Tuesday December 1st

1-12-2015

Wall Street looks set to follow Asian markets higher

U.S. stock index futures rose on Tuesday as Wall Street looked set to follow Asian markets higher, despite further weak Chinese factory data. Both the Chinese official and the Caixin/Markit purchasing managers' indexes (PMI) showed that manufacturing activity decreased once again in November. The Chinese Shanghai Composite index closed 0.4 percent higher after the news, while the Japanese Nikkei closed up 1.4 percent, topping 20,000 for the first time since August. Overnight, the International Monetary Fund officially stated that the yuan would enter its Special Drawing Rights (SDR) basket in October 1, 2016, making it a reserve currency alongside the U.S. dollar, euro, pound sterling and yen. The yuan will make up 10.92 percent of the basket. European stocks traded mixed after euro zone average unemployment for October was reported at 10.7 percent, down from 10.8 percent in September and below expectations. In addition, euro zone, manufacturing PMI for November was confirmed at 52.8. However, the U.K.'s manufacturing PMI came in weaker than expected, at 52.7, showing declining growth in the sector. Investors were focused on two crucial data due later in the week, before the Federal Open Market Committee meets in mid-December. On Thursday, the European Central Bank (ECB) will announce its monetary policy decision and on Friday, the U.S. November non-farm payrolls are out. The ECB is expected to expand its quantitative easing program, while the Federal Reserve is seen raising interest rates, in what would be an historic divergence in policy by two major central banks. The dollar index, which tracks the greenback against a basket of other currencies, declined to below 100 on Tuesday, as the upturn in risk sentiment made "safe haven" bets like the dollar less appealing. The data focus in the U.S. on Tuesday will be the ISM index for November, which is seen showing modest increases from November's low reading of 50.1. There will also be vehicle sales for November and construction spending for October. No major earnings are expected from the U.S. on Tuesday, although Canada's Banque de Montreal and Bank of Nova Scotia will post results. Crude oil prices fell on Tuesday as the dollar eased slightly, but with OPEC widely expected to stick to its output target this week, concern about oversupply remained in focus. The European Central Bank is set to announce its latest policy decision on Thursday, OPEC's decision on output is due on Friday along with U.S. monthly jobs numbers, meaning oil prices have been hemmed into a range of no more than $4 for the last week. Brent crude futures fell 38 cents at $44.23 a barrel by 8:46 a.m. (1346 GMT), while U.S. WTI crude futures were down 27 cents at $41.38 a barrel. Gold rose for a second day on Tuesday, rebounding from last week's 5-1/2 year low, as a retreat in the dollar prompted investors to cover short positions ahead of a European Central Bank meeting and U.S. payrolls data this week. Spot gold was up 0.4 percent at $1,068.70 an ounce, while U.S. gold futures for February delivery were up $2.80 an ounce at $1,068.10. The metal hit its lowest since February 2010 last week at $1,064.46.