Federal Reserve taper speculation is beginning to take hold on the markets ahead of the closely watched nonfarm payrolls data, due out on Friday.
Most expect to see the nonfarm payrolls increase by 180,000 in November. The figure would be lower than October's 204,000 increase and slightly below the monthly average of 186,000, but most would consider it a solid reading. Seasonal hiring could help buoy the figure, but because Thanksgiving fell late in November, holiday hiring isn't expected to play a huge role in the data.
Also on Friday, the US will release an employment report which many see as tied to the Fed's taper plans. Some see strong employment data from November as reason for the Fed to begin tapering as early as December. However, the general consensus is that the US central bank will wait until congress can agree on a budget deal and evidence proves that the labor market's recovery is sustainable.
Top News
- Italy's Economy Minister gave an interview on Tuesday in which he said that Berlusconi's exit from the Italian Parliament will likely provide some much needed cohesion and help the nation's government implement the reforms necessary to get Italy back on track. Without Berlusconi, President Enrico Letta's government holds a stronger majority and will find it easier to make changes.
- With tensions in Asia running high due to China's newly declared air defense zone, Vice President Joe Biden is set to visit Beijing on Wednesday to try to smooth things over. Biden is expected to try to talk China into de-escalating the situation during his visit. Biden's meetings in China are also designed to send a message to Japan and South Korea that the US is involved in hopes it will keep the two nations from acting on their frustrations with China's new regulations.
- On Tuesday, the Ukrainian government easily survived a confidence vote with the opposition falling 40 votes short. The current government backed away from an EU trade deal, which has sparked a wave of protests as the nation's pro-Western citizens voice their disappointment.
- Australian GDP released on Wednesday showed the nation's economy expanded at a slower pace than expected. The nation's third quarter GDP increased by 0.6 percent, slightly below the expected 0.7 percent rise. The news could put pressure on the Reserve Bank of Australia to take the Australian dollar lower and could prompt a sooner than expected rate cut.
Asian Markets
Asian markets were mixed on Wednesday. The Japanese NIKKEI lost 2.17 percent and the South Korean KOSPI was down 1.12 percent. However, China's Shanghai composite was up 1.31 percent and the Shenzhen composite gained 1.39 percent.
European Markets
European markets were down across the board. The UK's FTSE fell 0.95 percent and the eurozone's STOXX 600 slipped 2.06 percent. France's CAC 40 fell 2.65 percent and Italy's MIB was down 1.95 percent.
Commodities
Energy futures were on the rise, Brent futures gained 0.03 percent and WTI futures were up 1.18 percent. Gold lost 0.12 percent, but silver was up 0.26 percent. Industrial metals were mostly lower with aluminum down 0.20 percent and tin down 0.22 percent.
Currencies
The euro lost 0.13 percent to the dollar and the pound fell 0.11 percent against the greenback. The dollar gained 0.26 percent against the yen and 1.27 percent against the Australian dollar.
Earnings
Notable earnings released on Tuesday included:
Bank Of Montreal (BMO) reported fourth quarter EPS of $1.64 on revenue of $4.19 billion, compared to last year's EPS of $1.65 on revenue of $4.18 billion.
- OmniVision Technologies, Inc. (OVTI) reported second quarter EPS of $0.60 on revenue of $397.20 million, compared to last year's EPS of $0.33 on revenue of $390.14 billion.
- United Natural Foods, Inc. (UNFI) reported first quarter EPS of $0.46 on revenue of $1.69 billion, compared to last year's EPS of $0.46 on revenue of $1.41 billion.
Pre-Market Movers
Stocks moving in the Premarket included:
Hewlett-Packard Co (HPQ) gained 1.38 percent in premarket trade after rising 0.66 percent on Tuesday
- Verizon Communications Inc (VZ) was up 0.81 percent in premarket trade after falling 0.66 percent over the past week.
- The Coca-Cola Co (KO) gained 0.37 percent in premarket trade after rising 0.67 percent on Tuesday
- AT&T Inc (T) lost 0.78 percent in premarket trade after falling 1.89 percent over the past five days.
Earnings
Notable earnings expected on Wednesday include:
Brown Forman Corporation (BFB) is expected to report second quarter EPS of $0.91 on revenue of $1.04 billion, compared to last year's EPS of $0.80 on revenue of $1.01 billion.
- Avago Technologies Limited (AVGO) is expected to report fourth quarter EPS of $0.82 on revenue of $731.58 million, compared to last year's EPS of $0.71 on revenue of $618.00 million.
- Aeropostale Inc. (ARO) is expected to report a third quarter loss of $0.24 per share on revenue of $520.04 million, compared to last year's EPS of $0.31 on revenue of $605.92 million
Economics
There will be several important releases on Wednesday's economic calendar including US new home sales, US crude inventories, the US beige book, US ISM non-manufacturing PMI, eurozone GPD, Eurozone retail sales, and services PMI from the eurozone, the UK, Germany, France, Spain, and Italy.
By Laura Brodbeck