MacDonalds The Only Bright Spot As Traders Shift To Risk Aversion

The only bright spot in stocks and earnings this week has been a surprise by MacDonald’s. Famous for generations of its Big Mac it now has a close competitor as sales of the MacBreakfast meals have soared with the new all day breakfast menu giving the home of the yellow arches higher sales and record profits.  McDonald’s reported fourth-quarter revenues and earnings that easily topped analysts’ forecasts, led by a 5.7% jump in same-store sales in the United States.

CEO Steve Easterbrook, who took over at McDonald’s nearly a year ago, said the company’s introduction of its all day breakfast menu in October was the main reason that U.S. sales did so well.

Many McDonald’s fans had been calling on the company for years to make Egg McMuffins, hash browns and other early morning treats available at lunch or dinner time. The menu change clearly has paid off for Mickey D’s. Easterbrook also said that mild weather in the quarter helped.

Shares of McDonald’s were up 1% and hit a new all-time high. McDonald’s was one of the top stocks in the Dow last year and has held up well so far in what’s been a volatile 2016.

McDonald’s has outperformed rivals such as Burger King, Wendy’s and KFC/Taco Bell parent Yum Brands. It also has done better than some popular fast casual restaurants — chains like Panera and Chipotle.

Otherwise it was a gloomy day for Wall Street. Stocks in the US fell sharply at the end of trade after notching their first week of gains this year, as oil prices resumed their slide. The Dow Jones declined 208 points, or 1.3 per cent, to 15,885. The S&P 500 fell 1.6 per cent and the Nasdaq Composite slipped 1.6 per cent.

Crude oil tumbled 5.8 per cent to $29.63 a barrel.

Stocks around the world have stumbled into the new year. While several indexes rebounded last week, many investors point out that the factors that have dragged on stocks this year still remain in place. Oil prices remain near multi-year lows, while concerns about slowing growth in China, pressure on emerging markets and the Federal Reserve’s plan for raising interest rates have also fueled investor jitters.

The euro rose for the first time in several days trading at 1.0850 as the revival of risk aversion renewed bids for low-yielding, haven currencies. The shared currency climbed with the yen and the Swiss franc as investors unwound overseas bets funded in those currencies and channeled cash into government bonds. The yen continued to rally in Asia gaining 20 points on the US dollar to trade at 118.09 as traders prepare for several central bank meeting this week including the Bank of Japan, the FOMC and the Bank of New Zealand with speculation mounting policy makers will have to address the volatile start to 2016 trading and its impact on the world economy. The prospect of another interest-rate cut from the Reserve Bank of New Zealand before the end of June has weighed on the local dollar, which dropped 0.7 percent on Monday. The kiwi is sitting at 0.6451 while the Aussie traded at 0.6949 as markets are closed for a local holiday.

Japan’s currency has gained versus all of its 16 major counterparts this year as a China-led stock selloff and the tumble in oil prices bolstered the currency’s appeal. Hedge funds and other large speculators raised net bullish yen positions to the highest level in almost four years last week. The BOJ is scheduled to make a statement on monetary policy Jan. 29.

The Loonie and Mexico’s peso declined with the ruble as currencies of commodity-producing nations fell with crude. Australia’s dollar weakened 0.7 percent.