Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening European markets traded with some gains. The first part of the session should be characterized by the reaction of investors to the results presented. Facebook reported a 11% increase in results for the 3rd quarter despite the sharp rise in costs. The EPS reached the 0.32 USD, compared to the estimated 0.27 USD. The shares rose more 2.30% in the aftermarket. Regarding the German economy, the industrial orders fell 1.70% in September contrary to the estimates of an increase of 1%. This data is another worrying signal from the German economy which has accused some weaknesses. With regard to the European Economy, Credit Agricole, Astrazeneca pharmaceutical and Adidas reported profits higher than expected. Deutsche Telekom announced results roughly in line with estimates. Moody’s lowered the debt rating of Volkswagen because of costs associated with the Diesel Gate, which will have a very negative impact on future earnings. The oil and mining sectors shall under-perform due to the pressure exerted by the strength of the dollar on commodities.
American indices closed lower, due to the oil drop, the words of Janet Yellen and dynamism shown by some economic data. The price of crude has been hit by rising reserves in the US, in line with the estimated and also the strength of the dollar. The testimony of Janet Yellen on the finance committee of the House of Representatives focused mainly on the US financial system. The Fed’s President said that should be made improvements to the risk management and also in what concerns the compliance in the largest banks and regional institutions, which will induce the central bank to adopt rules on this matter. For interest rates, said an increase in December is “a real possibility” although it depends on the evolution of the economy. The ISM for services increased in October from 56.9 to 59.1, significantly exceeding forecasts of 56.5. The most significant components of this index to employment and price increases recorded this month. In addition, the orders component, which usually precedes the cycles of ISM also has improved signaling that the service sector will continue to expand in the coming months. Unlike the ISM manufacturing (which stands at 50.2) and is quite exposed to the global economy, the ISM services has a greater focus on the domestic economy. The ADP report showed that the US private sector generated 182,000 jobs in October, slightly higher than the 180,000 estimated and below the 190,000 estimated in September. The interpretation of these numbers should be prudent, to the extent that its correlation with the official job report is low. But if these figures are confirmed on Friday by the official report, it will be shown the current slowdown in employment creation. However, this softening has to be placed in perspective. When the unemployment rate stood at historically low levels it is difficult for the US economy continue to maintain a high pace of job creation. The trade deficit recorded a decrease in September for 40800 M.USD compared to 44500 M.USD estimated. The value of imports was negatively conditioned by oil prices fall, as he watched a rise in exports mainly to Europe and to Canada. Today will be another very busy day in terms of interventions of members of the Fed.
The Asian session failed to produce a common standard. While Tokyo and Shanghai Stock Exchanges rised, Seoul and Sydney Stock Exchanges closed lower.