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The Journal Gazette

  • Investor studies share prices during the afternoon trading at a private stock market gallery in Kuala Lumpur, Malaysia, Monday, Nov. 4, 2013. Global stocks markets were mixed Monday, clouded by persistent fears that the U.S. may tighten its monetary policy by January. In Asia, markets opened the week on a pessimistic note but European stocks edged higher ahead of a key European Central Bank meeting that could potentially cut rate following recent appreciation in the euro. (AP Photo/Daniel Chan)

Monday, November 04, 2013 12:14 pm

Markets solid as focus moves from Fed to ECB

By PAN PYLASAssociated Press

Markets were solid Monday as investors awaited a raft of economic news over the coming days that culminate with the monthly policy meeting of the European Central Bank and the delayed publication of the October U.S. nonfarm payrolls report.

For weeks, the U.S. Federal Reserve has been the central bank most investors have been monitoring as they look for clues as to when it will start withdrawing its monetary stimulus. The $85 billion in monthly asset purchases have been one of the reasons why many stock indexes, including the main U.S. markets, have struck record highs.

Following the Fed's latest policy statement last week, some investors think "tapering" of the stimulus may begin as soon as December. That weighed on stock markets, which had been buoyed by expectations the Fed wouldn't act until March at the earliest, largely because of the uncertainty created by the partial U.S. government showdown.

Friday's payrolls data for October, delayed because of the shutdown, could further influence expectations.

Before then, on Thursday, the ECB will be in focus, with investors wondering whether surprisingly low inflation figures may prompt policymakers to cut the bank's benchmark interest rate to a record low of 0.25 percent. The prevailing view is that the ECB will keep the rate unchanged at 0.5 percent but may hint at further action if need be.

"For now, we think that the Governing Council will refrain from any immediate action, but we expect the downbeat tone of this week's meeting to lay the groundwork for a policy response over the next few months," said Adam Cole, an analyst at RBC Capital Markets.

The euro was the main mover following last week's inflation figures, which showed prices across the 17 EU countries that use the euro rising only 0.7 percent in October, well down on the ECB's mandate of just below 2 percent. Europe's single currency has recovered its poise somewhat, and was trading 0.2 percent higher Monday at $1.3516.

In stock markets, Germany's DAX closed up 0.3 percent at 9,037.23 while the CAC-40 in France rose 0.4 percent to 4,288.59. The FTSE 100 index of leading British shares ended 0.4 percent higher at 6,763.62.

In the U.S., the Dow Jones industrial average was down 0.1 percent at 15,603 while the broader S&P 500 index rose 0.1 percent to 1,764.

Earlier in Asia, Hong Kong's Hang Seng eased 0.3 percent to 23,189.62 and China's Shanghai Composite was flat at 2,149.63. Japan and India's stock markets were closed for public holidays. Seoul's Kospi lost 0.7 percent to 2,025.17.

The biggest mover in Asia was Thailand's benchmark, which tumbled 2.4 percent after protesters flooded the streets of the capital, Bangkok, to oppose an amnesty bill they say is designed to bring back Thaksin Shinawatra, who was ousted as premier in a 2006 coup.