On 05 November, 2015 – European markets were mixed on weak energy and resource stocks

Stocks were mixed as investors weighed earnings reports and disappointing economic data from Germany and the US. Investors were also reluctant to take positions ahead of the US employment report that will be released Friday morning US ET.

United States

Stocks ended nearly unchanged after a quiet session as traders weighed mixed corporate earnings and waited for the government’s monthly jobs report, due out Friday. A strong jobs report would be good news for the economy but at the same time could prompt the Federal Reserve to consider raising interest rates next month, which could in turn take some steam out of stocks. The Dow Jones industrials were virtually unchanged (down 4.15 points), the S&P slipped 0.1% and the Nasdaq lost 0.3%. Shares swung between gains and losses in the session as a rally in banks helped erase declines sparked by a renewed selloff in Valeant Pharmaceuticals International on reports that a major hedge funds has sold its investment in the company and a Congressional panel is assessing the company’s operations. Weakness in commodity producers also held back stocks for a second day.

Facebook and Ralph Lauren impressed investors with strong quarterly results but Whole Foods, hurt by intense competition and the widening availability of organic foods, did not. Facebook advanced after it reported an 11% gain in quarterly profit, helped by higher advertising revenue. The company said more than 1.5 billion people now visit Facebook at least once a month, up 14% from a year ago. Daily users increased by 17% to 1.1 billion. AstraZeneca climbed after the drug maker raised its revenue and earnings forecasts for the year after better than expected third quarter results.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$8.40 to US$1,106.30. Copper futures were down 2.9% to US$2.25. WTI spot crude was down US$1.01 to US$45.31. Dated Brent spot crude was down 52 US cents to US$48.06. The US dollar was up against the yen, pound, Swiss franc and the Canadian and Australian dollars. It slipped against the euro. The Dollar Index was up 0.2%. The yield on US Treasury 30 year bond was unchanged at 3.00% while the yield on the 10 year note was up 1 basis point to 2.24%.

Europe

Stocks were mixed Thursday as investors tried to evaluate a large number of corporate earnings and economic reports. Energy and resource stocks turned in weak performances as commodity prices came under pressure. The FTSE retreated 0.7% but the CAC added 0.6% and both the DAX and SMI were 0.4% higher.

A dovish economic outlook from the Bank of England has dampened the prospect of an interest rate increase in the near term and suggests that interest rates are unlikely to rise until late 2016 given that inflation is expected to remain low. The Monetary Policy Committee voted 8 to 1 to hold the interest rate at 0.50%. Ian McCafferty sought an increase in the Bank Rate by 25 basis points for a fourth month. However, the MPC voted unanimously to maintain quantitative easing at £375 billion.

Volkswagen extended recent losses after Germany ordered a probe into new allegations. Deutsche Telekom declined after its third quarter profit missed forecasts. HeidelbergCement advanced — the cement maker's margins and net income for the third quarter exceeded estimates. Adidas surged after the sportswear company raised its full year sales and profits forecasts after reporting a 10% rise in third quarter net profit on strong demand for its Adidas and Reebok brands. In Paris, Crédit Agricole sank after profits fell at its corporate and investment bank divisions. Société Générale climbed after posting higher third quarter profits.

EDF was down after its sales for the first nine months of the year grew 2.8% to € 53.8 billion from €52.3 billion in the previous year, among a challenging power price environment in Europe. In London, AstraZeneca gained after it lifted its 2015 forecasts after reporting third quarter results broadly in line with expectations. Wm Morrison Supermarkets declined after the company said that in the 13 weeks to November 1, total sales excluding fuel dropped 2% and were down 4.6% including fuel. Glencore dropped despite a broker upgrade. Randgold Resources was lower after its third quarter profit fell short of expectations.

Eurozone retail sales decreased unexpectedly in September after remaining flat in the previous month. Retail sales slipped 0.1% on the month. German factory orders declined 1.7% unexpectedly in September underscoring the risk in maintaining the moderate growth momentum.

Asia Pacific

Stocks retreated except in China and Japan after oil prices dropped and Federal Reserve Chair Janet Yellen indicated the US economy is ready for the first increase in short term interest rates in nearly a decade.

The Shanghai Composite was up 1.8% after climbing 4.3% the day before. Investors were buoyed by optimism over Beijing's five-year plan to bolster the economy and hopes the Shenzhen-Hong Kong Stock Connect will begin within this year. Investors also cheered news that the leaders of China and Taiwan will hold an historic meeting in Singapore on Saturday for the first time in more than six decades. The Hang Seng was virtually unchanged (down 2.53 points).

The Nikkei added 1.0% thanks to a weaker yen and strong corporate earnings. Canon, Nikon and Sharp rallied. Japan Tobacco, Ajinomoto and Yamada Denki jumped after raising their profit forecasts. Takata extended Wednesday's plunge after Honda said it would not use front air bag inflators made by the company. Toshiba retreated on a Nikkei report saying that the company would report a ¥90 billion loss for the first half.

Both the S&P/ASX and All Ordinaries lost 0.9%. Banks dragged down the indices after Reserve Bank governor Glenn Stevens said interest rates were more likely to go down than up but there is little urgency to do so. Separately, RBA deputy governor Philip Lowe said he was concerned with "recent problems with the data relating to banks' owner-occupier and investor housing loans". In addition to the banks, BHP Billiton and Rio Tinto declined. Newcrest and Evolution Mining sank after gold prices hit one month low.

The Kospi was 0.2% lower on foreign fund selling after Fed Chair Yellen and New York Fed President Willian Dudley hinted at a potential rate increase this year. The Sensex declined 0.9% as caution ahead of Bihar exit poll results due out later in the day and worries about an impending US rate increase sapped investors' appetite for risk. The fifth and final round of voting in Bihar is underway and the exit poll results will come later in the evening. The actual results will be out on Sunday.

Looking forward

Germany and the UK post September industrial production while France reports September merchandise trade. In the US, the October employment situation report will be released. Canada's labour force survey for October also 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.