Caution in China, US data subdue world stock markets

AP and AFP

AP and AFP–Caution about China’s economic prospects and upcoming U.S. economic data kept Asian stock markets subdued Tuesday. European markets were also lackluster. Investors are awaiting economic events in the U.S. with Federal Reserve minutes due Wednesday and a monthly jobs report on Friday.

In early European trading, the FTSE 100 index of leading British shares rose 0.1 percent to 6,735.29 while Germany’s DAX was nearly flat at 9,431.48. France’s CAC-40 was down 0.2 percent at 4,217.19.

Futures in New York pointed to a higher opening on Wall Street. Dow Jones futures rose 0.2 percent to 16,396 and S&P 500 futures were up 0.2 percent to 1,825.10.

Confidence was weakened by lackluster services industry activity in the U.S., Wall Street’s fall Monday and recent signs of renewed weakness in China’s manufacturing.

“China is defiantly in play right now,” said Chris Weston, chief market strategist at IG in Melbourne, Australia. “We certainly aren’t seeing the sort of flows that suggest the Chinese and Hong Kong markets are going to see double-digit appreciation this year.”

On Monday, data showed U.S. service companies grew at a steady but slightly slower pace in December. Sales dipped and new orders dropped to a four-year low, according to a report from the Institute for Supply Management. It suggests growth may remain modest in the coming months.

After a broadly positive year for global markets 2014 has started sluggishly, but investors will eye the release Wednesday of minutes from the US Federal Reserve’s most recent policy meeting. Analysts will seek clues about whether officials will further cut a stimulus program this month, after reducing it by US$10 billion a month to US$75 billion at the December meeting. The most closely watched economic report of the week will come on Friday, when the Labor Department is scheduled to release its jobs survey for December. That’s going to influence the Fed’s decision on how fast to reduce its bond purchases in the coming months.

In Asia, markets were mixed Tuesday, with bargain-hunting lifting some bourses but Tokyo dropping again following heavy losses in the previous session due to a stronger yen. Wall Street provided another negative lead and Chinese dealers continued to fret about the restart of initial public offerings, which they fear could lead to a share glut. Tokyo fell 0.59 percent, or 94.51 points, to 15,814.37 and Sydney closed down 0.15 percent, or 7.9 points at 5,317.0. Shanghai ended flat, edging up 1.61 points to 2,047.32 and Hong Kong added 0.13 percent, or 28.63 points, to 22,712.78. Seoul rose 0.32 percent, or 6.16 points, to close at 1,959.44, despite a 0.23 percent loss for Samsung Electronics shares after the company said it expects a steep drop in its fourth-quarter operating profit. In Tokyo the Nikkei extended the 2.35 percent loss it suffered Monday on profit-taking after the index surged 57 percent last year.