On 18 November, 2015 – European markets were mixed on continued geopolitical concerns in the region

Stocks were mixed in Asia and Europe — investors were rattled by continuing geopolitical concerns. However, they rallied in the US after the Federal Reserve published the minutes of its October meeting and on corporate deals.

United States

Stocks had their biggest gain in four weeks as investors were encouraged by corporate deal news. The Dow Jones industrials were up 1.4%, the S&P gained 1.6% and the Nasdaq added 1.8%.

ConAgra Foods jumped after the company said it would split in two. Norfolk Southern advanced after receiving an unsolicited offer to be bought out by Canadian Pacific. Bank stocks rose after minutes from the latest Federal Reserve meeting suggested the bank was ready to raise interest rates in December. Banks can charge more to loan money when rates are higher. Both JPMorgan Chase and Bank of America were up. Jack in the Box burger chain was up after it gave an upbeat 2016 profit outlook. Target shares retreated after the retailer reported that its sales at established locations increased in the third quarter at a slower rate than in the previous quarter. Citrix Systems dropped on news that it would cut about 1,000 jobs and spin off its GoTo business into a separate company, seeking to cut costs. Apple shares increased after a broker issued a bullish note on the iPhone maker, saying it expects the company to produce recurring revenue from services like music and payments.

The Federal Reserve published the minutes of its October 27 and 28 FOMC meeting. At that time, the FOMC left its policy interest rate unchanged at zero to 0.25%. According to the minutes, most members said that conditions for an increase in short-term interest rates "could well be met" by December. The minutes show that members thought that it may be appropriate to lift rates on December 16 provided economic data continue to improve and that "unanticipated shocks" did not occur. However the minutes also exposed continued divisions among Fed policymakers, with some warning that it was "unlikely" that information available by December would support an increase. They questioned whether the US economy was strong enough to withstand a sudden setback given the Fed's limited monetary firepower at a time of ultra-low rates. In a maneuver aimed at priming the markets, the FOMC explicitly flagged up the potential for a move on December 16 as it dropped previous warnings about financial and economic dangers lurking overseas. Discussing that language in the October meeting, the committee insisted that it should still be seen as leaving the Fed's policy options open.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing dropped US$11.45 to US$1,067.75. Copper futures were down 1.5% to US$2.08. WTI spot crude was down US$1.02 to US$40.73. Dated Brent spot crude was down 72 US cents to US$44.47. The US dollar was up against the yen, Swiss franc and the Canadian and Australian dollars. However, it declined against the euro and pound. The Dollar Index was down 0.05%. The yield on US Treasury 30 year bond was down 1 basis point to 3.05% while the yield on the 10 year note was up 2 basis points to 2.27%.

Europe

Markets were mixed Wednesday. News of a bomb threat in Germany, the diversion of two Air France flights to Paris from the US and a police raid in a Paris suburb weighed on investors’ risk appetite. The FTSE was up 0.2% and the SMI gained 0.4%. However, the CAC and DAX retreated 0.6% and 0.1% respectively.

According to European Central Bank Executive Board member Yves Mersch, there is no indication of any economic pessimism as a result of the Paris terror attacks. He also said, "I would also like to mention that we should shy away from drawing premature conclusions about whether the terror attacks will have any economic impact."

Wirecard advanced after the financial services company reported nine month results. Volkswagen, BMW and Daimler advanced. Lufthansa and International Consolidated Air Group declined. In Paris, Air Liquide sank after agreeing to buy US company Airgas. Air France KLM retreated after two of its Paris-bound planes that took off from the US were diverted due to bomb threats.

In London, UK Mail Group dropped after first-half profit declined. The company cut its dividend and warned on its outlook. Soco International plunged after revising its production outlook for the year. Miners Antofagasta gained on a broker upgrade. Glencore, Anglo American, Fresnillo and Rio Tinto also advanced. Tourism related stocks came under pressure in London again Wednesday on concerns about international security after last week's attacks in Paris. Budget carrier easyJet and British Airways owner IAG declined. Enel led utilities lower after saying it will buy back its renewables energy business.

Asia Pacific

Stocks were mostly lower Wednesday. The bomb scare in two flights bound for Paris also induced caution among traders. The Chinese, Indian and Singaporean markets were among the worst hit. A factor muting trading is that investors are hesitant to take big bets ahead of the Federal Reserve’ December meeting and as the year nears its close.

The Nikkei inched up 0.1% as the market capitalized on the yen's weakness. The yen’s weakness was founded on hopes that the Bank of Japan will unveil further stimulus after its monetary policy board announces its monetary policy decision on Thursday. Expectations however, are for no change in policy. Among sectors, food, real estate, retail, utility and pharma stocks advanced. Export and financial stocks were mixed. However, housing, construction, chemical, mining, glass, printing, cement, telecom and paper stocks all moved to the downside. Japan Airlines retreated.

Both the S&P/ASX and All Ordinaries added 0.3%. Most sectors saw strength, led by financial, consumer discretionary, industrial, IT, real estate and telecom stocks. Meanwhile, material stocks fell steeply on profit taking. Consumer staple stocks also lost ground. The wage cost index increased 0.6% in the third quarter, at the same pace as in the second quarter. Annually, wages costs were 2.6% higher.

The Shanghai Composite lost 1.0% and the Hang Seng was 0.3% lower. Investors were concerned that potential initial public offerings could divert liquidity from the market. Cathay Pacific Airways declined. In China, investors anticipate that officials could announce as soon as Friday plans to relaunch mainland listings, which were halted during the summer selloff. China’s securities watchdog said last week it will allow 28 IPOs by year-end and let the market play a bigger role in the supply and pricing of new listings.

Looking forward

October merchandise trade is released by Japan. The UK releases October retail sales and November CVI industrial trends survey. The European Central Bank publishes minutes from its October governing council meeting. The November Philadelphia Fed survey along with weekly jobless claims, money supply and Fed balance sheet 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.