European stocks inched higher Monday while Asian markets fell as weak Japanese data, slumping oil prices and a hostage situation in Australia’s largest city induced caution.
KEEPING SCORE: In early European trading, France’s CAC 40 was up 0.3 per cent at 4,120.44 and Germany’s DAX gained 0.1 per cent to 9,600.89. Britain’s FTSE 100 added 0.1 per cent to 6,307.59. Futures pointed to a rebound on Wall Street after Friday’s decline, which produced the worst weekly loss in U.S. shares in more than two years. Dow futures were up 0.6 per cent at 17,288 and S&P 500 futures gained 0.6 per cent to 2,002.60.
OIL SLUMP: Oil inched higher after another rout on Friday that was sparked by the International Energy Agency saying that global demand will grow less than previously forecast next year. Oil has now fallen 47 per cent since reaching a peak of $107 in June this year. On Monday, benchmark U.S. crude was up 41 cents at $58.22 a barrel in electronic trading on the New York Mercantile Exchange. Lower oil prices should be positive for many countries but there are also worries the recent plunge is a sign of a sickly global economy.
JAPAN ELECTIONS: Japan’s ruling coalition won a convincing victory in lower house elections Sunday, giving Prime Minister Shinzo Abe’s Liberal Democrats up to four more years to pursue economic and political reforms. But the “tankan” business survey released Monday highlighted challenges facing Abe’s government which is using lavish monetary and fiscal stimulus to end two decades of economic stagnation. More than two-thirds of the large and medium-sized companies surveyed said they viewed the outlook for the coming quarter as “not so favourable.”
THE QUOTE: “While the (Japan election) result was largely expected, I still feel there is room for buying dips in USD/JPY and the Nikkei given Prime Minister Abe is only likely to ramp up his strategy,” said market strategist Stan Shamu at IG in Melbourne, Australia. “The fact that many continue to doubt whether Mr Abe is capable of delivering a successful economic strategy goes a long way toward contributing to the subdued price action. This only means Abe has to be even more aggressive to prevent failure.”
SYDNEY SIEGE: A hostage situation is unfolding inside a cafe in Sydney, Australia with the nation’s prime minister saying it may be “politically motivated.” Five people have been able to flee from the cafe in downtown Sydney where a gunman took an unknown number of hostages at the height of Monday morning rush hour. Two people inside the cafe were earlier seen holding up a flag containing an Islamic declaration of faith that has often been used by extremists, raising fears that a terrorist incident was playing out in the heart of Australia’s biggest city.
ASIAN SCORECARD: Japan’s Nikkei 225 closed down 1.6 per cent at 17,099.40. Hong Kong’s Hang Seng dropped 1 per cent to 23,027.85 and Seoul’s Kospi shed 0.1 per cent to 1,920.36. Australia’s S&P/ASX 200 dropped 0.6 per cent to 5,186.10. China’s Shanghai Composite reversed losses to close up 0.5 per cent at 2,953.42. Markets in Taiwan, Singapore and Indonesia fell.
CURRENCIES: The dollar fell to 118.39 yen from 118.83 yen late Friday. The euro fell to $1.2443 from $1.2464.