World markets diffident as Fed move looms large
AP and AFP
December 5, 2013, 12:24 am TWN
MANILA/HONG KONG--World stock markets put in a patchy performance Wednesday, with Japan suffering a sharp fall, as investors continued to worry the U.S. Federal Reserve will soon start reducing its monetary stimulus.
European benchmarks made modest gains and U.S. stock futures were up slightly, auguring possible gains on Wall Street.
Chris Weston, chief market strategist at IG in Melbourne, Australia said traders and economists are looking to employment figures Wednesday from payrolls company ADP for indications about the strength of hiring ahead of the official U.S. employment report due Friday.
Eyes are on the release this week of U.S. economic indicators — with the main focus on Friday's non-farm payrolls data — which will provide some clarity on the Fed's plans for its US$85 billion-a-month bond-buying scheme.
The Fed's stimulus has shored up global stock markets over the past few years. So-called “tapering” of that stimulus could work the opposite way, even though it would be predicated on an improving U.S. economy.
Traders fear strong jobs figures will increase the likelihood of a pullback as early as the bank's next policy meeting in two weeks' time.
Among other U.S. data due for release this week are figures for third-quarter growth and home sales, while the Fed will open up its Beige book on regional economies.
“In a return to the good news is bad news theme, international equity markets were sold (Tuesday). Investors responded to solid economic data by worrying about the looming Fed taper program,” CMC Markets chief analyst Ric Spooner said in a note, according to Dow Jones Newswires.
Britain's FTSE 100 was nearly flat at 6,532.88. Germany's DAX rose 0.2 percent at 9,238.87 and France's CAC-40 climbed 0.3 percent at 4,185.77.
Dow Jones Industrial futures were up 0.2 percent and S&P 500 futures rose 0.1 percent.
In Asia, markets were mixed on Wednesday, but traders are growing concerned that recent upbeat U.S. data could prompt the Federal Reserve to begin cutting down its stimulus program this month.
Exporters listed on Japan's Nikkei suffered as profit-taking hit the dollar, which had been close to a six-month high against the yen on Tuesday.
Tokyo tumbled 2.17 percent, or 341.72 points, to 15,407.94 and Seoul dropped 1.12 percent, or 22.56 points, to 1,986.80. Hong Kong fell 0.76 percent, or 181.77 points, to 23,728.70.