European stock markets closed narrowly mixed yesterday while Wall Street marked time ahead of an expected US interest rate cut.
London’s FTSE 100 closed 0.34% up at 7,330.78 points, Frankfurt’s DAX 30 ended 0.23% down at 12,910.23 points and Paris’ CAC 40 closed 0.45% up at 5,765.87 points, while the EURO STOXX 50 was flat at 3,620.29 points at close.
News that auto giants Fiat Chrysler and Peugeot-maker Groupe PSA were in talks on a possible $50bn (€45bn) mega merger sparked local interest, with both shares making sharp gains.
The British pound firmed in early trade but then slipped back after UK lawmakers voted to hold a general election in December as Prime Minister Boris Johnson seeks to break the Brexit deadlock.
Wall Street was easier as investors awaited a Federal Reserve decision on interest rates.
The Fed was widely expected to cut interest rates again but markets were keen to hear whether the US central bank would signal additional rate cuts or a pause.
A fresh data showed US economic growth cooled slightly in the third quarter, while private sector companies hired more people in October than analysts expected.
General Electric shot up about 10% after reporting better-than-expected third-quarter profits and boosting some of its financial targets despite reporting another large loss.
Apple and Facebook results were due after the close.
XTB analyst David Cheetham said the key focus was on “the Fed decision this evening where investors are expecting a hawkish cut, with US rate setters widely expected to lower the base rate for the third meeting in a row.”
“With a cut today completely priced in, markets are looking to the Fed’s stance on its policy outlook,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
While Fed funds rate futures fully price in a 25- basis-point cut yesterday, only about a 30% chance of another cut in December has been priced in, compared with about more than 70% earlier this month.
“I think the Fed will clearly indicate that a rate cut in December is not its main scenario,” said Tomoaki Shishido, macro strategist at Nomura Securities.
In Paris, PSA rallied 5.4% while in Milan Fiat Chrysler Automobiles (FCA) surged 10%.
A merger would bring PSA access to the lucrative US market, while helping it survive the twin impact of the global economic slowdown and trade war worries, analysts said.
“One bright spot was the car sector,” noted City Index analyst Fiona Cincotta.
“Like most of the car sector both Fiat and Peugeot have been struggling with slowing global car demand and the fallout of various trade frictions.”
The tie-up would make the new automaker the fourth largest in terms of sales behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Peugeot.
Asian stocks slipped yesterday as traders waited for the Fed decision, confident of another rate cut but focused on its plans for the future.
“With market expectations signalling a 93-percent chance of a rate cut today, we are instead seeing a focus on the outlook, with markets expecting to wait until April 2020 to see the next 25 basis-point move,” IG analyst Chris Beauchamp said.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.33% from Tuesday’s three-month high while Japan’s Nikkei lost 0.57% after hitting a one-year high the previous day.
China’s CSI300 of Shanghai and Shenzhen shares fell 0.49%.
Since US President Donald Trump outlined what he called the first phase of a trade deal with China earlier this month, investors have bet on a trade truce between the two countries, driving global equities higher.
Treasuries yield stood at 1.833%, near a 1-1/2-month high of 1.860% touched earlier this week.
That has helped to lift the dollar, particularly against safe-haven currencies such as the yen.
The dollar was traded at 108.86 yen, after having hit a three-month high of 109.07 yen.
The Bank of Japan is widely expected to keep its policy on hold today.
The euro stood flat at $1.1111, having bounced off from Tuesday’s low of $1.10735.
Oil prices slipped after an industry report that stocks at the Cushing delivery hub for the benchmark rose last week, shrugging off a drop in overall inventories.
US West Texas Intermediate (WTI) crude lost 0.47% to $55.28 per barrel while international benchmark Brent crude futures dropped 0.19% to $61.47 a barrel.
from Gulf Times https://ift.tt/2NoxWVP
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