Markets steady despite talk of US stimulus cutDecember 5, 2013 @ 6:13 am
LONDON (AP) - Global stocks were lackluster Thursday as another round of strong U.S. economic data reinforced expectations that the U.S. Federal Reserve will begin to reduce its monetary stimulus this month.
Expectations that the Fed will decide to begin "tapering" its $85 billion in monthly asset purchases at its Dec. 18 meeting ratcheted up further after the U.S. government reported that the economy grew at an annualized rate of 3.6 percent in the third quarter, its fastest pace since the first quarter of 2012. The increase was up from the previous estimate of 2.8 percent and largely due to an inventory build despite softer consumption and investment measures.
A 23,000 fall in weekly jobless claims to 298,000 also added to the evidence that the U.S. economy is growing strongly and that the stimulus will be reduced. Whether those expectations remain intact could hinge on Friday's official nonfarm payrolls report for November.
"Investors still want to see what the November payroll report contains," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
Earlier this year, fears of the stimulus withdrawal had caused jitters in the markets as the monetary injection had helped shore up stocks for several years. Recently, though, the reaction has been more muted amid the realization that it's predicated on an improving economic outlook.
In Europe, most markets were muted after European Central Bank and Bank of England kept their monetary policies unchanged, as anticipated. All eyes will be on ECB President Mario Draghi as he holds his monthly press conference following the bank's monthly meeting.
The FTSE 100 index of leading British shares was down 0.1 percent at 6,502 while Germany's DAX was flat 9,142. The CAC-40 in France was 0.1 percent lower at 4,143.
Indexes on Wall Street were expected to fall modestly, with Dow and S&P 500 futures down 0.2 percent.
The dollar has not moved much in recent weeks as the tapering talk accentuated. On Thursday, it was trading in narrow ranges, with the euro down 0.3 percent at $1.3548 and the dollar down 0.2 percent at 102.19 yen.
Earlier in Asia, Japan's Nikkei 225 dropped 1.5 percent to 15,177.49 and China's Shanghai Composite fell 0.2 percent to 2,247.06. Hong Kong's Hang Seng was down 0.1 percent at 23,712.57 and South Korea's Kospi eased 0.1 percent to 1,984.77.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
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