With focus increasingly on US, markets remain in check

LONDON – European stock markets traded in fairly narrow ranges Tuesday ahead of a raft of U.S. economic news and uncertainty over the outcome of the country’s presidential election.

KEEPING SCORE: In Europe, Germany’s DAX was down 0.1 per cent at 10,656 while France’s CAC 40 fell 0.1 per cent to 4,505. Britain’s FTSE 100 edged 0.2 per cent higher to 6,966. U.S. stocks were poised to open higher with Dow futures and the broader S&P 500 futures up 0.2 per cent.

US THE FOCUS: Increasingly, the focus in markets has turned towards the U.S. not least because the presidential election next Tuesday between Hillary Clinton and Donald Trump appears to have tightened following last week’s disclosure from the FBI that it had opened a new investigation into U.S. presidential candidate Hillary Clinton’s private email server. The seeming narrowing in the race to be president has introduced a new element of uncertainty in markets — something that analysts say is likely to keep markets in check.

NOT JUST POLITICS: Before Americans go to the polls, traders have a raft of economic data to digest this week, starting later with the monthly manufacturing report from the Institute for Supply Management. The data week culminates Friday with the October nonfarm payrolls report, which is likely to cement market expectations that the Federal Reserve will raise interest rates in December. The Fed is meeting this week but is not expected to raise rates so close to the election. It’s also a busy week for corporate earnings, with more than one-fifth of S&P 500 companies reporting their quarterly results.

ANALYST TAKE: “October was a mixed month for global equities, positive for European and U.K. stocks but negative for US markets as the uncertainty over the outcome of the U.S. election continues to cap the upside,” said Michael Hewson, chief markets analyst at CMC Markets. “While Hillary Clinton is still expected to win the final vote, email concerns notwithstanding, next week’s outcome could well be too close for comfort, and the potential for surprises from either side of the political divide is likely to remain fairly high.”

CHINA DATA: Caixin’s monthly purchasing managers’ index rose to 51.2 in October from 50.1 the previous month as production grew at its fastest pace in more than five years on strong domestic demand. A similar index by the official Chinese Federation of Logistics & Purchasing rose to 51.2 from 50.4 in September. Both are at their highest level since July 2014. They are based on 100-point scales on which the 50 mark separates expansion from contraction.

JAPAN: The Bank of Japan wrapped up a two-day policy meeting without any changes to its minus 0.1 policy rate or other moves. The central bank did downgrade its inflation outlook, saying it expects to achieve a 1.5 per cent inflation rate, rather than 1.7 per cent, in the fiscal year that begins in April. The inflation rate now is about zero. Recent manufacturing data have shown a slight uptick in production that economists say could signal the stagnant economy is gaining strength.

ASIAN SCORECARD: Hong Kong’s Hang Seng index jumped 0.9 per cent to close at 23,147.07 and the Shanghai Composite index added 0.7 per cent to 3,122.44. Japan’s Nikkei 225 edged 0.1 per cent higher to 17,442.40, and India’s Sensex rose 0.2 per cent to 27,995.38. South Korea’s Kospi slipped less than 0.1 per cent to 2,007.39 and the S&P ASX/200 of Australia lost 0.5 per cent to 5,290.50. Shares in Southeast Asia were mixed.

ENERGY: U.S. benchmark oil futures fell 13 cents to $46.73 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $1.84 to $46.86 a barrel in New York. Brent crude, the international standard, rose 2 cents to $48.63 a barrel.

CURRENCIES: The euro was up 0.3 per cent at $1.1011 while the dollar rose 0.1 per cent to 104.87 yen.