European shares closed higher yesterday, as investors focused on key data from the euro zone rather than the geopolitical risk posed by the protests in Hong Kong.

CPI data ahead

Most European exchanges ended yesterday’s session higher. Germany's DAX Index and the French CAC closed up around 0.5 and 1.3 respectively while U.K.'s FTSE 100 closed down around 0.3 percent, as unrest in Hong Kong continue to send ripples in the western markets. This news comes despite official figures showing that the U.K. economy grew more than previously estimated, with this year's second-quarter growth revised up 0.1 percent. Next ended around 3.7 percent lower after it issued a profit warning that challenged earning expectations.

In the euro zone, investors were still focused on what the European Central Bank (ECB) will announce at its policy meeting tomorrow.

Euro zone inflation slowed to 0.3 percent in September, largely as expected. It comes amid growing concerns that the region could be heading towards a long-term period of weak consumer price growth or even deflation – when consumer prices start to fall.

Euro zone unemployment was unchanged from last month at 11.5 percent, and also in line with expectations. Meanwhile, German retail sales in August saw their sharpest rise in more than three years.

Shares of RBS closed up 1.8 percent after it announced that it was releasing $1.3 billion from provisions that it had been holding for bad loans. The U.K. state-owned lender said that improvements in the economy, especially Ireland, had caused it to free up the cash.

In Asia, equities had been mostly lower yesterday amid caution over developments in Hong Kong and as investors focused on data in China and Japan. Protesters remained on Hong Kong's streets on Tuesday, spreading to various areas as police have been relatively absent.

U.S. stocks slipped on Tuesday, dragged down by energy and materials shares as economic data disappointed.

Major indexes also posted losses for the month, but ended the quarter with gains.

The S&P energy index was down 1.2 percent yesterday following a more than 3 percent drop in U.S. oil prices. The S&P materials index also fell 1.2 percent. The S&P 500 also fell with Chevron being the biggest loser. As the company announced its plan to spin off its PayPal unit eBay was up 7.5 percent at $56.63, ending the day, as the biggest gainer.

U.S. consumer confidence fell in September for the first time in five months and home prices in July rose less than expected from a year earlier, underscoring the unsteady nature of U.S. growth.

As the S&P 500 rose 6.7 percent since December 31 analysts are skeptical of how many more gains are in store for the market this year.

Apple shares rose 0.6 percent to $100.75 after China approved iPhone 6 sales to begin October 17.

The Dow Jones industrial average fell or 0.17 percent, to 17,042.9, the S&P 500 lost 0.28 percent, to 1,972.29 and the Nasdaq Composite dropped 0.28 percent, to 4,493.39.

For the month of September, the Dow was down 0.3 percent, the S&P 500 was down 1.5 percent and the Nasdaq was down 1.9 percent. For the quarter ending September, the Dow rose 1.3 percent, the S&P 500 gained 0.6 percent, and the Nasdaq climbed 1.9 percent.

Following its disappointing profit forecast Ford Motors dropped 2.12 percent yesterday as investors sought to offload exposure in the stock.

Declining issues outnumbered advancers on the NYSE by 1,942 to 1,133, for a 1.71-to-1 ratio on the downside; on the Nasdaq, 1,864 issues fell and 824 advanced for a 2.26-to-1 ratio favoring decliners.

Confidence among U.S. consumers unexpectedly declined in September to a four-month low as Americans’ views of the labor market deteriorated.

Investors are analyzing reports to assess whether economic growth is strong enough to withstand higher interest rates. The S&P 500 reached a record on 18th September as the Fed maintained a commitment to keep interest rates near zero for a considerable time after completing asset purchases. The central bank also said that the timing could move forward if data continue to exceed expectations.

US data on the manufacturing and services industries are due later this week, in addition to the government’s monthly labor report. Alcoa Inc. unofficially kicks off the earnings season when it reports quarterly results on 8th October.

A lot of strategists seem a bit nervous that more economic data will come in lower than expected. Thus far, their fears seem well-founded.

This morning saw a flurry of disappointing data: consumer confidence for September came in at 86, well below expectations of 92.6. Separately, September Chicago PMI, a measure of manufacturing activity in the Chicago area, also came in below expectations, at 60.5 (estimates of 61.9).

Stocks started up, but drifted lower almost immediately, and lost ground again as the disappointing economic news hit the market. There was a lot of talk that the S&P 500 Index had established a short-term bottom around 1965 yesterday.

Auto sales data is expected to be released today by the Institute for Supply Management (ISM), Payrolls data is expected on Friday.

The employment report will be released on Friday, and expectations are that August's disappointing 142,000 number will be revised upward. Still, there is some worry that September's expectation of 215,000 jobs created may disappoint. Weekly jobless claims bottomed in July, and in six out of the last nine years September's figures have come in below August.

In the meantime, Europe is mostly higher, with France and Spain up fractionally. Germany started positive and has drifted into negative territory.

The dollar's strength continues, with the euro down again today. European inflation was lower than expected; the European Central Bank (ECB) is meeting tomorrow, and the falling price data makes stimulus more likely.

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