Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded with modest gains. Initially, investors will react to the results presented before the opening. Briefly, Michelin and Roche reported earnings lower than the expected but maintained its projections for 2016. Lufthansa improved its forecasts in terms of EBIT, for 2016 and Nestlé reported the lowest revenue growth of the last decade, reducing the projections for 2016. the meeting of the ECB will be the main event of the day. It is not likely any Central Bank’s decision nor any updating of its economic projections, the topic of this meeting will be the possibility of the ECB change or reduce its asset purchase program. Since the publication of a report by Bloomberg on this issue that investors began to speculate that possibility. At the press conference, the financial markets will monitor carefully the words of Mario Draghi regarding this topic. Governors of Central Banks of the Germany, Austria and some countries of Eastern Europe, which have always been the most critical to the asset purchase plan may be a pressure pad for the ECB to start as soon as possible, the reduction of their purchases.
US markets closed higher, reflecting the good business results and oil rise. The results of the companies continue to exceed analysts’ forecasts. Yesterday, Morgan Stanley was the last major financial institution to report its quarterly accounts. Like its peers, the institution exceeded forecasts, supported the strong increase in trading revenues. Interestingly, the Brexit caused high volatility (particularly in the bond and foreign exchange markets), which resulted in greater trading opportunities for investors, which led to an increase in commissions generated by US banks. In a general context marked by good results, Intel’s numbers are a notable exception. The stock depreciated 5.93%, after having presented results and quarterly revenue above expectations but with the outlook presented for the 4th quarter below expectations. Oil was driven by the sharp decline in oil reserves, which bucked analysts’ estimates. According to the Department of Energy, the oil inventories fell by 5.2 million barrels, compared with a projected increase of 2.18 million barrels, while gasoline reserves increased by 2.5 million, compared to an estimated drop of 900,000 barrels. In terms of economic indicators, the Dallas Fed released the Beige Book which makes a detailed description of the US economy. The main points of this document are that the US economy continues to expand moderately, inflation remains relatively contained but in some regions have seen a rise in wages, which in term may cause some pressure on prices levels. Regarding the real estate market, Housing Starts in September fell 9% to 1,047 million, against 1.17 expected, while the Building Permits rose 6.30% to 1.23 million, compared to 1.55 million estimated.
Today, Asian markets had a relatively quiet session, achieving modest gains. In Japan, valuations were more significant due to various business news and the interruption of the last two days recovery of the Yen against the Dollar.