On 28 October, 2015 – European and US markets rise with Fed announcement in focus

Stocks in Europe and the US advanced while they were mostly lower in Asia. All trading circled around waiting for or responding to the FOMC monetary policy announcement.
United States
US stocks ended sharply higher after a volatile session Wednesday as the Federal Reserve gave a vote of confidence to the US economy by signaling a December interest rate increase was still on the table. The Dow Jones industrials were up 1.1%, the S&P gained 1.2% and the Nasdaq added 1.3%. Stocks rebounded to new session highs, led by financial and energy stocks, after the Federal Reserve held interest rates near zero but signaled a possible rate increase at its December meeting.
The FOMC pointed specifically to the next meeting as a time when they would be assessing whether it was time to increase rates. The economy is still expanding at a “moderate” pace according to the Fed. They will consider tightening policy at their next meeting in December without making a commitment to act this year. Even with a slower pace of recent job gains, labor market indicators show slack has diminished since early this year. The Fed removed a line from September’s statement saying that global economic and financial developments “may restrain economic activity somewhat,” saying only that the central bank is monitoring the international situation.
Shares of financial companies, especially banks, rose sharply. Bank of America shares jumped. Utilities, considered the bond proxies of the stock market because they pay out high dividends retreated. Major indexes were lifted by a surge in crude oil futures that helped fuel an increase in energy shares. Shares of Twitter slipped after posting soft quarterly user growth for its social media service and issuing a gloomy forecast for the holiday period. American International Group shares climbed after activist investor Carl Icahn revealed he had taken a “large stake” in the company, encouraging it to split up into three separate companies.
Gold at the afternoon London fixing was up US$13.90 to US$1,179.60. Copper futures were up 0.2% to US$2.37. WTI spot crude was up US$2.74 to US$97.78. Dated Brent spot crude was up US$2.23 to US$49.04. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. However, it declined against the Canadian dollar. The Dollar Index was up 1.0%. The yield on US Treasury 30 year bond was up 2 basis points to 2.87% while the yield on the 10 year note was up 6 basis points to 2.09%.
Europe
Stocks advanced solidly, rebounding from the weak performance of the previous two trading sessions. Energy stocks were among the best performers due to rising crude oil prices. Investors were eagerly anticipating the monetary policy announcement from the US Federal Reserve after markets here closed for the day. The FTSE added 1.1%, the DAX advanced 1.3% and both the CAC and SMI were 0.9% higher.
Sweden’s central bank held its key interest rate unchanged and boosted its asset purchases on Wednesday, making its policy more expansionary as it prepares for a possible December expansion of the European Central Bank’s stimulus.
Sweden’s Riksbank left its benchmark, the repo rate, unchanged at minus 0.35% for a second straight meeting as expected. The bank last lowered the repo rate in July, when it cut the rate from minus 0.25%. Lowering its interest rate path, the Bank said an initial increase in the repo rate will be deferred by approximately six months compared with the previous assessment.
Volkswagen climbed even as the automaker posted its first quarterly loss in 15 years. The company said it is still committed to diesel engines despite the problems of its emissions cheating scandal. Linde advanced after the company reported that operating profit for first nine months of 2015 improved by 8.2%. But, after adjusting for exchange rate effects, operating profit fell slightly by 0.7%. It confirmed its 2015 outlook. Technip and Total were up. Meggitt plunged after it reported that its trading during the third quarter was below expectations due to a marked deterioration in September.
Royal Dutch Shell gained after the company said that the 80,000 barrel per day Carmon Creek thermal in situ project located in Alberta, Canada does not rank in its portfolio at this time. BT Group advanced after its acquisition of EE was approved by the Competition and Markets Authority. British American Tobacco gained after its revenues grew 4.2%. Lloyds Banking Group tumbled after its underlying profit fell 8%. Antofagasta dropped after its copper production for the first nine months of the year at 460,400 tonnes was 11.0% lower than in the same period last year. Brewer Heineken increased in Amsterdam after its third quarter sales beat estimates.
Asia Pacific
Most shares retreated after oil prices hit two-month lows overnight and US stocks ended lower for a second day on the back of mixed earnings and disappointing durable goods orders and consumer confidence data. The focus was firmly on the FOMC rate decision later in the global market day.
The Shanghai Composite dropped 1.7% on profit taking and caution before the FOMC statement. The Hang Seng retreated 0.8%.
The Nikkei added 0.7% on bets the Bank of Japan will unveil further stimulus when it reviews its policy later in the week. The safe-haven Japanese yen was flat to higher against the dollar after the US threatened further naval incursions into waters claimed by China. Softbank, a Mazda Motor, Sumco and Fanuc advanced. Aviation group ANA Holdings gained before announcing its half-yearly results after market hours. Canon and Hitachi Construction Machinery slumped after downgrading their profit forecasts, citing sluggish Chinese demand. Nintendo and Panasonic declined ahead of their financial results due this week.
Both the S&P/ASX and All Ordinaries lost 0.2%. Banks were mixed as were miners. Third quarter consumer price index was up 1.5% on the year, missing forecasts for 1.7%. The Kospi slipped 0.1% while the Sensex lost 0.8%.
Global Stock Market Recap

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.
Looking forward*
Japan posts September industrial production. Germany releases October unemployment. The Eurozone posts October economic sentiment. In the US, the first estimate of third quarter gross domestic product is released along with the October pending home sales index. Weekly jobless claims, money supply and Fed balance sheet also will be reported.
*Note — all releases are listed in local time.