Global indices advanced in October

Stocks in Europe and the US advanced ahead of Federal Reserve and Bank of England monetary policy announcements.

United States

US shares advanced Tuesday thanks to consumer company earnings. The indices also advanced for the month of October. Investors were waiting for an announcement on the next Federal Reserve chair, which could come Thursday. Both the Dow Jones industrials and S&P edged up 0.1 percent while the Nasdaq added 0.4 percent. In October, The Dow was up 4.3 percent, the S&P gained 2.2 percent and the Nasdaq was 3.6 percent higher.

The Fed began two-day meeting in Washington on Tuesday although the central bank is widely expected to leave interest rates unchanged in its statement on Wednesday. Market-watchers are also tracking developments of the tax-cut plan being developed by Trump and fellow Republicans.

October consumer confidence hit its highest level in nearly 17 years. The index jumped 5.3 points to 125.9. The quarterly employment cost index added 0.7 percent on the quarter and 2.5 percent when compared with the same month a year ago.

Mondelez jumped after the Oreo cookie maker reported better-than-expected profit and revenue, while Kellogg surged following its first sales increase in more than two years. Apple advanced to a record high after positive reviews of iPhone X. The stock provided the biggest boost to all the three major indexes. Under Armour tumbled after the sportswear company slashed 2017 forecasts.

Rockwell Automation jumped after the company said it had rejected an unsolicited acquisition bid from rival Emerson Electric for more than $27 billion. Emerson shares declined. Fertilizer maker Mosaic jumped after its earnings for the latest quarter were well above expectations, but it also cut its dividend. Sony was higher after the company reported strong second quarter profit growth and raised its full-year guidance.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$1.85 to US$1,270.15. Copper futures were unchanged at US$3.11. WTI spot crude was up 29 US cents to US$54.44. Dated Brent spot crude was up 47 US cents to US$61.37. The US dollar was up against the yen, Swiss franc and the Canadian and Australian dollars. The euro was virtually unchanged and the pound was higher against the US currency. The Dollar Index was up 0.04 percent. The yield on the US Treasury 30 year bond was unchanged at 2.88 percent and 10 year note was up 1 basis point to 2.38 percent.

European markets

Shares advanced Tuesday in light trading. German markets were closed for a holiday. Investors were cautious prior to Wednesday’s Federal Reserve decision and Thursday’s Bank of England announcement. In addition to the central bank announcements, traders are also looking forward to a number of important corporate earnings and economic reports. The FTSE was up 0.1 percent, the CAC gained 0.2 percent and the SMI advanced 0.7 percent. For the month of October, the FTSE added 1.6 percent, the CAC gained 3.3 percent, the DAX advanced 3.1 percent and the SMI was 0.9 percent higher. The IBEX added 0.7 percent for the day and 1.4 percent on the month as political tensions eased after Spain took over direct rule of Catalonia.

Airbus rallied after reaffirming its 2017 guidance. BNP Paribas tumbled after the lender posted lower trading revenues in the third quarter. BP jumped after it reported a 9.2 percent increase in third-quarter earnings and announced it would launch a share buyback. Ryanair Holdings climbed after the company maintained its full-year profit guidance after reporting an 11 percent increase in first-half profit.

Specialty chemicals firm Croda gained after a good performance across all three businesses in the third quarter. WPP advanced even though the company lowered its full-year earnings forecasts, saying firms are reducing advertising spending. ABB climbed on a broker upgrade. Nestlé was higher along with Novartis and Roche in Zurich.

Third quarter flash gross domestic product climbed a quarterly 0.6 percent and was up 2.5 percent when compared with the same quarter a year ago. The unemployment rate declined to 8.9 percent in September, down from 9.0 percent in August — a more than eight-year low. October flash harmonized index of consumer prices slowed to 1.4 percent on the year from 1.5 percent in September. Third quarter flash gross domestic product was up 0.5 percent on the quarter and 2.2 percent on the year.

Asia Pacific

Most Asian stocks declined Tuesday as China's October official manufacturing PMI missed expectations and the Bank of Japan kept its monetary policy unchanged as widely expected.

The Shanghai Composite added 0.1 percent after the October CFLP manufacturing PMI eased to 51.6 from 52.4 in September indicating slower growth. The composite added 1.3 percent for the month of October. The Hang Seng was 0.3 percent lower on the day but was up 2.5 percent on the month.

The Nikkei slipped 0.06 point while the Topix was 0.3 percent lower as the US dollar slipped against the yen. For the month, the former soared 8.1 percent and the latter added 5.4 percent.

Economic data released were mixed. September industrial production dropped a monthly 1.1 percent, reversing a 2.0 percent increase in August. Household spending was down 0.3 percent on the year. SoftBank tumbled in the wake of reports that the company plans to call off talks to merge its Sprint unit with T-Mobile US amid failure to agree on ownership of the combined entity. Mitsubishi Electric dropped after declaring its second-quarter results. Banks Mitsubishi UFJ Financial and Sumitomo Mitsui declined.

The Bank of Japan left monetary policy settings unchanged in line with expectations. The BoJ's short-term policy rate for excess reserves remains at minus 0.1 percent while the target level for the long-term 10-year yield remains at around zero percent. Officials voted 8 to 1 in favour of this decision. The BoJ updated its view of the economy. The economy is projected to "expand moderately" with the median forecast for real GDP growth revised from 1.8 percent to 1.9 percent for the fiscal year starting April 2017 and left unchanged at 1.4 percent for the fiscal year starting April 2018.

Australian shares erased early gains to end slightly lower, dragged down by banks and miners. The S&P/ASX was down 0.2 percent while the All Ordinaries were 0.1 percent lower. For the month, both indices were 4.0 percent higher. The big four banks declined. Lower iron ore prices weighed on miners, with both Rio Tinto and rival Fortescue Metals Group retreating. BHP Billiton eased after saying a Brazilian court has extended the deadline for negotiating a settlement of public civil claims over the November 2015 Samarco fatal dam disaster to November 16, 2017.

The Kospi jumped 0.9 percent after South Korea and China agreed to hold talks on the sidelines of next week's APEC summit in a bid to normalize relations that have been strained by a year-long standoff over the U.S. defense missile system. On the month, the index was 5.4 percent higher. The Sensex was down 0.2 percent but gained 6.2 percent on the month.

Looking forward

China and Japan post October manufacturing PMIs. The UK and US also post manufacturing PMIs. In the US, the ADP private employment report, October ISM manufacturing index and September construction spending will be reported. The FOMC announces its monetary policy decision.

Global Stock Markets

Global Stock Markets

Note — all releases are listed in local time.