -0.15%  . The bank’s shares on Tuesday fell 5% and were off a further 0.2% Wednesday.
The day’s laggard by far was New Zealand, where earnings news helped push the NZX-50 NZ50GR, +0.29%   down 0.8%. “Stock-specific action seems to have dragged down the market,” said Greg McKenna, chief market strategist at broker AxiTrader.
Construction heavyweight Fletchers FBU, +1.86%   dropped 5.2% and Sky Network Television SKT, -14.48%   slid 2.8%.
North Korea embassy official involved in Kim killing, Malaysia says
Malaysian police said that they had identified two more suspects in the killing of Kim Jong Nam and that the two women who claimed they thought they were shooting a prank video were trained for the crime. Photo: Kyodo/AP
Elsewhere, Australia’s ASX 200 XJO, -0.49%   and South Korea’s Kospi SEU, -0.07%   each rose 0.2%, while the Japan’s Nikkei NIK, -0.18%   eased by less than 2 points as the yen USDJPY, +0.05%  gained modestly against the dollar. Its weakness Tuesday had helped lift Japanese shares. The dollar was recently around ¥113.15, versus ¥113.70 earlier Wednesday.
Lower yields on Japanese government bonds weighed on financial stocks, which logged modest declines. But steelmakers continued to rally amid hopes that metals prices will continue rising. JFE 5411, -1.59%   rose 3% and Nippon Steel & Sumitomo Metal 5401, -0.30%   added 1.8%, both to 18-month highs.
In the oil patch, futures extended overnight gains in Asian trading. Tuesday’s advance during European trading came after leaders of the Organization of the Petroleum Exporting Countries affirmed that their production-cut deal is being implemented.
April Brent oil futures, after rising nearly 1% Tuesday, are up nearly 0.5% more to $57 a barrel, just shy of the highest close this year.


Carla Mozee
European stocks finished flat on Wednesday, backing off their highest levels in more than a year as investors readied for potential signs that borrowing costs are about to rise in the world’s largest economy, the U.S.
The Stoxx Europe 600 SXXP, -0.01%  finished unchanged at 373.38, frustrating those looking for a fourth-straight win but still hovering at best levels since late 2015. The regional benchmark on Tuesday rose 0.6% to 373.40, the best close since Dec. 2, 2015, helped by a better-than-expected preliminary reading on manufacturing activity in the eurozone.
On Wednesday, Germany’s closely watched Ifo business climate index came in above expectations, with a reading of 111.0 in February, compared with a 109.5 estimate, according to Dow Jones Newswires.
Germany’s DAX 30 DAX, +0.26%  finished the trading session up 0.3% to 11,998.59 and earlier crossed above the 12,000 mark for the first time since April 2015. The export-oriented index was aided by a decline in the euro EURUSD, -0.1042%  against the U.S. dollar, which hit an intraday low of $1.0496.
Movers: Thyssenkrupp AG shares TKA, +4.62%  surged 4.6% after the German industrials heavyweight said it’s selling its Brazilian steel plant to Ternium SA TX, +10.13%   in a deal valued at☻€1.5 billion.
On the losing side, shares of Bayer AG BAYN, -0.76%  fell 0.9%. The chemicals conglomerate Bayer AG said fourth-quarter net profit dropped 26% to €453 million from a year earlier, hurt by one-off expenses.
London-based lender Lloyds LLOY, +4.39% LYG, +4.42% rose 4.3%. The bank’s pretax profit more than doubled to £4.2 billion ($5.2 billion), as it reduced the amount set aside to cover compensation for customers sold payment-protection insurance (PPI) they didn’t need. It has also carried out a program of cost cuts, including the closure of branches.
Lloyds said it will pay a total ordinary dividend of 2.55 pence a share, up 13% on a year ago. It will also issue a special dividend of 5 pence per share.
UBM PLC UBM, +4.47%  climbed 4.4% as the business exhibitions company projected underlying revenue growth in 2017.
Indexes: The FTSE 100 UKX, +0.38% finished the trading day up 0.3% at 7,302.25 and France’s CAC 40 PX1, +0.15%   closed up 0.1% at 4,895.88.
Euro and French politics: The shared currency EURUSD, -0.1042%  eventually pared its loss against the dollar, trading at $1.0538, after French centrist politician Francois Bayrou gave up his run for president and threw his support behind centrist candidate Emmanuel Macron. Macron is believed to have a good chance of beating far-right candidate Marine Le Pen if a second round of voting were needed in May. Le Pen has called for France to leave the European Union and the euro.
“Political risk from the French presidential election is becoming a key driver of increasing euro weakness in recent days. With a deterioration in polling numbers for candidates such as Francois Fillon and Emanuel Macron, the prospects of Marine Le Pen improve,” said Richard Perry, market analyst at Hantec Markets, in a note. The first round of voting is set for April 23.
“Whilst the market is still not anticipating a victory for Le Pen in the second round, the probability is apparently now above 40% and there still needs to be an adjustment to factor in the increased risk,” Perry said.
French bonds TMBMKFR-10Y, +0.00%   rose late Wednesday, with the yield on the 10-year bond falling 6 basis points to 1.02%
See: Euro may retest $1.03 as Le Pen rises in the polls

Wall Street

Sue Chang, Anora Mahmudova

AFP/Getty Images
Minutes from the Federal Reserve meeting indicated more willingness among central bank officials to raise interest rates if the economy continues to strengthen.
The Dow on Wednesday eked out a slight gain to log its best record-setting streak in three decades, but the broader equity benchmarks struggled as Federal Reserve minutes implied that the central bank is comfortable with raising interest rates “fairly soon.”
The Dow Jones Industrial Average DJIA, +0.16%  added 32.60 points, or 0.2%, to close at 20,775.60—its longest run of record closes since 1987, according to the Dow Jones data.
The S&P 500 index SPX, -0.11%  declined 2.56 points, or 0.1%, to finish at 2,362.82, dragged down by energy shares which fell 1.6% as oil prices CLJ7, +0.80%  tumbled.
The Nasdaq Composite Index COMP, -0.09%  shed 5.32 points to end at 5,860.63.
“A rate increase in March is most likely on the table even though the minutes don’t necessarily indicate that and it seems the Fed is prepping the market for it,” said Bob Pavlik, chief market strategist at Boston Private Wealth.
“Many” Federal Reserve officials indicated their support for raising rates if the economy continued to strengthen, according to the minutes of the Fed meeting earlier this month. But the transcript also showed a mood of uncertainty over President Donald Trump’s fiscal policy plans, which have been the biggest boost to stocks during the past few months.
The risks facing the U.S. economy are more in balance, allowing the Fed to gradually raise interest rates, said Gov. Jerome Powell to the Forecaster’s Club of New York.
Meanwhile, some analysts warned that the rally on Wall Street and overly complacent attitude among investors are creating a dangerous situation.
“Make no mistake, lowering taxes is truly pro-growth and will keep the strong undertone of growth moving ahead. This will, however, mean a tighter monetary policy. Although we recognize that rates are below normal, the fact is that when the tightening process begins, the ‘full speed ahead’ of climbing stocks will run into a brick wall,” said Peter Cardillo, chief market economist at First Standard Financial, in emailed notes.
Opinion: Market timing is out of favor—so is a stock-market top near?
Stock movers: Shares of Toll Brothers Inc. TOL, +6.06%  jumped 6.1% after posting a fall in profit and revenue, but rising contracts in five of its markets.
Dish Network Corp. DISH, -0.67% shares fell 0.7%, reversing gains that followed news that the company swung to a profit on an increase in subscribers.
Garmin Ltd. GRMN, +7.33%  earnings results in the latest quarters came in much better than expected, sending shares up 7.3%. The stock is up 32% over the past 12 months.
First Solar Inc. FSLR, -8.33%  shares dropped 8.4% as the solar-panel maker reported that it swung to a loss on restructuring charges.
Shares of Bristol-Myers Squibb Co. BMY, +1.04%  rose 1% after news late Tuesday that Carl Icahn has taken a stake in the New York drugmaker. Icahn, who owns a large stake, believes the company’s pipeline of drugs would make it an attractive takeover candidate, according to The Wall Street Journal.
Barron’s on why GM shares are zooming higher
Barron's Bounce: Two auto-related stocks are up sharply after recommendations in Barron's. Plus: A little-known biotech soars 21% after a mention in the magazine.
Other markets: Asian markets ADOW, -0.27%  mostly rose with the Hong Kong Hang Seng Index HSI, +0.99% up 1%. European stocks SXXP, -0.01% eased across the board.
The 10-year Treasury yield fell 1 basis point to 2.41%. The dollar gained against the euro EURUSD, -0.1136% but slipped against the yen. Gold prices GCJ7, +0.30%  settled lower.
--Barbara Kollmeyer contributed to this article.