While London shivers under a blanket of freezing fog this morning, perhaps it is not surprising that the FTSE 100 Index is only slightly higher so far today after closing yesterday’s session prone. Indeed, the opening tone in European equity markets so far is cautious ahead of today’s report from the Federal Open Market Committee on the U.S. economy and policy pointers. Apart from this, there is a paucity of ‘macro’ news due today except for Eurozone October industrial production numbers for October which, being so historic, may add little to the picture for prospects.
What was encouraging was yesterday’s ZEW survey on sentiment for the German economy which attempts to look six months forward and which showed a jump to a seven-month high. It looks as if Germany may avoid slipping back into recession after what are expected to be a soft Q4/2012 and a flat Q1/2013. This individual strength will be important for the recovery of the Eurozone but it must be hoped that inflation in Germany will not be a problem for some time if the European Central Bank’s interest rate policy is not to be compromised as it has begun to be in the past.
On Wall Street, the Dow and S&P; 500 both gained around 0.6% but off their best levels. In contrast, the NASDAQ Index came storming back with a 1.2% rise, close to the day’s high, which helped it to claw back some more of its pronounced weakness since mid-September relative to the other indices. Support for this move came from the shares of Apple Inc – which have become something of a trader’s gambling chip in recent weeks – which gained a net 2.1% on the day after being up 3.7% at one stage.
Index recoveries have continued in Shanghai and Hong Kong this morning, respectively +0.4% and +0.8%, on hopes of sustained monetary accommodation from the FOMC and further signs of economic stimulus from China’s new leadership.
One note of encouragement for the U.K. economy has emerged this morning with the release of employment data which shows there was a fall in the level of unemployment benefit claims in November against expectations of a rise while the overall level of unemployment fell by 82,000 to 2.51 million – the largest decline since 2001. The apparent resilience of the U.K.’s employment level has confounded observers in recent months at a time when the economy has been, at best, sluggish. Unsurprisingly, most of the jobs-gain has been in the areas of part-time employment and self-employment.
As we approach the end of the year, there is, inevitably, a sense that investors are winding down for the holidays. A late boost may come from the Federal Reserve’s comments later today.