Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, European indexes traded without major fluctuations. Initially, investors will react to the results that were published before the opening. One of the sectors in focus should be the technological, due to the publication of results from Apple. Several European companies such as ST Microelectronics and Infinenon are suppliers of this company, so its activity turns out to be influenced by its customers. The results of Santander and Lloyds inaugurated the earnings season of the banking sector. The Spanish bank showed a profit for the first nine months of 4600 M€, which marginally exceeded the 4450 M€ estimated. The core capital ratio Tier 1 reached 10.47%. Lloyds, the largest English lender, reported a profit of 1910 M£. (excluding a fine related with inaccuracies in the sale of insurance), falling short of the 2040 M. £ estimated. The protagonist of the earnings season in this sector will be the Deutsche Bank which reports its accounts tomorrow. Oil shares should be shown vulnerable to the recent weakness of the oil.
US shares closed with moderate losses, penalized by the weakness of the industrial sector as well as the oil weakness. Most companies continue to report profits and revenues that equal or exceed analysts’ forecasts. In fact, yesterday, Procter & Gamble, Merck, Dupond, United Technologies and General Motors do fit this pattern. However, one should note some disturbing exceptions: 3M and Caterpillar. These two symbols of American industry designed a worrying scenario. 3M reported an EPS slightly higher than expected and revenues equal to expectations. However, 3M reduced its projections for revenues for 2016. Caterpillar reached a higher than expected EPS but revenues were lower than anticipated, forcing the company to reduce its sales projections this year and to recognize that the markets in which it operates continue to be”challenging”. Concerning economic indicators, the S&P/Case-Shiller Home Price Indices grew by 0.40% in August from the previous month and 5.10% compared to the same month last year. These forecasts assume an annual increase of only 5%. The rise in house prices continues to be supported by demand side of the economic expansion, low interest rates and the rise in the wages. On the other hand, the Consumer Confidence measured by the Conference Board dropped to 98.60 in September, compared to 102.0 expected by economists.
With the exception of the Nikkei, Asian indices closed in negative territory, highlighting the weakness in oil shares and Australian banks.