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On 11 October, 2017 - Stocks were mixed globally as investors waited for key earnings reports

Anne D Picker, Econoday

Investors’ reactions to the FOMC minutes were muted.

United States

US stock indexes edged up to record closing highs Wednesday. Investors reacted mutedly to the minutes of the most recent Federal Reserve policy meeting. The Dow Jones industrials, S&P and Nasdaq were up 0.2 percent.

Real estate, utilities and consumer staples were among S&P 500 sectors that posted gains, while financials were pressured by a slip in Treasury yields and industrials also declined. Wal-Mart was higher. Kroger jumped after it said that it was exploring the sale of its nearly 800 convenience stores. Johnson & Johnson advanced. J&J gained after a broker upgrade. Colgate-Palmolive also advanced following a broker upgrade. General Electric retreated after a broker said a dividend cut was "increasingly likely" and lowered its price target on the stock. Delta Air Lines rose following the company’s upbeat guidance for the fourth quarter, though earnings fell in the most recent quarter. Fastenal declined after the maker of fasteners, tools and supplies reported earnings that were in line with expectations.

The Federal Reserve released the minutes of its September 19-20 FOMC meeting. The minutes revealed that committee members were concerned about the risk of stubbornly low inflation and divided over how to respond. At the same time, the FOMC said that a further increase in the fed funds rate is likely to be needed later this year assuming the economy stayed on track. The minutes said that recent hurricanes had not disrupted that outlook. The Fed expects slower growth for a few months, but it does not expect a long-term effect.

Many expressed worries that poor price growth could reflect entrenched factors following a half-decade of sub-target readings. And several insisted they wanted to see economic data that that “increased their confidence” that inflation would move towards the Fed’s 2 percent inflation objective before they acted again. The FOMC announced the gradual reduction of its balance sheet — a move that was well-telegraphed prior to the meeting. US markets had little reaction to the minutes.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.15 to US$1,289.25. Copper futures were up 1.16 percent to US$3.10. WTI spot crude was up 41 US cents to US$51.33. Dated Brent spot crude was up 28 US cents to US$56.89. The US dollar was down against the euro, pound, Swiss franc and the Canadian and Australian dollars. It was virtually unchanged against the yen. The Dollar Index was down 0.4 percent. The yields on both the US Treasury 30 year bond and 10 year note were down 1 basis point to 2.87 percent and 2.34 percent respectively.

European markets

European stocks were mixed Wednesday. Spanish stocks rallied (up 1.3 percent) after Catalan leader Carles Puigdemont refrained from making a formal declaration of the region's independence on Tuesday, easing tensions for now. The FTSE was down 0.1 percent, the CAC slipped 1.24 points and the SMI lost 1.83 points. The DAX managed to gain 0.2 percent. Traders were cautious prior to the release of FOMC minutes from the September meeting.

Drug delivery devices maker Gerresheimer climbed after unveiling its third-quarter results. GEA Group surged after an activist investor bought a stake of just over 3 percent in the food processing machinery firm. Unilever gained after launching the €450 million buyback of its Dutch preference shares.

Smith & Nephew advanced after hedge fund Elliott Management reportedly built a stake in the medical device maker. Mondi retreated after the company said its annual results would be slightly lower than expectations. Novartis climbed while Roche and Nestlé declined in Zurich. Clariant advanced along with Logitech and Swisscom. Julius Baer, Credit Suisse and UBS were lower.

Eurozone house prices increased at a steady pace in the second quarter, increasing 3.8 percent on the year matching the rate of the first quarter. Spain's inflation accelerated for the second straight month in September. The CPI was up 1.8 percent on the year after increasing 1.6 percent in August.

Asia Pacific

Asian stocks were mixed Wednesday as higher commodity prices and better-than-expected data from Japan and Australia boosted investor optimism about global growth. Traders also were relieved that Catalan leader Carles Puigdemont refrained from making a formal declaration of the region's independence on Tuesday.

The Shanghai Composite was up 0.2 percent while the Hang Seng declined 0.4 percent. According to its Statistics Bureau, China is on track to meeting its growth target of around 6.5 percent this year and could well exceed it.

The Nikkei was up 0.3 percent to close at its highest level since December 1996 and the Topix added 0.1 percent. Japanese shares closed at their highest level in 21 years, with exporters and defensive stocks leading the surge after data showed Japan's core machinery orders rose for a second straight month in August. Core machine orders were up 3.4 percent on the month after jumping 8.0 percent in July. Kobe Steel shares plummeted to extend losses for the second straight session after a revelation that it had falsified data about the strength and durability of some aluminum and copper products shipped to about 200 companies.

Both the S&P/ASX and All Ordinaries were up 0.6 percent led by financials as the Australian dollar pushed higher after a strong reading on consumer confidence. The headline index jumped 3.6 percent to 101.4 in October after a 2.5 percent increase in September. Woodside Petroleum and Beach Energy rallied after oil prices surged on Tuesday amid signs that markets are gradually tightening after years of oversupply. Miners BHP Billiton and Rio Tinto declined along with Fortescue Metals Group.

The Kospi added 1.0 percent amid strong buying by foreign investors prior to Samsung Electronics' third quarter earnings release on Friday. The Sensex lost 0.3 percent as investors waited for earnings reports along with industrial output and inflation data later this week.

Looking Forward

Japan releases September producer price index. Australia posts August home loans. China reports September merchandise trade data. India releases September consumer prices and August industrial output. The Eurozone releases August industrial production. In the US, September producer prices and weekly jobless claims, money supply and the fed balance sheet will be released.

Global Stock Markets

Global Stock Markets

*Note — all releases are listed in local time.

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