Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded lower. The lower increase than expected inflation in China raised renewed fears about a deflationary pressure in the economy which affected the Asian markets and may influence European stock markets, including the sectors most exposed to this economy, such as industrial and producers of row materials. However, the luxury goods company LVMH’s became the first company in the sector to be noted that the slowdown of the Chinese economy in the summer affected their sales, mainly in the products of Louis Vuitton. The mining company Billiton may also be influenced by the Wall Street Journal’s news about the possible sale of bonds in the amount of 3000 M.USD. Moreover, the technological sector should be highlighted because of Intel and ASML results presentation. The Dutch company reported an increase in quarterly net profit and said it expected to achieve record sales this year. Net profit stood at 322 M€ compared to 244 M€ in the same period in 2014 and 370 M€ in the previous three months. Revenues reached 1,550 M€, compared to 1,650 M€ in 2014. The numbers came out almost in line with forecasts.
The US market ended yesterday’s session with slight losses as investors focused on economic indicators for China and at the earnings season that begins to take on added importance this week. The pharmaceutical and industrial sectors led losses in the S & P500 index. The price of oil did not show considerable variation in the day that the International Energy Agency reported that growth in global crude demand will slow in 2016. Johnson & Johnson ended with a slight loss, although the company had demonstrated a result adjusted per share of 1.49 USD, above the foreseen 1.43 USD and announced a purchase plan of 10 000 M.USD in own shares. Yesterday after the close, JP Morgan opened the presentation of results by the banking sector. The largest financial institution in terms of assets reported that revenues fell 6.90% during Q3, although the results have benefited from a significant tax credit: the quarterly profit rose 22%, ie increased from 5570 M.USD in 2014 to 6800 M.USD (1.68 USD per share). Excluding this tax effect, EPS reached 1.32 USD, compared with 1.37 USD expected by analysts. Trading revenues were down 15%, in line with what the CEO of the institution had commented in September. James Dimon have said, the results of the trading area would be similar to those of other banks, following comments from the CEO of other institutions such as Bank of America and Citigroup, which indicated that revenues in trading units shares, bonds, foreign exchange and commodities are expected to decline 5% in Q3. The earnings season of the US banking sector continues today with the presentation of quarterly accounts at Bank of America and Wells Fargo. In the last quarter, Bank of America managed to surpass analysts’ forecasts due to lower legal expenses to the extent that the institution was ending their lawsuits. Now, it is important that the Bank of America manages results through an increase in its activity. With regard to Wells Fargo, its core business is the provision of housing loans, making it less dependent on the evolution of capital markets.
The behavior of Asian stocks was not uniform. The Japanese market ended negative, hurt by data on inflation in China reignited fears about the slowdown in the economy. The sectors most exposed to China, as the related to machinery and steel producers, were the most penalized. In China, stock market losses were not as significant as the inflation indicator relative to September bolstered expectations that must be implemented more measures to stimulate the economy. The consumer price index rose less than expected increasing 1.60% in September compared to the same period last year, producer prices decreased for 43 consecutive months.