Home' Trinidad and Tobago Guardian : November 8th 2015 Contents NOVEMBER 8 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
Stocks had a mixed reaction Fri-
day to the surprisingly strong
October jobs report as
investors adjusted to the
prospect of higher interest
rates as early as next month.
While the major US indices, on the surface,
had a muted reaction to the jobs numbers, a
look at the individual parts of the market
showed investors were actively reshuffling
Dividend-paying stocks, which are typically
bought for their higher-than-average payouts
when interest rates and bond yields are low,
dropped sharply on Friday. The Dow Jones
utility index, a basket of 15 dividend-paying
utility stocks, sank four per cent.
In contrast, bank stocks rose sharply as
investors bet that higher interest rates would
translate into higher profits, since they may
be able to charge more for lending. JPMorgan
Chase rose US$2.02, or three per cent, to
US$68.46, Bank of America rose 64 cents, or
3.7 per cent, to US$17.95 and Morgan Stanley
rose US$1.53, or 4.5 per cent, to US$35.41.
"You just need to look at those two groups
and see that the market is positioning itself
for higher interest rates," said Ryan Larson,
head of equity trading at RBC Global Asset
Wall Street has been in a months-long
guessing game about the Federal Reserve,
trying to figure out when the policymakers at
the nation s central bank will finally raise inter-
est rates. The market turmoil over the summer
kept the Fed from raising rates at their Sep-
tember meeting, and policymakers decided to
wait yet again at their October meeting to see
more signs the US economy was on sure foot-
By nearly every account, the October jobs
report gave the Fed exactly what they wanted.
The Labour Department said US employers
added 271,000 jobs, far more than the most
hopeful of expectations, and the unemploy-
ment rate dipped to a fresh seven-year low of
five per cent, from 5.1 per cent. The burst of
hiring, the most in 10 months, filled jobs across
a range of industries.
"This makes it pretty likely the Fed will
raise rates in December," said Priscilla Hancock,
a global fixed income strategist for JP Morgan
Fed fund futures, which are securities that
bet on which way the Fed will move interest
rates, now show a 74 per cent chance of the
central bank raising rates in December, up
from 60 per cent on Wednesday and up from
well below 50 per cent as recently as late sum-
mer. But the size of the predicted interest rate
increase remains modest. Investors expect
interest rates will go from their current 0-to-
0.25 per cent levels to 0.5 per cent.
"The Fed is still going to be extremely
accommodative for investors. A rate hike in
December is removing those emergency meas-
ures that the bank put into place during the
financial crisis," Hancock said.
The Dow Jones industrial average rose 46.90
points, or 0.3 per cent, to close at 17,910.33.
The Standard & Poor s 500 index fell less than
a point to 2,099.20 and the Nasdaq composite
rose 19.38 points, or 0.4 per cent, to close
The bond market s reaction to the jobs num-
ber was far more volatile than the stock mar-
ket s, with bond prices sinking as investors
scaled back their holdings of Treasuries and
The benchmark 10-year US Treasury note
rose to a yield of 2.32 per cent from 2.23 per
cent on Thursday, a big move for that security.
The two-year note jumped to a yield of 0.89
per cent, a five-year high for that note, from
0.83 per cent the day before.
The data also caused the dollar to rise sharply
against its major currency counterparts. The
euro fell to US$1.0742, its lowest level in six
months, and the dollar rose against the Japan-
ese yen to 123.19.
The stronger dollar caused a selloff in com-
modities as well. Benchmark crude oil fell 91
cents, or two per cent, to US$44.29 a barrel
and Brent crude, which is used to price inter-
national oils, fell 56 cents, or 1.2 per cent, to
US$47.42 a barrel.
Gold fell US$16.50, or 1.5 per cent, to
US$1,087.70 an ounce, silver fell 29 cents, or
2 per cent, to US$14.69 an ounce and high-
grade copper fell a penny, or 0.6 per cent, to
US$2.242 a pound.
In other energy trading, heating oil rose less
than a cent to US$1.49 a gallon, wholesale
gasoline futures rose a penny to US$1.37 a gal-
lon and natural gas rose 0.7 cent to US$2.371
per 1,000 cubic feet. AP
US stocks end
mixed as market
A worker walks past an
indicator showing the
Nikkei 225 was up one
per cent at 19,116.41 in
November 5, 2015.
Chinese stocks surged
for a second day
Thursday as confidence
grew that stimulus
measures are helping
the world's No 2
economy to stabilise.
Other Asian markets
were mixed on renewed
expectations that the
Federal Reserve's first
rate hike in nearly a
decade could take place
as early as next month.
A broker looks at his screen at the stock exchange in Frankfurt, Germany, Wednesday
November 4, 2015. Volkswagen shares are falling after the company said it had understated
carbon dioxide emissions for 800,000 cars, widening its scandal over cheating on US diesel
emissions tests. The company's ordinary shares slid 9.7 per cent Wednesday to 100.80 euros in
morning trading in Europe.
Asian shares were subdued Friday
ahead of a US jobs report that s likely
to influence whether the Federal Reserve
raises interest rates in December.
KEEPING SCORE: Japan s bench-
mark Nikkei 225 added 0.5 per cent to
19,206.03 while South Korea s Kospi
inched down 0.2 per cent to 2,045.66.
Hong Kong s Hang Seng fell 0.9 per
cent at 22,836.87. But the Shanghai
Composite in mainland China was up
0.5 per cent to 3,541.76. Other regional
markets were mixed, rising in Australia
and Indonesia and falling in Taiwan and
JOBS REPORT: Analysts are fore-
casting that US employers added
185,000 jobs and the unemployment
rate held steady at 5.1 per cent in Octo-
ber. A solid report would suggest the
world s biggest economy is shrugging
off slower growth overseas and will
likely give the Fed confidence to raise
short-term interest rates in December.
Interest rates have been at record
lows since the 2008 financial crisis.
Testifying before a committee of the
US Congress on Wednesday, Fed Chair
Janet Yellen described the US economy
as "performing well" and said an inter-
est rate hike in December was a "live
ENERGY: In energy markets, US
crude oil added 16 cents to US$45.36
a barrel in electronic trading in New
York. Brent crude, which is used to
price international oils, rose 17 cents to
US$48.15 a barrel in London.
CURRENCIES: The US dollar was
trading at 121.67 yen, up from 121.49
yen. The euro cost US$1.0887, up slight-
ly from US$1.0871.
Asia stocks subdued ahead of US jobs report critical for Fed
How the Dow Jones industrial
average fared on Friday
The Dow Jones industrial average rose
46.90 points, or 0.3 per cent, to 17,910.33.
The Standard & Poor's 500 index fell 0.73
points, or 0.03 per cent, to 2,099.20.
The Nasdaq composite index rose 19.38
points, or 0.4 per cent, to 5,127.12.
For the week:
The Dow was up 246.79 points, or 1.4 per
The S&P 500 was up 19.84 points, or 1 per
The Nasdaq was up 93.37 points, or 1.9 per
For the year:
The Dow is up 87.26 points, or 0.5 per cent.
The S&P is up 40.30 points, or 2 per cent.
The Nasdaq is up 411.07 points, or 8.7 per
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