Most Fed watchers expect an interest rate increase in December.
US stock indices were mixed Wednesday after they pulled back from gains made earlier in the day. The Dow Jones industrials and the S&P added 0.2 percent while the Nasdaq slipped 0.2 percent. Stocks have been rising in recent weeks in part on expectations that Congress is making progress in its efforts to cut tax rates. There was little reaction to the Federal Reserve’s monetary policy announcement during afternoon trading.
Estee Lauder jumped after strong sales growth in China and Hong Kong helped it to report higher revenue and earnings for the latest quarter than expected. Facebook reported a 79 percent jump in profit. Facebook’s total advertising revenue rose 49 percent in the third quarter to $10.14 billion, about 88 percent of which came from mobile ads. Net income rose to $4.71 billion from $2.63 billion. Total revenue increased 47.3 percent to $10.33 billion. Oil prices supported shares of energy firms including Devon Energy, Chesapeake Energy and Marathon Oil.
The October ISM manufacturing index eased from September’s high of 60.8 to 56.7. Both new and export orders were strong. September construction spending increased a monthly 0.3 percent and 2.0 percent from the same month a year ago.
The Federal Reserve kept its interest rate range unchanged at 1.00 percent to 1.25 percent as widely expected. In its statement, the FOMC said that growth was solid and the labor market continued to strengthen. It acknowledged that inflation remained soft but did not downgrade its assessment of inflation expectations. The Fed also noted that the nation’s unemployment rate had declined further. The Fed has raised rates twice this year and currently forecasts one more rate increase by the end of 2017 as part of a tightening cycle that began in late 2015.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$6.90 to US$1,277.05. Copper futures were up 1.3 percent to US$3.14. WTI spot crude was down 12 US cents to US$54.26. Dated Brent spot crude was down 48 US cents to US$60.46. The US dollar was up against the yen, euro, pound and Swiss franc. The currency declined against Canadian and Australian dollars. The Dollar Index was up 0.25 percent. The yield on the US Treasury 30 year bond was down 3 basis points to 2.85 percent and 10 year note slipped 1 basis point to 2.37 percent.
Most European indices advanced Wednesday. The DAX rallied after investors returned following yesterday's public holiday. Traders were encouraged by positive economic data from both China and the United States. Chinese manufacturing data provided a boost to shares of mining stocks. The FTSE retreated 0.1 percent while the CAC was up 0.2 percent, the SMI added 0.3 percent and the DAX jumped 1.8 percent. Traders were waiting for the Federal Reserve monetary policy announcement which will occur after markets here are closed.
Investor concerns over Catalonia and its potential exit from Spain eased further on Wednesday. Catalonia's ousted leader Carles Puigdemont has agreed to the snap election called by Spain's central government and said the fight for independence would go on.
Bayer advanced amid reports that the pharmaceutical firm and Novartis are threatening legal action against 12 clinical commissioning groups in the north of England for plans to offer patients a cheap eye drug. Novartis also was higher in Zurich. AstraZeneca climbed after winning US approval for a new drug to treat blood cancer. Indivior shares gained after the FDA committee recommended approval for a new drug to treat opioid addiction. Standard Chartered was down as higher expenses overshadowed a rise in third-quarter profit. Next tumbled after a disappointing trading update — sales missed forecasts.
October manufacturing PMI climbed to 56.3 from an upwardly revised 56.0 in September. UK house prices increased at a faster pace in October according to Nationwide Building Society. House prices increased 2.5 percent on the year following September's revised 2.3 percent rise.
Asian stocks advanced broadly Wednesday — investors were waiting for the Federal Reserve decision.
The Shanghai Composite edged up 0.1 percent. Investors were cheered by the October Caixin Manufacturing PMI that continued to indicate expansion. The reading was unchanged at 51.0 as expected. This index has now signaled expansion in the Chinese manufacturing sector for five consecutive months after indicating a small contraction in May. The Hang Seng jumped 1.2 percent.
The Nikkei added 1.9 percent and the Topix was 1.2 percent higher thanks to a weakening yen, solid manufacturing data and upbeat corporate earnings results. Japan's manufacturing activity continued to expand strongly in October, underpinned by solid performances of output, new orders and employment. Banks including Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial advanced. A weaker yen boosted exporters including Canon, Honda and Panasonic. Sony advanced after reporting strong second-quarter profit growth and raising its full-year operating income forecast. Tokyo Electron jumped, touching a record high, after the company raised its net profit forecast for the year through March 2018 to 198 ¥billion from ¥163 billion.
Both the S&P/ASX and All Ordinaries were up 0.4 percent. Chinese steel futures rose and the latest PMI survey indicated that growth in the country's manufacturing sector expanded for the 13th successive month in October. National Australia Bank gained ahead of its earnings results due Thursday. Both ANZ and Westpac also were higher. BHP Billiton and Rio Tinto gained.
The Kospi jumped 1.3 percent to close at a fresh record high, led by technology shares. The Sensex rallied and gained 1.2 percent.
Australia posts September merchandise trade balance. October manufacturing PMIs will be released for the Eurozone, France and Germany. Germany also posts October unemployment rate. The Bank of England announces its monetary policy decision and publishes its Quarterly Inflation Report. In the US, third quarter productivity and costs will be released along with weekly jobless claims, money supply and fed balance sheet.
Global Stock Markets
Note — all releases are listed in local time.