Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European indexes rehearsed without major oscillations. Today’s session should be influenced essentially by external factors. The first of these factors will be the publication of the results of two of the major US banks: JP Morgan and Citigroup. Another factor conditioning the trend of the European session will be the interventions of several members of Central Banks (among them Mario Draghi) at the IMF Annual Meeting, which starts at 3:00 p.m. (GMT – 01h00).
US markets rallied again, although gains were modest. The session was relatively quiet, and this calm was interspersed by the release of the minutes of the last FED meeting. From the reading of this document it is pointed out that several members of the Central Bank argue that if the economic situation continues to be positive, then it will be appropriate to increase the benchmark interest rates at the next December meeting. This scenario has gradually been discounted by investors. Today begins the Earnings Season of the banking sector, which is always closely followed by investors. For the financial sector as a whole, analysts estimate that profits have fallen by 7.80%. However, insurers will have to report a drop in their results due to compensation for the damage caused by hurricanes in the southern US. In fact, before the occurrence of these meteorological phenomena, analysts estimated that this sector would have generated profits of 9900 M.USD, which were later reduced to 5500 M.USD. Thus, if insurers are excluded, the other institutions should have registered a 3.80% increase in third quarter profits. If confirmed, this profit growth rate is lower than the one observed in previous quarters and is explained by the weak volatility in the financial markets (lower trading revenues) and the slowdown in credit lending. In the current phase, investors are more focused on factors other than the third quarter results. The rise in yields (and possibly the leading rates at the December FED meeting), the tax reform (which will lower the tax rate on banks) and the initiative to deregulate the sector have deserved a greater weighting in investors’ decisions regarding banking activities. The results of JP Morgan, to be published at 13:30 GMT-01h00, always serve as reference to the earnings season of the banking sector. This institution is the one that holds the most assets (2100 000 M.USD) and is the most profitable. Today, Citigroup will also publish its quarterly accounts (1:00 p.m.). Analysts anticipate EPS of 1.32 USD. Also today, President Trump will give a conference where he will comment on the agreement reached in 2015 between Iran and a sextet of countries (USA, Russia, China, Germany, France and England). This agreement provided, among other clauses, for Iran to abandon its nuclear plan for military purposes and for the gradual ending of sanctions imposed on Iran. President Trump has repeatedly threatened to cancel this contract. Today’s speech on this topic will have financial implications, primarily on the oil market.
Most Asian markets ended up following Wall Street’s response to the publication of the minutes of the last Fed meeting. The Nikkei extended the gains recorded yesterday that allowed it to reach the highs since 1996. On the contrary, the Chinese markets did not follow this trend, with the Hang Seng and Shanghai Composite indices registered slight setbacks.