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 main theme of the opening will be the oil drop during the New York session (-2.90%). This movement is explained by the prospect of declining demand and increasing supply. The fears of a fall in demand are explained by weak economic data in China. In addition to the slowdown in China, another factor which could weigh projections on the price of crude oil is the transformation of this economy from dependent on industrial investment (and therefore consumer of oil) for a more focused economy on services and consumption (less user of oil). On the supply side, the Iranian Oil Minister said his country expected to rise by 500,000 barrels / day its exports, after being lifted some of the sanctions that fell upon this country. Furthermore, economists estimate an increase of 3.7 million barrels of American oil reserves during the last week. On Wednesday, the Energy Department will release its official figures. Therefore, some indices more exposed to oil and other commodities, such as English FTSE100 should register a under-performance. The potential beneficiary in relative terms, would be the DAX due to lack of oil or mining activities in this index. However, the German market is very dependent on specific factors such as E.On, RWE and Volkswagen.
The US market closed with contained variations, which is a trial of strength considering the loss suffered by the oil. The evolution of crude oil price has been the biggest determinant of oil sectors, mining (oil influences the behavior of other raw materials) and industrial. As such, yesterday’s behavior in the market as a whole is quite revealing of positive sentiment prevailing on Wall Street. This positive sentiment is also demonstrated by the reaction that investors have shown to business results. In general, most companies that have already released their quarterly accounts (+ 71%) managed to surpass the estimates in terms of profits. However, in terms of revenue only 47% of companies managed to beat forecasts. The sharp drop in trading revenues led to Morgan Stanley the second consecutive quarter of decline in profits. In the 3rd quarter, the EPS reached 0.48 USD (-42.40% over the same quarter of 2014), less than the 0.636 USD estimated. Revenues amounted to 7700 M.USD (-12.80%), falling short of the 8480 M.USD anticipated. Morgan Stanley was the last of the major US banks to report their quarterly accounts, with their shares having corrected 4.90%. In sectoral terms, to underline the good performance of the biotechnology sector (+ 2.20%), which contributed to the over-performance of the Nasdaq. Today are scheduled interventions of two members of the Fed, William Dudley (New York Fed) and Jerome Powell. In recent weeks there have been several indications that point to a loss of momentum on the part of the American economy. It is still not visible if it is a seasonal issue or temporary or something more disturbing. Given the paucity of data scheduled for this week, investors will follow the opinions of CEOs and their perspectives on the economics of companies that will publish their quarterly accounts. This supposed slowing US economy also hinders the mission of the Fed. The various members of the Central Bank have been noted that an increase in interest rates in December is quite likely. But if the economy starts to slow down? During this week, some members of the Central Bank will intervene in financial events and will be interesting to see if they will repeat the rhetoric of Fed (an increase of interest rates in December) or will wave to the weakness of some economic data.
The sharp drop of oil in the New York session was the differentiating element of the performance of many Asian indexes. Markets with a greater dependence on raw materials, such as Chinese and Japanese, recorded an over-performance compared to indices such as the Australian, made up of several mining and oil companies.