On 01 October, 2015 – Equities mixed ahead of US jobs data

Stocks advanced in the Asia Pacific region but were mostly lower in Europe while US shares were mixed as investors waited for the important US employment report to be released during the Friday global market day.

United States

United States markets drifted Thursday as investors waited for Friday’s release of the September employment report. The Dow Jones industrials slipped 0.1% while the S&P and Nasdaq added 0.2% and 0.1% respectively. Investors were looking ahead to Friday when the government will release its monthly report on jobs. Economists forecast that employers added about 200,000 workers to their payrolls last month. Strong hiring would most likely lift expectations that the Federal Reserve will increase its benchmark interest rate at its next meeting.

Dunkin’ Brands plunged after the company announced plans to shutter 100 Dunkin’ Donuts stores around the country as sales slow. The company’s revenue estimates also fell short of forecasts. McCormick said profit fell in its latest quarter, in part due to the slide of the Mexican peso and weak results in its India business. ConAgra Foods said it would cut about 1,500 jobs and relocate its headquarters as part of a restructuring plan.

Data today showed manufacturing barely grew in September as a stronger dollar and faltering overseas markets led to the slowest pace of orders since November 2012. A separate report today showed the number of Americans filing applications for unemployment benefits rose last week, maintaining a pattern of gains and losses around decade lows that signals firings remain muted. Tomorrow’s Labor Department report is expected to show the economy added 203,000 jobs in September with the unemployment rate holding at 5.1%.

Gold at the afternoon London fixing was up US$5.00 to US$1,119.00. Copper futures were down 1.4% to US$2.31. WTI spot crude was down 14 US cents to US$44.95. Dated Brent spot crude was down 45 US cents to US$47.92. The US dollar was up against the Swiss franc. It was virtually unchanged against the pound and yen. However, it declined against the euro and the Canadian and Australian dollars. The Dollar Index slipped 0.1%. The yield on US Treasury 30 year bond was down 2 basis points to 2.85% while the yield on the 10 year note slipped 1 basis point to 2.04%.

Europe

Most stock indices were lower Thursday. The markets were up in early trading after the positive performance of the Asian markets and some better than expected Chinese manufacturing data. As the focus of investors shifted back towards the struggles of the global economy and weakness in commodities, the markets retreated in the afternoon. The FTSE advanced 0.2% while the SMI was virtually unchanged. However, the CAC declined 0.5% and the DAX lost 1.5%.

BASF declined after the company completed the previously announced sale of its pharma custom synthesis business and parts of its active pharmaceutical ingredients business to Siegfried Holding in a deal valued at €270 million. Deutsche Börse climbed on a broker upgrade. Bayer was down after it trimmed the targeted gross proceeds and price range for the issuance of the shares of Covestro ahead of the planned stock market listing of the polymer company. Daimler was down after it said that its Supervisory Board proposed at the Annual Shareholders' Meeting that Manfred Bischoff be reelected to the Supervisory Board for a further period of office.

Both RWE and E.ON weakened. In Paris, oil field services provider Technip gained after announcing a contract award. Orange dropped after it announced a reorganization. Kering and LVMH declined as well. In London, Tullow Oil surged after the company and its lending banks completed the routine six-monthly Reserve Based Lend redetermination process. Johnson Matthey gained after it completed the sale of its Alfa Aesar Research Chemicals business to Thermo Fisher Scientific for £256 million in cash. Altice, which announced the sale of shares for the acquisition of Cablevision Systems, sank in Amsterdam.

Eurozone manufacturing PMI declined to a five month low of 52.0 in September from 52.3 the month before. Activity slowed in Germany while in France, activity picked up. However, in the UK, the manufacturing PMI slipped to 51.5 from 51.6.

Asia Pacific

Most Asian stock indices advanced Thursday despite mixed Chinese manufacturing data and weak Japanese business confidence data. Markets in Hong Kong and Mainland China were closed for holidays.

Conditions in China's manufacturing sector deteriorated at the sharpest rate since March 2009. September’s manufacturing PMI reading was 47.2, down from 47.3 in August but slightly higher than an earlier flash reading of 47.0. The official CFLP PMI stabilized at a low of 49.8.

Then Nikkei added 1.9% thanks to a weaker yen. Wednesday's disappointing decline in industrial output and weak business confidence figures from the Tankan also fueled expectations the Bank of Japan will ease its monetary policy further at its October 30 policy meeting. Business conditions in Japan worsened during the third quarter according to the Tankan survey conducted by the Bank of Japan. The index for large manufacturers fell to 12, down from 15 in the previous quarter.

The Markit/Nikkei Japan final manufacturing PMI remained in expansion territory with a reading of 51.0 in September, down from 51.7 in August. Mitsui Fudosan, Nissan Motor, Mazda Motor, Mitsubishi Electric and Sumitomo Realty & Development climbed as did Fast Retailing, Fanuc and Softbank. Scandal-hit Toshiba advanced after appointing new board members at an extraordinary shareholders meeting. Japan Tobacco declined, extending Wednesday's 7% loss after agreeing to buy US$5 billion of cigarette assets from US rival Reynolds American.

The S&P/ASX added 1.8% while the All Ordinaries index climbed 1.7%. The big four banks were up while miners were mixed. The Kospi gained 0.8% while the Sensex was 0.3% higher.

Looking forward

Japan posts third quarter Tankan and final September manufacturing PMI. China releases CFLP and Caixin PMIs. India, the Eurozone, Germany, France, UK and US post final September manufacturing PMI, In the US, September ISM manufacturing survey, August construction spending along with weekly jobless claims, money supply and Fed balance sheet will be reported.

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.