HONG KONG (AP) — Asian and European stock markets sank Friday as investors, disappointed by the ECB’s stimulus plan, hunkered down ahead of U.S. jobs data that will influence a Fed rate hike decision later this month.
KEEPING SCORE: European stocks headed lower in early trading. Germany’s DAX slipped 0.4 percent to 10,741.24 and Britain’s FTSE 100 lost 0.5 percent to 6,246.38. France’s CAC 40 dropped 0.5 percent to 4,706.45. But U.S. stocks were poised to open higher. Dow futures were up 0.5 percent to 17,570.00 and broader S&P 500 futures rose 0.5 percent to 2,060.90.
ECB EXPECTATIONS: Markets had been anticipating strong action from the European Central Bank in the run-up to its policy announcement Thursday. Expectations were further elevated after ECB chief Mario Draghi signaled the bank would act decisively to keep the 19 countries that use the euro from falling into deflation or an economic contraction. However, the ECB disappointed investors by cutting a key interest rate less than expected and not stepping up monthly bond purchases as expected, in a program known as quantitative easing, or QE.
GLOBAL OUTLOOK: With the ECB meeting out of the way, investors will now focus on the Federal Reserve’s policy meeting on Dec. 15-16. Investors increasingly expect the U.S. central bank to raise rates from a record low at the meeting, but they’ll also be keeping a keen eye on upcoming economic indicators that could influence the decision, starting with a U.S. jobs report for November due later Friday. The data is expected to show unemployment holding steady at 5 percent and 200,000 new jobs added. Key data due next week include Chinese trade and Japanese third quarter GDP.
MARKET INSIGHT: “Share market volatility is likely to remain high in the run-up to the Fed’s interest rate setting meeting in mid-December,” Shane Oliver, head of investment strategy at AMP Capital in Sydney, said in a report. “Providing the Fed undertakes a ‘dovish hike’ as we expect, in stressing that future moves will be gradual, then confidence is likely to return allowing share markets to see the normal ‘Santa Claus’ rally into year-end and the broad trend in shares to remain up.”
ASIA’S DAY: Regional benchmarks ended sharply lower, with Japan’s Nikkei 225 dropping 2.2 percent to close at 19,504.58. South Korea’s Kospi lost 1 percent to 1,974.40. Hong Kong’s Hang Seng shed 0.8 percent to 22,235.89 and the Shanghai Composite Index in mainland China dropped 1.7 percent to 3,524.99. Australia’s S&P/ASX 200 retreated 1.5 percent to 5,151.60. Benchmarks in Taiwan and Southeast Asia also lost ground.
CURRENCIES: The dollar strengthened to 122.71 yen from 122.53 yen in the previous day’s trading. The euro fell to $1.0888 from $1.0939, giving back gains from a 3 percent jump on Thursday’s ECB news.
ENERGY: Benchmark U.S. crude was up 17 cents to $41.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.14, or 2.9 percent, to close at $41.08 a barrel on Thursday in New York. Brent crude, which is used to set prices for international oils, climbed 4 cents to $43.88 a barrel in London.
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