U.S. Shares Lower as Markets Bet on December Rate Rise
U.S. Markets
U.S shares were lower and the dollar was pushed to an 11-week high as traders bet on a December interest-rate hike by the Federal Reserve, while Alcoa (AA) kicked off earnings season with positive third-quarter results.
The U.S. dollar climbed as investors prepare for the Fed to raise rates, with the CME Group's FedWatch tool showing markets have priced in a 70% likelihood of such a move. This is considered the bellwether for likely Fed action.
Traditionally considered to be the company to formally kick off earnings season, U.S. aluminium and composite metal provider Alcoa said that net income in the third quarter rose to $166 million, or $0.33 per share, from $44 million, or $0.06 per share, in the third quarter of 2015.
Stocks on the Move
Yum Brands (YUM) shares rallied after it outlined plans to boost growth at its fast-food restaurants once the sale of units it owns in China are completed on Oct. 31.
In merger and acquisition news, U.S. industrial group General Electric (GE) said that it plans to buy LM Wind Power, a Danish manufacturer of rotor blades, for $1.65 billion. Since 2001, LM Wind Power has been owned by the London-based private equity firm Doughty Hanson. The acquisition is valued at 8.3 times estimated 2016 EBITDA and is expected to close in the first half of 2017, GE said.
Foreign Markets
After a weak opening, European shares inched up in the morning and were trading moderately lower in the afternoon. Energy stocks were weak as they tracked falling oil prices, while luxury shares rallied following an upbeat earnings report from French luxury group LVMH.
Asian shares closed mixed after Monday's slight gains. Tokyo shares rallied as trading resumed after a three-day weekend. Chinese shares closed higher, extending Monday's rally. The mainland's stocks climbed to one-month highs, after rising the most in two months in the previous session. Sentiment was boosted as investors welcomed Beijing's plan to reduce rising corporate debt. Hong Kong shares closed sharply lower. The Hang Seng Index slipped into the red and extended the losses during the session as investors took profits after a recent rally. Sydney shares closed slightly higher, while Seoul stocks dipped. In Mumbai, the markets were closed for the Dussehra public holiday.
