Wednesday Morning Cheat Sheet: 3 Stories Moving Markets

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It’s Wednesday, October 30, and U.S. stock stock futures advanced in early trading. As earnings season rolls on, economists and market participants will keep one eye on the U.S. Federal Reserve today: The Federal Open Market Committee concludes a two-day policy meeting and is expected to make an announcement in the afternoon. Given the turmoil of the 16-day partial shutdown and still weak economic recovery, the Fed is expected to delay tapering asset purchases.

Payroll data from the ADP National Employment Report provided more evidence that the U.S. labor market is still not yet fully recovered. Overall nonfarm private payrolls grew by just 130,000 in October, the lowest level since April and below the three-month average growth rate of 142,000.

However, payrolls in both manufacturing (+5,000) and construction (+14,000) increased noticeably, which suggests that business activity within these core industries could remain strong heading through the fourth quarter. Employment within the financial industry continued to fall. Small businesses (those with 1-49 employees) added 28 percent of new jobs, medium businesses (40-499 employees) added 10 percent of new jobs, and large businesses (500+ employees) added 62 percent.

At 8:40 a.m., Dow futures were up 0.25 percent, S&P 500 futures were up 0.2 percent, and Nasdaq futures were up 0.42 percent.

Major Asian equity markets closed Wednesday on a positive note. In Japan, the Nikkei climbed 1.23 percent to 14,502.35, and the yen weakened to 98.2150 against the dollar. In Hong Kong, the Hang Seng advanced 2 percent to 23,304.02, and in Shanghai, the SE Composite climbed 1.48 percent to 2,160.46. In India, the Mumbai Sensex climbed 0.5 percent to 21,033.97. In Australia, the ASX All Ordinaries climbed 0.27 percent to 5,425.40.

The Bank of Japan is expected to make a policy announcement later today, but it is not expected to change its benchmark interest rates or the size of its stimulus program. Rates are likely or remain unchanged at the zero bound.

Japanese industrial production, reported late Tuesday night, increased less than expected in September. Total industrial output increased 1.5 percent on the month, missing expectations for a 1.8 percent increase. Production increased 4.8 percent on the year.

Higher output was recorded in key segments such as transportation equipment, electronics, and communications equipment. Output of large and small passenger cars also increased (+8.9 and +9.9 percent, respectively). Japan’s statistics office forecasts that output will increase 4.7 percent in October but decline about 1.2 percent in November.

European equity markets advanced in midday trading. In the U.K., the FTSE 100 was up 0.39 percent; in Germany, the DAX was up 0.28 percent; in France, the CAC 40 was up 0.42 percent; and the Euronext 100 index was up 0.29 percent.

Eurostat, the statistical office the European Union, reported on Wednesday that the businesses investment rate in the second half of 2013 was 19.2 percent in the euro area and 18.9 percent in the EU27. This compares against an investment rate of 18.8 percent in the first half in both the euro area and the EU27. The increase was largely the result of higher direct investment, as total stocks of materials fell.

Separately, Eurostat reported that the household savings rate in the euro area declined from 13.1 percent in the first quarter to 12.8 percent in the second quarter, declining from 11.1 percent to 10.7 percent in the EU27 over the same period. Savings rates in Europe have come down fairly steadily since the height of the financial crisis.

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