On 01 December, 2015 – European markets slid ahead of European Central Bank policy announcement

Stocks in Asia and the US rallied while shares in Europe retreated as the ECB meeting approaches.
United States
Stocks moved broadly higher on Tuesday, helped by improving economic data from Japan and Europe as well as hopes that the European Central Bank will expand its stimulus program. Banks and industrial companies led gains, helped by prospects for higher interest rates and manufacturing growth. The Dow Jones industrials were up 1.0%, the S&P gained 1.1% and the Nasdaq added 0.9%.
Banks advanced. While the European Central Bank is looking to cut interest rates, the Federal Reserve remains on track to raise interest rates later this month. Higher interest rates are good for banks because they can charge more to loan money. JPMorgan Chase, Morgan Stanley and Goldman Sachs were up. Pharmaceutical stocks were boosted by a broker upgrade of both Eli Lilly and Merck, citing optimism over their drugs pipelines. Health and retail shares rebounded after declining Monday as auto sales suggested upbeat growth in November. Shares of Ford advanced, but General Motors slipped.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 48.6, the first time the index has been below the 50 breakeven level since November 2012. A reading below 50 indicates contraction in the manufacturing sector.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.50 to US$1,065.40. Copper futures were up 1.3% to US$2.07. WTI spot crude was down 1 US cent to US$41.64. Dated Brent spot crude was down 36 US cents to US$44.25. The US dollar was down against the euro, yen, pound, Swiss franc and the Australian dollar. However, it advanced against the Canadian dollar. The Dollar Index was down 0.5%. The yield on US Treasury 30 year bond was down 8 basis points to 2.90% while the yield on the 10 year note declined 6 basis points to 2.15%.
Europe
Stocks were mostly lower Tuesday even though most economic data were positive. Investors were reluctant to take positions ahead of Thursday’s European Central Bank policy announcement. The ECB is largely expected to announce further stimulus measures at that time. The FTSE added 0.6% and the SMI was virtually unchanged. The CAC and DAX retreated 0.9% and 1.1% respectively.
Linde plunged after slashing its earnings targets yet again. In Paris, Accor climbed after announcing some acquisitions. Air Liquide and Schneider Electric were down along with Carrefour. In London, financial stocks turned in a strong performance after all of the UK’s major banks passed stress tests. Barclays, Royal Bank of Scotland, Loyds Banking Group and HSBC advanced.
Eurozone’s manufacturing upturn gained further momentum as the final manufacturing PMI was 52.8 in November, the highest reading since April 2014. The euro area unemployment rate declined to its lowest level since early 2012. The unemployment rate dropped marginally to 10.7% in October from 10.8% in September. This was the lowest rate since January 2012. Germany’s unemployment rate decreased to a record low in November of 6.3% from 6.4% in October. UK manufacturing sector growth eased in November from the recent peak achieved in the prior month. The reading declined to 52.7 from 55.2 in October. Bank of England Governor Mark Carney said on Tuesday there was no new wave of capital regulation for banks in the pipeline, after the central bank set out plans to require them to hold extra capital.
Asia Pacific
Asian stocks advanced Tuesday after a slew of reports showed the pace of contraction in China’s manufacturing sector slowed in November and the services sector showed resilience, replacing manufacturing as China’s growth engine. Encouraging economic data from Japan and Australia also boosted investors’ appetite for risk.
Chinese shares reversed early losses to end modestly higher after mixed economic reports. While the official manufacturing PMI contracted for a fourth straight month to a three-year low, the services PMI reading stood at 53.6, slightly higher than October’s reading of 53.1. The final Caixin/Markit manufacturing PMI contracted for the ninth straight month in November, but more slowly than in October. The Shanghai Composite was up 0.3% while the Hang Seng added 1.7%. The yuan held steady after the International Monetary Fund admitted the currency into its reserve currency basket, known as Special Drawing Rights.
The Nikkei was up 1.3% thanks to exporters who were bolstered by a weaker yen. The November manufacturing PMI climbed to 52.6 from 52.4, its fastest pace in 20 while an 11.2% increase in capital expenditure in the July to September period points to an upward revision to third-quarter GDP. Canon, Fanuc, Sony and Honda Motor gained. Banks posted advances with Mitsubishi UFJ Financial, Mizuho Financial Group and Sumitomo Mitsui Financial climbing. Takeda Pharmaceutical rose after the drug maker announced a partnership in Japan for generic drug sales. Utility Kansai Electric Power and steelmaker Nisshin Steel also were higher. Nissan Motor dropped on equity dilution worries after reports the automaker is considering raising its stake in alliance partner Renault.
Australian shares rallied on bargain hunting after the Reserve Bank of Australia left the cash rate unchanged at 2% and sounded upbeat on the economy. Encouraging building approvals and separate data showing a rebound in resource exports in the third quarter also buoyed investor sentiment. The S&P/ASX climbed 1.9% and the All Ordinaries added 1.8%. BHP Billiton rebounded to recover the previous day’s losses after the Brazilian government said it plans to sue the company for the Samarco mine disaster last month. Rio Tinto advanced and Fortescue Metals Group also advanced despite iron ore prices tumbling to a fresh near-decade low. Gold miner Newcrest and Evolution Mining jumped after gold prices rebounded from five year lows on Monday. The big four banks also were higher
The Kospi was up 1.6% after tumbling 1.82% on Monday. The Sensex edged up 0.1% after the Reserve Bank of India kept its key repo lending rate unchanged at 6.75% but affirmed its commitment to ease its policy as and when room is available.
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*
Australia reports third quarter gross domestic product. The Eurozone posts November flash harmonized index of consumer prices and October producer price index. The Bank of Canada announces its monetary policy decision. In the US, third quarter productivity & costs and the ADP private employment report for November will be reported. The Federal Reserve publishes its Beige Book in preparation for its December 15 and 16 FOMC meeting.
*Note — all releases are listed in local time.