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Market Update

Yellen in Hot Seat Defends Fed's Approach, European Markets Advance

Author: Nichole Harper
Last Update: 1:28 PM ET November 04 2015

[1:25 PM New York City, New York – U.S. market indexes struggled as the Fed Reserve Chair Janet Yellen defended the central bank’s tighter regulation approach in supervising banks. Yellen also said that the U.S. economic recovery is less likely to be affected by the global turmoil. DAX Index in Germany struggled after Volkswagen plunged 9%.

Lawmakers grilled Federal Reserve Chair Janet Yellen today during a contentious hearing on Capitol Hill.

Yellen defended the central bank’s tighter approach and closer scrutiny of nation’s banks and also said that the U.S. economy is “performing well” and added that the global turmoil is less likely to affect the nation’s economic recovery.

U.S. trade deficit in September narrowed by $7.25 billion to $40.8 billion from the revised $48 billion in August.

Exports in September increased by $3 billion but imports dropped by $4.2 billion from August, the U.S. Department of Commerce said.

On Wall Street, Tollbooth Strategy Index slipped 30.46 or 0.3% to 11,056.36.

S&P 500 index fell 7.34 or 0.4% to 2,102.54 and the Nasdaq Composite Index slid 10.33 or 0.2% to 5,134.85.

Crude oil in New York dropped $1.47 to $47.38 a barrel and gold decreased $4.15 to $1,113.64 an ounce.

U.S. Movers

Time Warner Inc (TWX) slipped 1.7% or $1.29 to $76.03 after the media and entertainment company reported revenues in the third-quarter ending in September rose 5% from a year ago to $6.56 billion.

Net income in the quarter jumped 7.5% to $1.04 billion or $1.26 per diluted share compared to $967 million or $1.11 per share from the same quarter last year.

The company said revenues in Turner segment fell 2% to $2.4 billion and revenues in Home Box Office business jumped 5% to $1.4 billion while revenues in Warner Bros segment surged 15% to $3.2 billion.

As of October 30, Time Warner repurchased 41 million shares for $3.3 billion.

Twenty-First Century Fox Inc (FOXA) dropped 3.2% or 89 cents to $30.36 after the media and entertainment company said total said revenues in the third-quarter ending in September declined 6% from a year ago to $6.08 billion.

Net income in the quarter plunged 35.1% to $675 million or 34 cents per diluted share compared to $1.04 million or 47 cents per share from the same quarter last year.

European Markets

European financial markets reacted positively after the European Central Bank president, Mario Draghi reaffirmed central bank’s commitment to review monetary stimulus at the next meeting in December.

Draghi added that the central bank is “willing and able to use all the instruments available” and lifted market hopes that more measures will be announced at the next meeting.

DAX index in Frankfurt, the lone underperformer in the region, declined after Volkswagen AG plunged more than 9%.

The second-largest automaker in the world said it had understated emissions of carbon dioxide for 800,000 luxury cars in Europe, and had overstated the fuel economy.

Another disappointment in Germany came from the PMI data, the purchasing manager’s index, tracked by the private survey company Markit.

While the PMI readings in France were better than the initial estimates, the German figures fell below expectations.

In London trading, FTSE 100 index gained 65.67 or 1% to 6,449.13 and in Frankfurt the DAX index fell 25.43 or 0.2% to 10,925.20.

In Paris, CAC 40 index increased 51.11 or 1% to 4,987.08.

Marks & Spencer Group Plc jumped 2.9% to 535.18 pence after the U.K.-based after the food, clothing and home products retailer said group revenues in the first-half ending in September rose 1% from a year ago to £4.95 billion.

Profit in the period tumbled 24.3% from a year ago to £170.7 million compared to £225.6 million and diluted earnings per share slipped to 10.4 pence from 13.8 pence.

The retailer lifted gross margin forecast in general merchandise for the year between 200 basis points to 250 basis points from the earlier estimated range of 150 basis points to 200 basis points.

SABMiller Plc fell 0.04% to 4,008.50 pence after the U.K.-based brewing and beverage maker said the U.K. Takeover Panel agreed to extend the deadline for rival Anheuser-Busch InBev to November 11 for cash offer of £44 per share or worth about $107 billion.

Asian Markets

Market averages in Tokyo closed higher and Japanese government successfully raised $12 billion through the three public offerings.

The seasonally adjusted consumer confidence index in October increased to 41.5 from 40.6 in September, the Cabinet Office said today.

The monetary base in October jumped 32.5% to 338.89 trillion yen followed by 35.1% drop in September, the Bank of Japan said.

The adjusted monetary base in October soared 16.5% to 336.70 trillion yen from a year ago month.

The Nikkei 225 Stock Average jumped 243.67 or 1.3% to 18,926.91 and the broader Topix index increased 13.46 to 1,540.43.

The yen strengthened to 121.28 against a dollar.

Japanese government raised 1.4 trillion yen or $12 billion through the three combined public offerings, largest since the public offering of Nippon Telegraph & Telephone Corp in 1987 and NTT DoCoMo Inc listing in 1998.

Japan Post Holdings Co Ltd surged 25.7% to 1,760 yen after the postal and logistics group priced its initial public offering at 1,400 yen per share.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc