Sharechat Logo

While you were sleeping: Spectre of December hike

Thursday 5th November 2015

Text too small?

Wall Street moved lower, while the US dollar strengthened, as Federal Reserve Chair Janet Yellen repeated that a December interest rate increase was possible, while European Central Bank President Mario Draghi said he was prepared to add extra stimulus if needed.

In testimony to Congress, Yellen said a rate hike this year was a “live possibility,” underpinning the Fed’s comments after its October meeting last week.

The Fed is "expecting the economy will continue to grow at a pace to return inflation to our target over the medium term," Yellen told Congress, according to Reuters. "If the incoming information supports that expectation ... December would be a live possibility" for a rate increase.

Meanwhile, an ADP Research Institute report showed US companies added 182,000 workers last month, following a 190,000 increase in September. The strength of the labour market is a key gauge for policy makers.

"The private sector continues to add jobs at a healthy pace and I think it's likely strong enough that if this pace of job growth continues — if this continues over the month –- it will be enough to justify a rate hike in December," Omer Eisner, chief market analyst at Commonwealth Foreign Exchange in Washington, told Reuters.

Investors will scrutinise the government’s nonfarm payrolls report, due for release on Friday. It is expected to show an increase of 180,000 jobs in October, while the unemployment rate is expected to remain at 5.1 percent.

Separately, a Commerce Department report showed the trade deficit narrowed by 15 percent to US$40.8 billion in September, the smallest since February, while a report by the Institute for Supply Management showed its non-manufacturing index rose to 59.1 in October, the highest in three months, and up from 56.9 in September.

In New York trading at about 11.40am, the Dow Jones industrial average fell 0.3 percent. At about 11.26 am trading, the Standard & Poor’s 500 Index slid 0.4 percent and the Nasdaq Composite Index declined 0.2 percent.

Slides in shares of UnitedHealth and those of Pfizer, last down 2.6 percent and 2 percent respectively, led the Dow lower. Facebook is among the S&P 500 companies scheduled to report quarterly results today.

In Europe, the Stoxx 600 Index finished the session with a 0.9 percent advance from the previous close. The UK’s FTSE 100 Index also climbed 0.9 percent, as did France’s CAC 40 Index. Germany’s DAX Index fell 0.4 percent.

Euro-zone bonds also rose on Draghi’s comments in Frankfurt that the central bank would review the amount of stimulus needed to stoke the economy at its December meeting.

“Draghi’s comments are clearly supportive in the short term and earnings season so far has been reasonable although expectations weren’t high,” David Hussey, head of European equities at Manulife Asset Management in London, told Bloomberg. “European equities still look reasonable value assuming recovery continues and margins can expand back to previous levels.”

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report