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Asian Markets at Close Report

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Mar 14, 2017

Asian, European & U.S. Stock Markets Closing Reports on March 14, 2017.


Aza Wee Sile
Asian equities wavered on Tuesday, ahead of the Federal Reserve's two-day monetary policy meeting and as European political uncertainty weighs on sentiment.
Market expectation for a U.S. rate hike is at 93.0 percent, according to CME Group's FedWatch Tool at 2:55 pm HK/SIN.
Ahead, traders will be cautious as they eye Federal Open Market Committee's upcoming decision and look for clues on how quickly the U.S. central bank is planning to tighten monetary policy.
"Solid U.S. employment growth of 235,000 in February, a fall in unemployment and a slight rise in wages growth keep the Fed on track to raise interest rates again this coming Wednesday," said Shane Oliver, head of investment strategy and chief economist at AMP Capital, in a weekly note.
"However, with U.S. monetary policy a long way from being tight, future rate hikes likely to be gradual and U.S. economic data likely to be solid we don't see it derailing the bull market in shares," Oliver said.
But aside from the Fed, European political uncertainty could also affect Asian equities by weighing on sentiment, Margaret Yang, market analyst at CMC Market said in a Tuesday note.
She cited the Dutch elections on Wednesday as a risk, as "Netherland's far-right Party for Freedom could emerge as one of the largest parties."
In addition, the possibility of U.K. Prime Minister Theresa May triggering Article 50 to formally begin the Brexit process and Scotland holding another independence referendum could also weigh on Asian markets and currencies.
The euro was trading at $1.0644 at 2:55 p.m. HK/SIN, weaker compared to levels around $1.05 seen last week, while the pound was also weaker against the greenback, at $1.2165.
Over in Japan, the Nikkei 225 finished down 0.12 percent or 24.3 points at 19,609.5.
Toshiba clawed back from earlier losses of more than 8 percent, to trade up 0.47 percent at 215.9 yen per stock.
The embattled company said it would speed up looking at whether it should sell a majority of its overseas nuclear power business, and that it would reduce the number of directors. Toshiba also said it would strengthen global management supervision and increase corporate involvement in risk monitoring at group companies.
Earlier, the Japanese conglomerate announced it would postpone earnings filings again due to the need for more time with auditors to review its U.S. nuclear subsidiary probe.
Machinery manufacturer Tsugami rose 5.16 percent to 774 yen a share, earlier hitting a 10-month high and rising 6 percent, after it announced that it would buy back up to 2 million of its shares, or 3.32 percent of total shares.
The Australian benchmark ASX 200 closed up 0.03 percent or 1.76 points at 5,759.1.
Earlier, a National Australia Bank's monthly business survey of more than 400 firms showed that the index of business conditions fell 7 points to +9 in February. All sectors except retail reported improved conditions last month.
South Korea's Kospi closed up 0.76 percent or 16.2 points at 2,133.78, even as the country remains engulfed in political uncertainty after the impeachment of President Park Geun-hye last Friday.
Hyundai Engineering signed a deal with an Iranian investment fund on Sunday for a 3.2 billion euro ($3.2 billion) petrochemical project, which is awaiting financing by Korean banks, Reuters reported. Shares of Hyundai Engineering were down 0.41 percent at 48,150 won per stock.
On the mainland, the Shanghai composite closed up 0.05 percent or 1.6 points at 3,238.62 while the Shenzhen composite fell 0.14 percent or 2.78 points at 2,027.1.
China's January to February economic data painted a rosier picture of the world's second largest economy. Industrial output grew by 6.3 percent in the first two months of the year, from the same period a year before, fixed asset investment grew 8.9 percent on-year. Private investment rose by 6.7 percent from 3.2 percent in the same period last year.
But retail sales growth missed expectations, up just 9.5 percent in January and February on-year, lower than analysts' median forecast of a 10.5 percent increase.
Goldman Sachs upgraded China's stocks to "overweight" on Monday, saying that the increasing producer price index will translate to better corporate revenues and easing credit stress in the short-term. The investment bank also added that Chinese banks had brighter credit outlook and loan pricing.
Over in Hong Kong, the Hang Seng index was down 0.15 percent by 3:00 p.m. HK/SIN.
In the broader currency market, the greenback climbed higher, at 101.5 against a basket of currencies, above levels around 101.2 seen yesterday. At 3:04 pm HK/SIN, the yen weakened against the dollar to 115.07, while the Australian dollar was at $0.7551.
Oil prices began to reverse losses on Tuesday Asian time. Brent crude futures added 0.12 percent to $51.29 a barrel, while U.S. crude was up just 0.04 percent to $48.42.
Stateside, the Dow Jones industrial average fell 0.1 percent to close at 20,881.48. The S&P 500 index inched up 0.04 percent to close at 2,373.47 and the Nasdaq added 0.24 percent to finish at 5,875.78.


Silvia Amaro, Sam Meredith
European markets closed lower on Tuesday as investors digested political events across the continent and awaited a probable interest rate hike from the U.S. Federal Reserve.


FTSE FTSE 7357.85
-9.23 -0.13% 868568539
DAX DAX 11988.79
-1.24 -0.01% 108404736
CAC CAC 4974.26
-25.34 -0.51% 94631732
IBEX 35 IBEX 35 Idx 9905.10
-90.80 -0.91% 234655701
The pan-European Stoxx 600 ended more than 0.3 percent lower with most sectors and major bourses trading in negative territory.
Swiss drugmaker Galenica announced it was expecting the flotation of one of its units to be concluded in the second quarter of 2017. The company also announced a 19 percent fall in its 2016 profits and as a result, the stock was near the bottom of the European benchmark, down by over 5.1 percent.
The British retailer Marks and Spencer also moved lower on Tuesday following reports that it is pulling out of the Chinese high street this month. Its shares dropped 2.1 percent.
Energy firm RWE closed at the top of the European benchmark, up by 6.4 percent, after reporting earnings amid talks of a potential merger of one of its divisions. Paris-based energy firm Engie was said to be considering a stake in RWE's subsidiary Innogy, according to a Bloomberg report. However, French outlet BFM TV cited an unnamed source on Tuesday who had declared the gas and power company had no interest in making any such bid. Engie shares closed over 1.3 percent lower.
Shares of the online supermarket Ocado pared gains from earlier in the session to close 0.7 percent lower, on comments from its chief financial officer that he is confident the company will secure international deals.
The British insurer Prudential rose 3 percent after posting an operating profit of £4.3 billion ($5.16 billion), beating expectations, thanks to growth in its Asian business.
Meanwhile, in the U.S., the Dow Jones industrial average and broader S&P 500 both continued to move lower as investors eyed the first day of the Federal Open Market Committee's two-day meeting.

Brexit focus

However, the market's main focus is likely to be Brexit. Prime Minister Theresa May won the right to trigger negotiations with the EU on Monday evening. However, with Scotland asking for a new independence referendum before the U.K. leaves the EU in 2019, several media reports suggest the prime minister will wait until the end of March to formally begin negotiations. Sterling reached an eight-week low on Tuesday morning.
Elsewhere, in the Netherlands, Prime Minister Mark Rutte told CNBC on Tuesday that Turkey's President Tayyip Erdogan was "totally off the mark" when he recently compared the Dutch to Nazis and had behaved in an "increasingly hysterical" manner.
The Dutch prime minister urged voters they shouldn't succumb to the "domino effect" of populism after the Brexit vote and the election of Donald Trump. Polls to elect a new government open Wednesday.
In terms of data, the latest euro zone industrial production figures showed a weaker than expected output. Production rose 0.9 percent in January from its previous month, but economists were expecting a 1.4 percent increase.

Is the Fed definitely going to hike rates at this meeting?

Total Votes:
Not a Scientific Survey. Results may not total 100% due to rounding.


Evelyn Cheng
U.S. stocks closed slightly lower Tuesday, ahead of a likely interest rate hike, as energy stocks fell.
"The continued drop in oil has got stocks rolling over again," said Peter Coleman, head trader at Convergex. "A little out of stocks into bonds."
U.S. crude oil prices briefly fell 2 percent to hit a fresh three-month low after OPEC said oil inventories had continued to rise and Saudi Arabia surprisingly self-reported a jump in production, despite the start of a global deal to cut supply.
Energy was the worst performing S&P 500 sector, and the Energy SPDR ETF (XLE) fell more than 1 percent to hit its lowest since Nov. 7. Chevron had the greatest negative impact on the Dow Jones industrial average.
"Oil begs the question, is this a canary in a coal mine saying global growth isn't as robust as we thought?" said Mike Baele, managing director at U.S. Bank Private Client Reserve.
Dow Jones industrial average year-to-date performance

The Federal Open Market Committee kicked off its two-day meeting Tuesday and is expected to announce a rate increase at the meeting's Wednesday afternoon conclusion.
"What they have following that [rate hike], I think, is what's making people nervous," said JJ Kinahan, chief market strategist at TD Ameritrade. "What will be their new targets?"
Traders mostly bought Treasurys, sending the benchmark 10-year Treasury yield lower near 2.60 percent, after closing Monday at 2.607 percent, its highest since Sept. 2014. The rate-sensitive 2-year yield briefly edged higher to 1.38 percent.
The U.S. dollar index traded about 0.4 percent higher, with the euro around $1.061 and the yen near 114.7 yen against the greenback.
Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.
"It's really monetary policy and the timing and complexity of U.S. legislation" that are in focus for markets this week, said Peter Boockvar, chief market analyst at The Lindsey Group. He added that trade volume would likely be light given a snowstorm in the greater New York area.
As of the close, U.S. composite trade volume was just over 6.2 billion shares, just below the 50-day average of 6.8 billion shares.
The Dow transports fell nearly 1.4 percent in their worst day since March 2. United Continental and other airline stocks led the index lower.
Late Monday, the Congressional Budget Office said it estimated 14 million more people would become uninsured next year if the American Health Care Act is signed into law. The report said by the year 2026, a total of 24 million more Americans would be uninsured then they would be under Obamacare.
"The CBO review of the Obamacare repeal and replace [is] just adding to uncertainty about the timing of any legislation," Boockvar said. "If that gets delayed, then tax reform gets delayed."
The S&P 500 has climbed more than 10 percent since the election, helped by a 23 percent rise in the financial stocks. Many analysts attribute most of those gains to expectations of increased economic growth from the Trump administration's promises for tax cuts, deregulation and infrastructure spending.
However, U.S. Bank's Baele said that of stocks' rise, "a good chunk of this is because the numbers have been good, and if the administration has a setback I don't think we really give all the numbers back."
In economic news, the Producer Price Index (PPI) rose 0.3 percent last month. In the 12 months through February, the PPI jumped 2.2 percent, the biggest advance since March 2012 and ahead of the 2.0 percent gain forecast in the Reuters poll.
Earlier on Tuesday, the National Federation of Independent Business (NFIB) said its small business optimism index fell 0.6 points to 105.3 last month.


DJIA Dow Industrials 20837.37
-44.11 -0.21%
S&P 500 S&P 500 Index 2365.45
-8.02 -0.34%
NASDAQ NASDAQ Composite 5856.82
-18.97 -0.32%
Overseas, the STOXX Europe 600 declined 0.3 percent. The Shanghai composite eked out a roughly 2-point gain, while the Nikkei 225 fell 0.12 percent.
The Dow Jones industrial average closed 44.11 points lower, or 0.21 percent, at 20,837.37. Chevron had the greatest negative impact, while Walt Disney and Wal-Mart had the greatest positive impact.
The S&P 500 closed down 8.02 points, or 0.34 percent, at 2,365.45, with energy leading 10 sectors lower and consumer discretionary the only gainer.
The Nasdaq composite ended 18.97 points lower, or 0.32 percent, at 5,856.82.
The CBOE Volatility Index (.VIX), considered the best gauge of fear in the market, climbed above 12.
About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 747 million and a composite volume of 3.1 billion in the close.
U.S. crude oil futures for April delivery settled 68 cents lower at $47.72 a barrel.
Gold futures for April delivery settled 50 cents lower at $1,202.60 an ounce.
On tap this week:
Earnings: Oracle, Guess, Jabil Circuits
8:30 a.m. Retail sales
8:30 a.m. CPI
8:30 a.m. Empire state survey
10:00 a.m. Business inventories
10:00 a.m. NAHB survey
2:00 p.m. FOMC statement, economic projections
2:30 p.m. Fed Chair Janet Yellen briefing
Earnings: Adobe Systems, Dollar General, JA Solar, Vivant Solar
8:30 a.m. Jobless claims
8:30 a.m. Housing starts
8:30 a.m. Building permits
8:30 a.m. Philadelphia Fed survey
10:00 a.m. JOLTS
Earnings: Tiffany
9:15 a.m. Industrial production
9:15 a.m. Capacity utilization
10:00 a.m. Consumer sentiment
*Calendar subject to change.
— CNBC's Dan Mangan and Reuters contributed to this report.