Created on Wednesday, 04 December 2013 Written by PAN PYLAS, Associated Press
LONDON (AP) — A forecast-busting U.S. jobs report maintained the pressure on stocks Wednesday as it reinforced speculation that the Federal Reserve will start to reduce its monetary stimulus this month.
A run of solid economic reports have ratcheted up expectations that the Fed may decide to begin to taper the $85 billion of monthly asset purchases at its policy meeting on Dec. 18.
Since the stimulus has over the past few years helped shore up stock markets, its potential withdrawal has raised concerns, even if it is predicated on an improving economic outlook. Stocks have had a bad start to December after solid gains beforehand.
The big economic release this week will be Friday's official nonfarm payrolls data for November. The private payrolls report from ADP on Wednesday raised speculation that the government figures will be strong. ADP said the U.S. economy generated 215,000 jobs during November, more than the consensus in markets for a 165,000 or so increase. October's increase was also revised up to 184,000.
"The market is trying to work out whether good news is bad but clearly this report argues in favor of a December tapering," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
In Europe, the FTSE 100 index of leading British shares was down 0.6 percent at 6,491 while Germany's DAX fell 1 percent to 9,129. The CAC-40 in France was 0.8 percent lower at 4,139.
U.S. stocks were poised for further falls at the open, with Dow futures down 0.2 percent and the broader S&P 500 futures 0.3 percent lower.
The dollar's near-term fortunes could lie on Friday's payrolls data. Ahead of the publication, it was fairly flat, with the euro down 0.1 percent at $1.3569 and the dollar unchanged at 102.55 yen.
Earlier in Asia, most markets were under pressure. Japan's Nikkei 225 was the clear loser, closing down 2.2 percent to 15,407.94 from near six-month highs. Hong Kong's Hang Seng fell 0.8 percent to 23,728.70 and South Korea's Kospi slid 1.1 percent to 1,986.80.
But China's Shanghai Composite added 1.3 percent to 2,251.76 and Australia's S&P/ASX 200 gained 0.3 percent to 5,273.75.