Global Markets on Hold Ahead of Rate Decisions in the U.S. and Europe

Nichole Harper
02 Dec, 2015
New York City

Global markets lacked momentum and traders in Europe looked ahead to the policy decision of the central bank tomorrow. In the U.S., investors looked ahead to review speech from Fed Chair today and testimony tomorrow.

[R][11:45 AM New York City, New York – Global markets lacked momentum and traders in Europe looked ahead to the policy decision of the central bank tomorrow. In the U.S., investors looked ahead to review speech from Fed Chair today and testimony tomorrow.[/R]

Global market indexes were little changed and ECB policymakers are scheduled to meet later this week and U.S. Fed Chair Janet Yellen is scheduled to speak later today and testify in front of lawmakers.

Nonfarm business sector labor productivity rose 2.2% annual rate during the third-quarter from a year ago period. Output grew 1.8% and hours worked fell 0.3% in the quarter.

From year ago period productivity grew 0.6% and output and hours worked increased 2.5% and 1.9% respectively, the Department of Labor said.

Also, yesterday a private survey showed that the U.S. private sector added accelerated net new hires in November to 217,000 from 196,000 in October. The U.S. government agency is set to release its monthly payroll data on Friday.

On Wall Street, Tollbooth Strategy Index edged up 2.68 to 11,074.45.

S&P 500 index slid 4.86 or 0.2% to 2,097.87 and the Nasdaq Composite Index rose 9.40 or 0.2% to 5,165.47.

Crude oil in New York fell 56 cents to $41.29 a barrel and gold declined $12.59 to $1,056.70 an ounce.

U.S. Movers

Brown-Forman Corporation ((BF.A)) fell 19 cents to $114.18 after the alcoholic beverages maker said revenues in the second-quarter ending in October declined 4% from a year ago to $1.1 billion.

Net income in the quarter slipped 3% to $200 million compared to $208 billion and diluted earnings per share were flat at 97 cents from the same quarter last year.

European Markets

European stock markets changed direction several times in anticipation of the policy meeting of the European Central Bank on Thursday.

While recent economic data support additional stimulus measures from the ECB, there are concerns that expectations of additional steps may not produce intended results.

Annual inflation in the euro area remained stable at 0.1% in November, according to preliminary readings of Eurostat. The inflation number is below forecasts of 0.2% to 0.3% and further boosts expectations that ECB will take action to raise inflation.

Core inflation fell to 0.9% from 1.1% in October, also below forecasts.

Industrial producer price index in October fell 0.3% in the euro zone and 0.2% in the wider region of EU28.

In London trading, FTSE 100 index increased 36.90 or 0.58% to 6,432.55 and in Frankfurt the DAX index fell 18.42 or 0.16% to 11,242.82.

In Paris, CAC 40 index gained 19.43 or 0.4% to 4,933.96.

Sage Group Plc slipped 1.6% to 567 pence despite a strong earnings report as investors were taking profits after the recent stock rally.

The U.K.-based enterprise software maker reported revenues in the year ending in September jumped 6% from a year ago to £1.40 billion.

Net profit in the period increased 2.9% from a year ago to £194.3 million compared to £188.9 million and diluted earnings per share rose to 18 pence from 17.24 pence.

Vodafone Group Plc gained 0.3% to 222.70 pence after the U.K.-based communication services provider and Swisscom agreed to extend their strategic partnership agreement to fiscal 2019.

Asian Markets

The Nikkei average in Tokyo edged down in a choppy trading session despite a merger between two large petrochemical companies.

Although domestic economic news signaled improving economic fundamentals, investors remained defensive on the downside risk of a slowdown in China.

Inflation is improving steadily and the central bank is on track with its target of 2% inflation, but it is prepared to act quickly if a Chinese economic slowdown harms the trend, said Bank of Japan Deputy Gov. Kikuo Iwata.

The monetary base surged 32.5% to 343.72 trillion yen in November, compared to the previous year month and the base was unchanged from October, the Bank of Japan said in a separate report.

Current account balance jumped 47.1%, including a 46.2% rise in reserve.

JX Holdings and TonenGeneral are in talks for a merger, while a state-backed fund plans to acquire a majority stake in Sharp for an estimated value of 200 billion yen.

The Nikkei 225 Stock Average slipped 74.27 or 0.4% to 19,938.13 and the broader Topix index edged up 0.31 to 1,602.26.

The yen weakened to 123.07 against a dollar.

JX Holdings, Inc edged down 2% to 503.30 on reports that the petrochemical company is in merger talks with TonenGeneral Sekiyu KK. The deal is expected to be finalized by 2017.

The new entity will have annual sales of 14 trillion yen and will control more than half of all gasoline sales in the country.

Both companies confirmed they are in merger talks but said they have not made a formal decision yet.

The Japanese government is encouraging consolidation, slimming, and cost-cutting in the refining sector.

Stocks on Dalal Street in Mumbai trading struggled and investors reacted to local corporate news as Chennai remained submerged for the second day after heavy rains closed down the fourth largest city in India.

The aviation sector stocks traded higher after jet fuel prices were cut on Tuesday by 1.2%.

Jet Airways India Ltd surged 13% and SpiceJet Ltd soared 9%.

The metal companies are trading higher after that the central government may soon announce steps to curb steel imports, TV18 reported.

The stocks of housing finance companies eased after the Reserve Bank of India kept interest rates unchanged on Tuesday.

Rupee slipped 10 paisa to 66.59 against one U.S. dollar.

The Sensex Index decreased 51.56 or 0.2% to close at 26,117.85. The CNX Nifty fell 23.55 or 0.3% to 7,931.35.

Heavy late monsoon season rains shut down Chennai, the fourth largest city in India, for the second day in a row.

Tata Motors said auto sales in November slipped 7% but Hero MotoCorp said two-wheeler vehicle sales rose 0.6%.

Cox & Kings sold its U.K.-based adventure travel subsidiary to a Swiss-based travel group.