Daily Agenda: Global Equity Markets May Have Hit Bottom

European equities extend a modest rally; Treasury data reveals more selling of U.S. debt by China; Fitch cuts Anglo American to junk status.


Michael Nagle

A rally in global equity markets appears poised to extend into today in advance of the release of minutes of the most recent of the Federal Reserve’s Federal Open Market Committee meeting. Many market strategists now anticipate a discussion of problems abroad that may stay the Fed’s hand in raising rates during upcoming months. The Stoxx 600 index rose by nearly 2 percent in early trading despite a mixed session for Asian equities.

ABN Amro earnings disappoint. ABN AMRO Group today reported financial results for the final quarter of 2015 with a decline in earnings of 32 percent versus the same period in the prior year. The largest Dutch bank reported returns well below consensus analyst estimates less than a year after a public listing by the government of the Netherlands, which was forced to acquire the firm during the credit crisis.

China sells U.S. Treasuries. Data released by the Federal Reserve on Tuesday revealed an $18.4 billion reduction in Chinese holdings of U.S. government debt securities for December. As the People’s Bank of China has depleted currency reserves to support the yuan in semifree-floating venues, China has dropped to second among the top foreign holders of U.S. debt.

Fitch cuts Anglo American to junk. In the latest bad news for Anglo American, the London–based mining giant’s credit rating was lowered to a noninvestment grade rating by Fitch today. The move follows a similar pronouncement by ratings agency Moody’s on Monday as the firm struggles with low demand for metals.

U.S. economic data show mixed signals. Department of Labor producer price inflation data released today indicated a stronger-than-anticipated increase in costs at the factory gate. The food segment was largely behind the 0.1 percent upswing in the headline price index. Meanwhile, U.S. housing start data fell short of consensus economist estimates at an annualized pace of 1.099 million.