On 12 October, 2015 – Global markets were mixed as investors waited for the onslaught of earnings reports

Markets were also muted as there was very little global economic data to drive trading.

United States

United States markets were drifting on Monday afternoon as traders looked ahead to the start of corporate earnings season. The Dow Jones industrials gained 0.3%, the Nasdaq added 0.2% and the S&P was 0.1% higher.

Shares of EMC climbed after Dell said it was acquiring the data storage company in a deal valued at about US$67 billion. Since going private in 2013, Dell has been investing in research and development and expanding its software and services business. Eli Lilly stock dropped after the drug maker said it was halting development of evacetrapib, a drug that was intended to treat patients with high-risk cardiovascular disease.

The stock market is coming off its best week of the year. Most of the gains came after the release of last week’s disappointing jobs report, which suggested the Federal Reserve would postpone a long-anticipated interest rate rise for several months. That signal was reinforced on Thursday, when the minutes from the September Fed meeting showed that policy makers were too concerned about low inflation and the slowdown in China to raise interest rates. Low rates can help lift stocks by reducing returns on fixed-income investments such as bonds.

However, top finance officials urged the Federal Reserve to proceed with the much-awaited rate increase at an annual meeting of the International Monetary Fund. While the move would spur investors to move money back into the US from emerging markets, many policy makers are frustrated by the uncertainty the Fed’s delay has introduced.

Investors are listening for further hints on the Federal Reserve’s policy intentions. Fed Vice Chairman Stanley Fischer said the US economy may be strong enough to merit an interest-rate increase by the end of 2015, while noting that policy makers are also considering slower job growth and international developments. Fischer spoke at the annual meeting of the International Monetary Fund in Lima on Sunday. Fed Bank of Atlanta President Dennis Lockhart, speaking Monday repeated his view that he backs the first rate increase since 2006 by the end of the year. Chicago Fed’s Charles Evans today also reiterated his view that a later liftoff may be the best policy as inflation struggles to gain traction.

Gold at the afternoon London fixing was up US$13.35 to US$1,164.90. Copper futures were down 0.1% to US$2.41. WTI spot crude was down US$2.31 to US$47.32. Dated Brent spot crude was down US$2.52 to US$50.13. The US dollar was up against the Swiss franc and Canadian dollar. However it declined against the yen, euro, pound and the Australian dollar. The Dollar Index edged up 0.1%. US bond markets were closed for the Columbus Day holiday.

Europe

Stocks were mostly lower Monday. The FTSE ended Monday down 0.8%, snapping a run of eight consecutive days of gains. It was miners that proved a drag on the index. European markets also were mostly lower. However, the German DAX fared better on the strength of its utilities, which were up after they passed a nuclear stress test. The DAX edged up 0.2% while the SMI was 0.3% higher. The CAC however, lost 0.3%.

Following the strong performance of the previous trading week, some profit taking was to be expected. There was very little global economic data to drive trading Monday and holidays in Japan and the United States had some investors on the sidelines. Investors also exercised caution ahead of a number of important US corporate earnings reports later this week.

RWE and E.ON surged after the German government said they have enough nuclear-energy provisions to meet future obligations. Automakers Volkswagen, BMW and Daimler climbed. Safran declined. Media reports suggest European watchdogs have begun a probe into whether airlines are being forced to enter anti-competitive aircraft maintenance contracts. Rolls Royce declined in London after engine makers confirmed that they are in the process of filling out questionnaires sent to them by the European Commission regarding equipment servicing contracts in the aviation industry, in what could be a first step towards launching an investigation. Cap Gemini retreated after Indian peer Infosys Technologies reported second quarter results.

In London, Glencore declined after it said it is starting a process to sell its wholly-owned Cobar copper mine in Australia and Lomas Bayas copper mine in Chile. SABMiller was down despite the news that AB InBev has again raised its takeover bid for the British brewer to £43.50 per share in cash. Credit Suisse climbed in Zurich. The Schweiz am Sonntag reported, citing several managers of sub-units in the bank, that the lender plans to cut costs by 7% to 10%, which would translate into an annual reduction of 1.5 to 2 billion Swiss francs for the group.

Asia Pacific

Shares here were mixed Monday. Trading activity remained somewhat subdued in the wake of a public holiday in Japan. Australian shares underperformed due to profit taking after big gains last week as investors wait for Chinese merchandise trade numbers to be published on Tuesday.

Chinese shares hit a seven-week high after a senior central banker reportedly said the country's stock market correction was "almost over". Stimulus hopes also boosted investor sentiment after the People's Bank of China said it would expand a pilot program to cut loan costs for localities. The Shanghai Composite jumped 3.3% and the Hang Seng added 1.2%.

Australian shares succumbed to profit taking after five straight days of gains. The S&P/ASX dropped 0.9% while the All Ordinaries lost 0.8%. The indices were dragged down by banking and resource stocks. The Kospi edged up 0.1% as investors awaited upcoming third quarter earnings for further direction. The Sensex was down 0.6% on profit taking after hitting a seven week high last week.

Looking forward

China releases September's merchandise trade data. Germany and the UK post September consumer price indices. Germany releases October ZEW survey and the UK reports September producer prices. In the US, September NFIB will be released along with the September Treasury budget.

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.