21st Nov recap, 20th Nov recap

21^st November summary

Stocks were mixed in Europe and APAC as investors reacted to FOMC minutes on Wed. US share indices rallied after earlier decline in the week.

US

Stocks rebounded Thursday – economic data pointed to a slowly improving labor market and subdued inflation. Financial shares lef the market higher. Yellen talks about the need to support the economy. DJIA at all time high – crosses 16000 for the first time ever. S&P neared the 1800 milestone (which it reached the following day! On Friday 22^nd Nov!). Initial claims for jobless benefits declined 21000 to 323,000 in the latest week – from a revised 344,000 the week before. Marking flash manufacturing PMI jumped to 54.3 from October’s final reading of 51.1. Senate Banking committee voted to approve Yellen’s nomination to become Fed chair next year. Dollar was up against the JPY, CAD and AUD.

Europe

Most indices declined, weaker than expected PMI from France and China – and some worry that FED will begin reducing stimulus – although there are arguments for continued QE as well as its tapering. MIB (Italy) was up 0.6% however, and IBEX (Spain) up 0.4%. All other markets saw some retreat. China’s November flash PMI declined to 50.4 from 50.9 in October. Eurozone – Germany’s reading improved, France’s readings showed contracted in manufacturing and services. Eurozone’s private sector growth weakened for the second straight month. Raises concerns about Eurozone economic recovery. Although last week Ireland’s

APAC

All except Japan were down Thursday. Prospect of changes in Fed monetary policy still driving markets. Nikkei only jumped due to Yen’s decline against the dollar. Bank of Japan has left its monetary policy unchanged once again.

20 November – Most global markets declined as investors eyed Fed’s policy announcement.

One thing that most FOMC participants agreed upon was that curtailing quantitative easing should not be automatic.  Rather, determination of when the Fed might move continues to depend on economic data. The discussions were wide ranging. They covered such subjects as by how much should bond purchases be cut, which bonds should be cut — Treasuries and/or mortgage backed securities — and whether to change the rate paid on excess reserves. They also discussed whether qualitative guidance is better than specific numeric guidance such as explicit unemployment and inflation numbers.

The Bank of England released minutes of its monetary policy committee meeting held earlier this month. At that time, the MPC unanimously decided to retain its 0.5% interest rate and the £375 billion ceiling on its asset purchase program. The minutes implied that the interest rates are unlikely to rise in the foreseeable future even if the unemployment rate reaches its 7% threshold. The minutes echo the message of the Inflation Report released last week.

The Shanghai Composite was up 0.6% to a near one month high and the Hang Seng edged up 0.2% after the People's Bank of China signaled it would end normal intervention in the currency market and quicken the process of full yuan convertibility. The central bank plans to widen the yuan's trading band "in an orderly way" while increasing the currency's two-way flexibility.