MARKETS AT A GLANCE
(All data as of approximately 5 p.m. ET)
|Japan: Nikkei 225||15788.8||39.63||0.25%|
|S&P BSE Sensex||27057.4||-207.91||-0.76%|
|UK: FTSE 100||6830.11||1.11||0.02%|
|U.S. 2 Year||-1/32||0.572|
|U.S. 5 Year||-4/32||1.788|
|U.S. 10 Year||-10/32||2.541|
|Australia 10 Year||-2/32||3.58|
|China 10 Year||0/32||4.33|
|India 10 Year||-2/32||8.53|
|Japan 10 Year||-5/32||0.547|
|German 10 Year||0/32||1|
|Australia $ (AUD/USD)||0.9152||-0.0005|
|S. Korean Won (USD/KRW)||1034.44||10.04|
|Chinese Yuan (USD/CNY)||6.1292||-0.0004|
|WSJ Dollar Index||76.13||0.02|
U.S. stocks rose, stabilizing after two days of losses for the broad market. Treasurys ended lower as investors’ focus shifted to the Fed. Oil prices settled at multi-month lows after inventory data showed a smaller-than-expected decline. Gold futures settled at a fresh three-month low as the dollar strengthened.
Among the key Asian economic reports due out Thursday are China’s August CPI and PPI data. Inflation in China is expected to remain tame, rising 2.2% on the year, and the producer-price index is seen declining 1.1%. In the Philippines, many economists are forecasting the central bank will raise rates after the economy recorded 6.4% growth on the year in the second quarter.
U.S. stocks rose, rebounding after two days of losses.
The advance follows a string of shallow declines that knocked the S&P 500 from Friday’s record high. The S&P 500 is down 0.6% this week and up 8% so far in 2014.
Traders said the market was quiet, with little in the way of economic or corporate news to drive buyers or sellers.
Technology stocks were the best performers, led by Apple Inc. The stock climbed 3.1%, rebounding from losses on Tuesday, when the company unveiled the latest models of its iPhone and a line of watches.
Investors turned their attention to next week’s Federal Reserve meeting, which could shed light on when the central bank plans to raise short-term interest rates. The Fed’s easy-money policies have helped boost U.S. stocks in recent years by dimming the appeal of bonds.
Mohit Bajaj, director of ETF and portfolio trading services at broker WallachBeth Capital, said that he saw investors shifting money from U.S. bond exchange-traded funds into those that hold U.S. stocks.
“People are concerned about interest rates,” Mr. Bajaj said. “When people move out of fixed income, they’re looking to park that money in equities.”
Stephen Auth, chief investment officer of Federated Investors, said that the U.S. stock market has more room to rise as the economy improves. He said that shares of U.S. energy and technology companies look most attractive based on valuation and the outlook for higher profits.
“The U.S. economy is growing, earnings are growing,” Mr. Auth said.
Dollar General Corp. rose 0.4% after the company said that it is taking its $9.1 billion bid to buy Family Dollar Stores Inc. directly to Family Dollar’s shareholders. The attempted hostile takeover comes after Family Dollar’s board rejected Dollar General’s offer. Family Dollar rose 0.2%.
Japan’s Topix stock index hit a six-year high Wednesday as the dollar gained ground against the yen, but most markets elsewhere in Asia fell, dragged down by technology stocks.
The Swiss franc fell to its lowest level in nearly three weeks against the euro, after the Swiss National Bank said that negative interest rates remained an option should its minimum exchange rate come under threat.
Thomas Moser, an alternate member of the SNB’s policy-setting governing board, told The Wall Street Journal that negative interest rates would be used if needed. Mr. Moser added that he couldn’t say whether the SNB would announce this at its meeting on Sept. 18 or at a later date.
The SNB has kept the franc at a floor of 1.20 against the euro since August 2011, in a bid to keep its currency from appreciating too much and damaging the country’s economy. The franc has moved toward that floor as the euro weakened in recent weeks, appreciating nearly 0.9% between Aug. 5 and Sept. 10.
The dollar continued its rally against the yen, rising to its highest level since September 2008. Some investors are betting the Federal Reserve will sharpen its guidance on U.S. interest rates at its monetary policy meeting, set for Sept. 16-17.
“We’re moving into a time period where the Fed could be the first major central bank to raise interest rates,” said Camilla Sutton, a managing director at Scotiabank.
U.S. Treasurys extended losses, sending the 10-year yield up for a fifth straight session as investors brace for a potential turning point in Federal Reserve policy.
The Fed’s policy-setting board meets Sept. 16-17, after which it will release an updated policy statement and host a press conference with Fed Chairwoman Janet Yellen. There is growing expectation that the central bank will offer more clarity on the timing of its first rate increase since the 2008 financial crisis–a move that would weigh particularly on shorter-dated Treasurys.
It is the attention “out there about the Fed hiking rates that’s got people all hot and bothered,” said David Ader, U.S. government bond strategist at CRT Capital Group. He points to growing dialogue in the media and among market participants about whether investors’ expectations are out of sync with the Fed’s outlook on policy.
Contributing to that chatter was a research piece by the San Francisco Fed out earlier this week, suggesting that the public’s expectations for rate increases are lagging the central bank’s published outlook. An updated forecast by Fed officials will be released Sept. 17.
For now, market expectations center around the middle of 2015 for the first rate increase. Any hint that the move could come earlier would put pressure on shorter-dated notes, which are most tied to the outlook on monetary policy.
“We believe the danger is currently that the market swings from pricing too few rate hikes to pricing too many,” said Gennadiy Goldberg, U.S. strategist at TD Securities. The firm’s call is for the rate increase to happen in September 2015.
Reflecting bond investors’ hesitance ahead of the Fed meeting, a Treasury auction midday drew mediocre demand despite the recent price decline. The $21 billion sale of 10-year notes offered a 2.535% yield, but direct bidders took just 13.5% of the supply. That group mostly comprises domestic banks and investment funds.
By contrast, indirect bidders, who often reflect foreign interest, took 53% of the sale.
Bond traders say buyers overseas are lending support to U.S. Treasurys since the market pays more appealing rates compared to the 1.01% offered on 10-year German debt and 0.54% on similar Japanese government bonds.
Oil prices dropped to fresh multi-month lows as new signs of weak demand weighed on the market.
Investors have driven global prices down 15% from mid-June highs as fears about a supply disruption in Iraq or elsewhere faded and concerns about weak global demand grew.
The U.S. Energy Information Administration and the Organization of the Petroleum Exporting Countries both lowered their expectations for 2015 global demand growth in forecasts released this week. The International Energy Agency is set to release its latest outlook on Thursday.
The global oil market is well supplied. U.S. production hit a 28-year high in August, the EIA said Tuesday, and Libyan production has climbed to 800,000 barrels a day from 200,000 barrels a day several months ago.
“There’s too much light, sweet crude out there,” said Michael Wittner, head of global oil research at Société Générale. “Also, demand has been weak.”
The EIA’s weekly storage data showed less demand for crude oil and petroleum products than had been expected.
Crude-oil supplies fell less than analysts had called for in a Wall Street Journal survey, and petroleum-product stockpiles built significantly. Combined, oil and refined product supplies rose by 9.5 million barrels last week, the EIA said.
In the metals market, gold futures gave up earlier gains, settling at a fresh three-month low as a stronger U.S. dollar sapped investor appetite for the metal.
Obama Prepares Address on Islamic State
President Obama is set to propose a significantly expanded military offensive against Islamic State militants at a moment when the nation is deeply concerned about new threats to the country.
Banco Santander Chair Dies; Daughter Ana Patricia Botín to Take Post
Following the death of Emilio Botín from a heart attack, the late chairman’s eldest daughter, Ana Patricia Botín, has been appointed to succeed him as head of Banco Santander.
Dollar General Takes Bid to Family Dollar Holders
Dollar General is taking its $9.1 billion offer to buy Family Dollar Stores directly to its rival’s shareholders, in an attempt to pull off a hostile takeover after its offer was rejected by its target’s board.
U.S, EU Ready New Energy Sanctions on Russia
U.S. and European Union officials are close to imposing the toughest round of energy sanctions yet, which would hit both Russia’s energy industry and companies like Exxon Mobil that are working with state-controlled oil companies.
Regulators Weigh Rules for Private Trading Venues
Market regulators are considering imposing additional steps to require greater transparency and disclosures by private trading platforms and heightened oversight of computerized trading strategies.
Cameron Campaigns in Scotland
British Prime Minister David Cameron made a late push in Scotland for a united Britain, urging voters not to choose independence in a referendum next week.
OPEC Splits on Response to Falling Oil Prices
A split in response to falling oil prices emerged among members of OPEC after Saudi Arabia cut its oil production sharply last month while other leading members raised their output.
Ferrari Chairman Quits
Luca Cordero di Montezemolo is to quit as chairman of Ferrari after 23 years at the company, just days after his boss said that the luxury car brand’s Formula One race results over the past six years were unacceptable.
Ukraine Promises More Autonomy for East
Ukrainian President Petro Poroshenko said that Russia had withdrawn most of its troops from eastern Ukraine, raising further hopes that a peace deal struck last week would stick.
AngloGold Ashanti to Spin Off International Assets
South Africa-based miner AngloGold Ashanti said it is restructuring its operations by spinning off its international assets into a new, London-listed company and raising $2.1 billion in a rights issue.
RECENT DJ DOMINANTS:
Washington Trading Probe Broadens to Hedge Funds
Regulators Weighing New Rules for Private Trading Venues
Several Investors Circling Atlantic City’s Revel
Starbucks to Sell Single-Origin Coffees in Supermarkets
Cost of Employer Health Coverage Shows Muted Growth
(All times in GMT followed by country and indicator)
2100 NZ Reserve Bank of New Zealand Monetary Policy Statement
2350 JPN Q3 Business Outlook Survey
0100 AUS Sep Consumer Inflationary Expectations Survey
0130 CHN Aug CPI
0130 CHN Aug PPI
0130 AUS Aug Labor Force
0300 SKA Jul Money Supply index L
0300 SKA Aug Economic Trends, including household loans, money supply index Lf
0401 MAL Jul Industrial Production Index
0401 MAL Jul Manufacturing sales
0600 GER Aug CPI
0630 INA Sep Bank Indonesia Board of Governors meeting & decision
0645 FRA Aug CPI
0800 PHI Philippine Monetary Policy meeting & decision
0800 FRA Sep IEA Oil Market Report
0800 EU Sep v ECB Monthly Bulletin
0830 UK Jul CML Monthly Lending Trends
1000 FRA Q2 OECD Quarterly National Accounts G20 GDP growth
1230 US U.S. Weekly Export Sales
1230 US 09/06 Unemployment Insurance Weekly Claims Report – Initial Claims
1230 CAN Jul New Housing Price Index
1345 US Bloomberg Consumer Comfort Index
1400 US Q2 Quarterly Services
1400 US 08/30 DJ-BTMU U.S. Business Barometer
1430 US 09/05 EIA Weekly Natural Gas Storage Report
1600 US World Agricultural Supply & Demand Estimates (WASDE)
1800 US Aug Monthly Treasury Statement of Receipts & Outlays of the U.S. Govt
2030 US Federal Discount Window Borrowings
2030 US Money Stock Measures
2030 US Foreign Central Bank Holdings