World stocks, oil fall ahead of U.S. job data, Italian vote
HONG KONG - World stocks retreated and oil’s rally fizzled Friday as wary investors awaited U.S. jobs data and braced for Italy’s referendum on constitutional reform.
KEEPING SCORE: European shares skidded in early trading. France’s CAC 40 dropped 1.1 percent to 4,509.56 and Germany’s DAX sank 1 percent to 10,429.80. Britain’s FTSE 100 shed 0.9 percent to 6,692.80. U.S. shares were poised to open lower. Dow futures slipped 0.2 percent to 19,166.00 and broader S&P 500 futures declined 0.2 percent to 2,186.90.
WORK REPORT: Economists expect the latest monthly report on U.S. jobs, due out after trading ends in Asia, to show that employers added 174,000 jobs, leaving the unemployment rate at 4.9 percent, according to FactSet data. That would underscore the strength in the world’s biggest economy and strengthen the case for the Federal Reserve to raise interest rates next month. Ultra-low rates have sustained an extended boom in shares.
REFERENDUM RISK: Italians head to the polls Sunday to vote on measures that Premier Matteo Renzi says will make the country more competitive. Renzi has promised to resign if voters choose “no.” Market watchers say a rejection of the plan would raise uncertainty about Italy’s government and banks.
ANALYST INSIGHT: “Reaction to the Italian Senate referendum being held on December 4 will no doubt impact investment markets early in the week ahead,” said Shane Oliver, head of investment strategy at AMP Capital in Sydney. But he added, “we anticipate shares to be higher by year end as seasonal strength kicks in - the ‘Santa rally’ normally gets underway from around mid-December.”
ENERGY: Oil snapped its rally after hitting its highest level since mid-October. Benchmark U.S. crude lost 9 cents to $50.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.62, or 3.3 percent, to close at $51.06 a barrel on Thursday. Brent crude, the standard for pricing international oils, shed 15 cents to $53.79 a barrel in London. Crude futures jumped earlier in the week after the members of OPEC, which collectively produce more than one-third of the world’s oil, agreed to a small cut in production starting in January. “Crude seems to be trying to move to a new trading range each side of $55 a barrel,” said Jeffrey Halley, a senior market analyst at OANDA.
ASIAN SCORECARD: Japan’s Nikkei 225 index shed 0.5 percent to close at 18,426.08 and South Korea’s Kospi lost 0.7 percent to 1,970.61. Hong Kong’s Hang Seng retreated 1.4 percent to 22,564.82 and the Shanghai Composite Index was 0.9 percent lower at 3,243.84. Australia’s S&P/ASX 200 fell 1 percent to 5,444.00. Benchmarks in Taiwan, Singapore and Thailand and also fell.
CHINA CONNECT: Investors were awaiting Monday’s launch of a cross-border trading link between Hong Kong and China’s Shenzhen stock exchange, which is expected to attract interest from mainland Chinese investors shifting their money out of assets denominated in the weakening yuan. Declines on both sides were exaggerated Friday as investors cashed out to avoid possible glitches during the first few days of trading, brokers said.
CURRENCIES: The dollar slipped to 113.82 yen from 113.78 yen in late trading Thursday. The euro was flat at $1.0665.