Asia stocks muted on Fed concerns, Europe gains

AP and AFP

MANILA/HONG KONG–World stock markets were mixed Wednesday, with benchmarks in Asia flitting between gains and losses after an improvement in U.S. service industries reinforced expectations the Federal Reserve will reduce monetary stimulus. European markets gained.

They include the European Central Bank meeting on Thursday where it may foreshadow a further reduction to record low interest rates and the advance estimate of U.S. third quarter economic growth due the same day.

U.S. October jobs figures are due on Friday.

China’s leaders are also scheduled to meet in Beijing from Nov. 9-12 to craft a new blueprint for the world’s No. 2 economy as its state-led growth model runs out of oomph.

The European Union officials had cut their 2014 growth forecast for the eurozone to 1.1 percent from the 1.2 percent forecast in May. The figures — along with data showing inflation fell to a four-year low of 0.7 percent in October — dented hopes for a strong recovery in the bloc, but fuelled speculation the European Central Bank would cut interest rates or announce other growth-positive measures. While the focus is on U.S. third-quarter growth data and October jobs figures later this week, the non-manufacturing numbers indicated the economy is showing signs of strength. The ISM purchasing managers’ index for the service sector rose to 55.4 percent in October — up from a September reading of 54.4 percent and much higher than the expected 54.0 percent.

A figure above 50 indicates growth while anything below suggests contraction. Analysts highlighted a surge in the employment reading for the services sector, which accounts for about 80 percent of private-sector jobs. The positive numbers show the recovery in the world’s number one economy is gaining traction, but raise questions about the future of the Fed’s stimulus. Major European benchmarks were up in early trading. Britain’s FTSE 100 added 0.1 percent to 6,756.56. Germany’s DAX rose 0.4 percent to 9,041.89 and France’s CAC-40 climbed 0.7 percent to 4,284.17.

Futures augured a positive open on Wall Street. S&P 500 futures were up 0.4 percent at 1,764.20 and Dow Jones futures gained 0.4 percent to 15,614.

In Asia, stocks were mixed Wednesday although Tokyo was lifted by strong corporate sentiment, while upbeat U.S. service-sector data added to speculation the Federal Reserve will soon start tapering off its stimulus. Tokyo finished 0.79 percent higher, adding 111.94 points to 14,337.31 and reversing morning losses after a report said car giant Toyota would post strong earnings for its fiscal first half. Sydney was flat, edging up 1.8 points to 5,433.8. Seoul was also flat, dipping 0.26 points to 2,013.67. Shanghai fell 0.82 percent, or 17.63 points, to 2,139.61. Hong Kong ended almost unchanged, dipping 2.01 points to 23,036.94. Tokyo shares enjoyed a U-turn after lunch thanks to a Nikkei news report that Toyota would announce strong six-month earnings figures and upgrade its annual forecasts, thanks largely to a weaker yen and strong sales in North America.

Gold was at US$1,317.35 per ounce at 01042 GMT compared with US$1,311.73 on Tuesday.