On 16 September, 2015 – European markets rallied on hopes that the US will not raise interest rates until December

Stocks advanced globally on the day before the Federal Reserve’s latest monetary policy announcement. Analysts are split on whether the FOMC will increase its fed funds rate at this meeting.
United States
Stocks advanced Wednesday as investors waited to hear from the Federal Reserve and worked through company news. The Dow Jones industrials were up 0.8%, the S&P added 0.9% and the Nasdaq was 0.6% higher. Beer companies gained on news of a possible deal between two giant beer brewers while energy stocks rose sharply following a big jump in the price of oil. Investor and analyst opinions are mixed on the possibility of an increase in interest rates Thursday when the Fed announces its policy decision.
SABMiller, a major beer maker whose brands include Miller and Foster’s, jumped in London trading after the company said it received a takeover offer from Anheuser-Busch InBev. A combination of the two would create a massive conglomerate worth a combined US$275 billion. Any potential deal would most likely be heavily scrutinized by regulators in the US and overseas. Hewlett-Packard advanced after the company announced it would cut roughly 10% of its workforce and would split into two separate companies. FedEx retreated after the company’s quarterly results missed expectations and it cut its full-year profit forecast late Tuesday. Chevron and Exxon Mobil advanced on higher oil prices.
The Organization for Economic Cooperation and Development said the Fed would be right to begin raising rates this week but it needs to signal its intentions to the rest of the world. “Do it now to remove uncertainty facing emerging markets, but communicate more clearly the nature of the more gradual path, that’s the message,” OECD Chief Economist Catherine Mann said in an interview in Paris. Both the IMF and World Bank have urged the Fed to refrain from increasing rates at this meeting.
Gold at the afternoon London fixing was up US$11.65 to US$1,117.60. Copper futures were up 1.1% to US$2.45. WTI spot crude was up US$2.47 to US$47.06. Dated Brent spot crude was up US$2.11 to US$49.86. The US dollar was down against the euro, pound, Swiss franc and the Canadian and Australian dollars. However, it advanced against the yen. The Dollar Index was down 0.3%. The yield on US Treasury 30 year bond was up 2 basis points to 3.08% while the yield on the 10 year note added 1 basis point to 2.29%.
Europe
Stocks rallied extending gains from the previous session. Yesterday’s gains were fueled by investor hopes that the Federal Reserve will hold off on raising interest rates until December. The FOMC will announce its decision after the European close Thursday. Analysts remain split regarding whether the Bank will raise rates. The FTSE was up 1.5%, the CAC advanced 1.7%, the DAX gained 0.4% and the SMI added 0.9%.
Energy stocks turned in a strong performance Wednesday, as crude oil prices rallied. The US Energy Information Administration said that US crude inventories dropped by 2.1 million barrels last week. Brewers and spirit companies also surged on the potential for M&A in the sector.
SAP advanced on a broker upgrade. Utilities were under pressure again Wednesday with both E.ON and RWE retreating. Commerzbank and Deutsche Bank declined. Orange increased on a broker upgrade. Technip and Total gained. In London, SAB Miller soared after Anheuser-Busch InBev said it plans to make a proposal for the brewer. Anheuser-Busch InBev also jumped. Diageo and Pernod Ricard also advanced.
Mondi dropped on a broker downgrade. Royal Bank of Scotland retreated after it agreed to pay US$129.6 million to settle a US regulator’s claims that the company sold toxic mortgage backed securities to now defunct US credit unions. Mining stocks including Glencore, Randgold Resources, BHP Billiton and Fresnillo turned in a strong performance as precious metal prices increased. Richemont, which reported 5-month sales data, climbed in Zurich. Burberry also advanced. Investors were reassured by the resumption of sales growth in mainland China where Burberry has significant exposure.
Eurozone annual inflation slowed to 0.1% in August from 0.2% in July. UK wages grew at the fastest pace in over six years and the unemployment rate declined in the three months to July, signaling a buildup of inflationary pressures, underpinned by household income. Pay excluding bonuses increased 2.9% from the same period of last year, which was the fastest growth since early 2009.
Asia Pacific
Asian stocks also advanced Wednesday — investors braced for the Federal Reserve decision on interest rates. The FOMC announcement will be made after markets here are closed during the Thursday global market day.
The Shanghai Composite rebounded 4.9% after sinking over 6% on the first two days of the week. The Hang Seng added 2.4%. Shares of Citic Securities were higher, erasing early losses after the brokerage firm said its three top executives are under police investigation as part of a probe by Beijing into possible market manipulation.
The Nikkei added 0.8% a day after the Bank of Japan kept its monetary policy unchanged. Automakers including Honda, Toyota, Nissan and Mazda posted broad based gains. Sony gained 1 after cutting the price of its PlayStation 4 in Japan by about 13%. Orix rallied on a Nikkei report that the financial services group will acquire an 85% stake in Indonesian lease financing provider Sinar Mitra Sepadan Finance for about ¥8 billion. Energy explorer Inpex and JX Holdings advanced after US crude futures rose nearly 3% overnight, aided by a strong stockpile report and news that the White House does not support a move by the House of Representatives to repeal a 40-year-old ban on exports of crude oil.
Australian shares rallied, thanks to higher US shares and higher commodity prices. The benchmark S&P/ASX was up 1.6% while the All Ordinaries index added 1.5%. The big four banks and big miners gained. The Kospi added 2.0% after Standard & Poor’s upgraded South Korea’s sovereign currency rating by one notch, saying the country will maintain economic growth performance superior to most developed economies in the next three to five years. The Sensex advanced 1.0% as foreign funds halted a US$1 billion stock selloff and Chinese shares rallied in the last hour of trading amid a countdown to the Federal Reserve’s policy decision.
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 August merchandise trade. The Swiss National Bank publishes its quarterly monetary policy assessment. The UK releases August retail sales. In the US, August housing starts along with weekly jobless claims, money supply and Fed balance sheet will be released. The Federal Reserve will announce its monetary policy decision. It will also publish its latest forecasts. Chair Janet Yellen will hold her quarterly press conference.
*Note — all releases are listed in local time.