On 01 November, 2016 – Stocks mostly lower globally

Investors are risk averse before the FOMC meeting Wednesday and next week’s US presidential election.
United States
Stocks retreated on the first day of the new month amid growing concern over the tightening of next week’s US presidential election and prospects for higher US interest rates. The Dow Jones industrials lost 0.6 percent while the S&P and Nasdaq each retreated 0.7 percent. Volume was low. Traders said that volatility is to be expected before next week’s vote.
Newspaper company Tronc, which publishes The Los Angeles Times and The Chicago Tribune, tumbled after Gannett said it would drop its bid to buy the company. Gannett was also lower. Pfizer slid after the company reported that third-quarter profits plunged 38 percent, despite higher sales. Pitney Bowes was lower after the company’s earnings fell short of forecasts. Yum Brands, the parent company of KFC and Taco Bell, climbed on its first day of trading on the New York Stock Exchange. Valeant jumped after the Wall Street Journal said that the drug maker is in talks to sell its Salix business for around $10 billion. Apple slipped to a seven-week low amid signs of softness in demand in China for the iPhone 7. Occidental Petroleum dropped the most since March following its results.
Manufacturing grew last month at the fastest pace since July. The ISM manufacturing index was 51.9 after 51.5 in August. Anything above 50 indicates growth. Production and export orders grew faster in October.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$16.45 to US$1,288.45. Copper futures were up 1.1 percent to US$2.23. WTI spot crude was down 8 US cents to US$46.78. Dated Brent spot crude was down 30 US cents to US$48.31. The US dollar was down against the yen, euro, Swiss franc, yuan and the Canadian and Australian dollars. It was unchanged against the pound. The Dollar Index was down 0.7 percent. The yields on both US Treasury 30 year bond and the 10 year note were unchanged at to 2.58 percent and 1.83 percent respectively.
Europe
Although markets began the day on a positive note thanks to some encouraging Chinese manufacturing data, gains were pared and then slipped into negative territory following the weak opening in the US. The FTSE declined 0.5 percent, the CAC was down 0.9 percent, the DAX dropped 1.3 percent and the SMI lost 0.8 percent.
Central banks were in focus today. The Reserve Bank of Australia and the Bank of Japan both left their policy interest rates unchanged as widely expected. The Federal Reserve also began its 2-day FOMC meeting. The Fed is widely expected to leave interest rates unchanged when it makes its policy decision on Wednesday.
Deutsche Bank and Commerzbank retreated. In Paris, Total and Technip were lower. In London, Royal Dutch Shell climbed after the oil firm swung to a third-quarter profit and announced an interim dividend. BP declined after the company’s third quarter profit nearly halved amid a slump in oil prices. Weir Group was down after it warned that it now expects full-year 2016 profits to be slightly lower than current market expectations. Standard Chartered declined after the company reported third quarter statutory profit before taxation to $153 billion, down from $430 million last year. Operating income slightly declined to $3.465 billion from $3.682 billion a year ago.
Mining stocks turned in a strong performance following the release of the Chinese manufacturing data. Polymetal International and Fresnillo advanced along with Antofagasta and Randgold Resources. Novartis retreated in Zurich after the US FDA granted priority review status for its drug used in the treatment of advanced breast cancer.
UK manufacturing sector expanded at a slower-than-expected pace in October despite a weak currency-driven improvement in export orders. The October CIPS/Markit PMI slid to 54.3 from 55.5 in September. Swiss retail sales increased for the first time in nine months during September.
Asia Pacific
Stocks were mixed Tuesday as a sell-off in oil futures, the uncertainty surrounding the U.S. election and expectations of a December Fed rate increase offset fresh signs of strength in China.
The Shanghai Composite was up 0.7 percent and the Hang Seng added 0.9 percent. October CFLP manufacturing PMI improved to 51.2 from 50.4 in September. At the same time, the Caixin manufacturing PMI rose to 51.2 from 50.1 the month before.
The Nikkei inched up 0.1 percent while the Topix was virtually unchanged (up 0.17 point) after the Bank of Japan left its monetary policy settings unchanged. It was a 7 to 2 vote of the monetary policy board. Mitsubishi Electric, Alps Electric, Tokyo Electron, Kirin, Nikon and Sumitomo Heavy Industries climbed. Panasonic retreated after the company cut its annual profit forecast, citing the impact of a strong yen and a poor showing in its solar panel business. Similarly, industrial robot maker Fanuc tumbled after posting slower sales and profits for the half-year ended September.
Japanese manufacturing activity expanded at the fastest pace in nine months in October, Australia’s manufacturing returned to growth after two months of contraction and Taiwan’s manufacturing sector expanded at a faster rate, while manufacturing activity levels across Malaysia and South Korea continued to contract in the month.
The All Ordinaries and S&P/ASX both were down 0.5 percent, dragged down by financials, miners and energy stocks. Banks ANZ, Commonwealth and NAB declined. Weak oil prices weighed on the energy sector, with Woodside Petroleum and Santos closing lower on the day. BHP Billiton declined while South32 rallied. Airline Qantas tumbled after issuing a profit warning.
The Kospi was virtually unchanged (down 0.8 point) as investors avoided risk given the growing political uncertainties at home and abroad. The Sensex slid 0.2 percent.
Looking Forward
Final October manufacturing PMIs will be released for France, Germany and the Eurozone. German October unemployment rate will be reported. October construction PMI for the UK will be posted. In the US, October ADP private employment report will be released. The Federal Reserve announces its FOMC policy decision.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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