On 04 December, 2015 – US stocks rebound from Thursday’s losses

Stocks retreated in Europe and the Asia Pacific regions for the day and week. Investors were disappointed by the new ECB stimulus. However, they rallied in the US on the strong employment report.

United States

US markets rose sharply on Friday after the government reported another month of strong job gains. The price of oil retreated on reports that OPEC would not cut production. The Dow Jones industrials, S&P and Nasdaq each added 2.1 percent. On the week the Dow and Nasdaq were up 0.3 percent and the S&P, 0.1 percent. 

The anxiously awaited November employment situation report did not disappoint — employers added 211,000 jobs, with big gains in the construction and retail industries. Hiring remains robust and the economy continues to benefit from steady consumer spending even though manufacturers are feeling the pain from low oil prices and weak demand overseas. The report came in a bit stronger than analysts expected. Employment for both September and October were revised higher than initially reported. Investors now expect the Fed to raise interest rates at its December 15 to 16 meeting.

After the meeting of the Organization of the Petroleum Exporting Countries ended, oil prices crumbled. OPEC it took no action to curtail oil production. Instead, it will keep production steady to maintain its market share. Energy stocks including Chevron, Exxon Mobil and Hess declined.

Avon Products surged after multiple media reports said it was considering selling its North American business to the private equity firm, Cerberus Capital Management. Norfolk Southern declined after the railroad rejected a $28.4 billion offer from Canadian Pacific. Norfolk Southern said the offer was too low and that regulators probably would not approve it. JPMorgan Chase advanced after European antitrust regulators dropped charges against the bank on blocking exchanges from derivatives markets.

European Central Bank President Mario Draghi said Friday during a speech at the Economic Club of New York that the bank is ready to expand its economic stimulus program if need be, just a day after the bank's surprisingly modest steps to shore up the region's economy sent shudders through global financial markets. On Thursday in Frankfurt the ECB announced a slight cut in one of its key interest rates, but it declined to step up its monthly purchases of bonds, as investors had expected. Investor disappointment about the decision sent European stock markets to one of their worst days in months.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$23.80 to US$1,079.25. Copper futures were up 0.9% to US$2.08. WTI spot crude was down US$2.70 to US$39.97.  Dated Brent spot crude was down US$1.92 to US$43.00. The US dollar was up against all of its major counterparts including the euro, yen, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.1%. The yields on both the US Treasury 30 year bond and the 10 year note were down 5 basis points to 3.01% and 2.27% respectively.

Europe

European markets were mostly lower for a second day as the markets continued to struggle with Thursday’s announcement from the European Central Bank. The European markets dropped sharply Thursday — investors were disappointed with the European Central Bank’s stimulus package. They had been expecting more aggressive stimulus measures. The FTSE and SMI were down 0.6 percent while the CAC and DAX retreated 0.3 percent. On the week, the FTSE and SMI both lost 2.2 percent while the CAC and DAX plummeted 4.4 percent and 4.8 percent respectively.

Investor expectations regarding this month's European Central Bank policy session were wrong, according to ECB’s bank's Vice President Vitor Constancio. In an interview Constancio said, "We have to recognize that the markets got it wrong in forming their expectations." "They did indeed have higher expectations than were there and that's why they reacted like they reacted but that was not our intention."

Volkswagen, Continental and Daimler gained. In Paris, Insurer Axa climbed after announcing higher dividends for shareholders. Technip and Total retreated. Solvay, which launched a €1.5 billion rights issue, declined. In London, Whitbread declined on a broker downgrade as did Inmarsat. Anglo American was lower after the Wall Street Journal reported that the company is planning to lower its dividend. Berkeley, which boosted its dividend program, jumped. Sage Group advanced. Elekta reported better than expected operating profit, sending its shares higher in Stockholm.

German factory orders grew for the first time in four months in October, led by stronger demand for capital and consumer goods. Factory orders increased a seasonally and work day adjusted 1.8 percent on the month.

Asia Pacific

Stocks retreated Friday with Japanese stocks suffering their biggest one-day drop in more than two months. The losses added momentum to a global selloff after the European Central Bank announced a smaller-than-expected package of monetary stimulus during the Thursday global market day.

The Nikkei closed down 2.2 percent and were down 1.9% for the week, snapping a six week string of gains. A strengthening yen hurt Japanese exporters, which face diminishing value for repatriated earnings as the currency strengthens. Toyota Motor, Mitsubishi Motors and Suzuki Motor retreated. Fast Retailing — owner of the Uniqlo apparel chain — also declined.

The Shanghai Composite dropped 1.7 percent Friday as investors freed up cash in anticipation of 10 public listings which were announced Thursday. Chinese officials said last month they would relaunch initial public offerings after a suspension in July, during the heat of the summer stock selloff. The Hang Seng lost 0.8 percent. On the week, the two indices advanced with the Shanghai Composite gaining 2.6 percent and the Hang Seng, 0.8 percent.

The S&P/ASX retreated 1.5 percent while the All Ordinaries was 1.4 percent lower. On the week, the indices were both down 1 percent on the week. The Kospi was down 1.0 percent on the day and retreated 2.7 percent for the week. The Sensex lost 1.0 percent Friday and declined 1.9 percent on the week.

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.