Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indices did not show a definite trend. The situation of the Deutsche Bank, the future monetary policy of the ECB and the recent weakness of the oil will be the themes of the day. During the weekend, the Bild newspaper reported that the CEO of Deutsche Bank failed to reach any agreement with the monetary authorities concerning the process involving the bank in malpractices in trading assets linked to subprime. This news, as other early by the financial press, had no official confirmation. Another theme of this week is the future of the asset purchase programme of the ECB. In Washington, Mario Draghi did not wave directly to this topic but said inflation should reach the target of 2% in 2018, and simultaneously declared that “this scenario is based on the premise that the current stimulus will be maintained.” Probably the ECB will only pronounce directly on this issue when its office of economic studies came to publish in December the economic projections for the coming years.
US markets closed with modest losses in a session marked by the publication of the employment report. The employment report indicated that the labor market remains in a phase of expansion although the pace of job creation is not as high as in the 1st half of the year. In September, the US economy generated 156,000 jobs, short of the 172,000 estimated. In part, this difference was offset by the upward revision of the August reading (from 151,000 to 167,000), a pattern that has repeated in recent years. The unemployment rate stood at 5%, above the 4.90% forecasted. The wage growth reached 2.60% compared to September 2015. These figures indicate that the expansion of the labor market remains intact although at a slower pace. These data confirm the improvements in the labor market indicated by the Fed at the last meeting and shall not constitute an obstacle to a rise in interest rates in December. Until this meeting will be published two employment reports. The Fed has scheduled a meeting in early November but should not take any decision before the presidential elections. After the publication of this indicator, the probability of a rise in benchmark rates increased marginally from 63% to 65%. The consequences in other financial assets were also evident, with the rising yields, which favored the appreciation of the dollar. The appreciation of the US currency together with the intention of some investors for profit taking led oil retreating 1.20%. Yesterday was held the second debate between Hillary Clinton and Donald Trump, and the first surveys and opinion of political analysts point to a tie between the two candidates. Today is celebrated the Columbus Day. The bond market will be closed and the activity in the stock market shall be lower than usual.
The major Asian indices closed with modest losses. After a week of celebrations, the Chinese stock markets traded with gains of more than 1%. The Japanese market was closed, the Sports Day celebration.