World stocks drift as Fed rate outlook eases on service data
HONG KONG — World stock markets meandered Wednesday after a weak report on U.S. service companies added to expectations that the Fed won’t move anytime soon to raise interest rates.
KEEPING SCORE: European shares posted small gains in early trading. France’s CAC 40 rose 0.3 percent to 4,541.80 and Germany’s DAX rose 0.3 percent to 10,717.28. Britain’s FTSE 100 edged up less than 0.1 percent to 6,828.08. U.S. stocks were poised to open slightly higher, with Dow futures up 0.1 percent to 18,532.00 and broader S&P 500 futures rising 0.1 percent to 2,185.60.
U.S. SERVICES DATA: A private monthly survey found that U.S. services companies expanded in August at the slowest pace in more than six years. The Institute for Supply Management’s services index came in at its lowest level since February 2010. Last month’s decline was also the biggest since late 2008, when the U.S. was gripped by a recession amid the global crisis. While Federal Reserve chief Janet Yellen had said last month that the case for raising rates was becoming stronger, the numbers add to other recent evidence that the U.S. economy is still shaky and reduce expectations for such a move.
ANALYST INSIGHT: The latest figures are “highlighting a continuing concern that the recovery in the U.S. economy may be losing steam,” said Nicholas Teo at KGI Fraser Securities in Singapore. “This, together with last week’s lower than expected payroll numbers, may in turn deny Mrs. Yellen of the confirmation she needs to lift rates later this month.”
ASIA’S DAY: Japan’s benchmark Nikkei 225 index lost 0.4 percent to finish at 17,012.44 as the latest U.S. data pushed the yen higher, hurting shares of the country’s export manufacturers. South Korea’s Kospi fell 0.2 percent to 2,061.88 and Hong Kong’s Hang Seng dipped 0.2 percent to 23,741.81. The Shanghai Composite Index in mainland China climbed less than 0.1 percent to 3,091.93 and Australia’s S&P/ASX 200 rose 0.2 percent to 5,424.20.
ENERGY: Benchmark U.S. crude oil futures added 46 cents to $45.29 in electronic trading in the New York Mercantile Exchange. The contract added 39 cents to settle at $44.83 a barrel in New York. Brent crude, the benchmark for international oil prices, rose 54 cents to $47.80 a barrel in London.
CURRENCIES: The dollar sank to 101.66 yen from 101.99 yen in late trading Tuesday. The euro slipped to $1.1239 from $1.1246. TVJ
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