- EUR shows some strength in morning trading
- German factory orders expected to post gains
- S&P 500 up 0.6% on Republican midterms victories
Forex Overnight: EUR trading mostly higher
The EUR is trading firmer against most of its major counterparts this morning. Later today, traders will track German factory orders data which are widely expected to show a rebound on a monthly basis in September.
The main focus will be on the European Central Bank’s monetary policy decision and post-meeting press conference, especially after the Bank of Japan unveiled fresh stimulus measures last week. Likewise, the Bank of England’s monetary policy meeting will also attract market attention.
Moreover, the National Institute of Economic and Social Research’s UK gross domestic product report will be in spotlight along with UK industrial and manufacturing production data for September. In the US, market participants will track US weekly jobless claims data following yesterday’s upbeat private sector employment data and ahead of tomorrow’s crucial nonfarm payrolls data.
At 06:00 GMT, the EUR has risen 0.3% and 0.2% against the USD and GBP to trade at $1.2520 and GBP 0.7833, respectively.
UK Stocks: Expected to open weaker
The FTSE 100 is likely to open 17 points in the red.
Key economic indicators scheduled for release today include the NIESR gross domestic product Estimate, Industrial Production, Manufacturing Production, and New Car Registrations. Additionally, the BoE will announce its interest rate and asset purchase facility decision later today.
AstraZeneca (AZN), Experian (EXPN), 3i Group (III), Randgold Resources (RRS), Tate & Lyle (TATE), and Cable & Wireless Communications (CWC) are scheduled to report their results.
Reuters has reported that BP (BP/) restarted operations of its coking unit at its refinery in Whiting, Indiana, yesterday.
The US government has stated that it had, at the request of South Korea, cancelled a preliminary contract with the US unit of BAE Systems (BA/) to upgrade South Korea's fleet of F16 fighter jets in partnership with the US Air Force.
According to Sky News, UK business secretary Vince Cable, in a letter to the Groceries Code Adjudicator, has voiced his concerns about Tesco's (TSCO) supplier base and expressed support for a comprehensive review of the retailer’s dealings with suppliers.
Asia: Trading mostly lower
Asian markets are trading mostly in the red this morning.
In Japan, automakers, Honda Motor (7267) and Nissan Motor (7201) lost value. Japan Real Estate Investment (8952) and Tama Home (1419) also traded lower. On the upside, Rakuten (4755) rallied after the company reported an annual increase in its net profit for the quarter ended September 2014. Toyota Motor (7203) gained value, buoyed by an annual rise in its operating profit for July-September quarter. At 06:00 GMT, the Nikkei 225 index declined 1.0% to trade at 16,769.3.
In South Korea, Hyundai Steel (004020) traded higher after posting a sharp increase in its operating profit for the three months ended September 2014. In China, GD Power Development (600795) tumbled after the Electricity Council downwardly revised its outlook for power consumption this year. In Hong Kong, Agricultural Bank of China (1288) and China Construction Bank (939) edged lower. Likewise, Sino-Ocean Land Holdings (3377) and Shimao Property Holdings (813) declined.
US Stocks: Futures trading in the red
At 06:00 GMT, S&P 500 futures were trading 5.6 points weaker.
Key economic indicators scheduled for release today include Initial and Continuing Jobless Claims, Non-Farm Productivity, Unit Labour Costs and Challenger Job Cuts.
Walt Disney (DIS), DIRECTV (DTV), Apache (APA), Monster Beverage (MNST), and NVIDIA (NVDA) are scheduled to announce results today.
In the after-hours trading session yesterday, Whole Foods Market (WFM) and Tesla Motors (TSLA) surged 7.4% and 7.2%, respectively, after the companies reported third-quarter earnings above analysts’ estimates. News Corporation (NWSA) rose 3.9% after the company posted an increase in its first-quarter revenue and earnings. On the downside, Qualcomm (QCOM) shed 5.8% as its fourth-quarter results missed analysts' estimates. Prudential Financial (PRU) lost 2.4%, hurt by disappointing third-quarter earnings.
Yesterday, the S&P 500 index rose 0.6% in the regular trading session as the Republican Party won a majority in the US Senate in the US midterm election. Moreover, a report from the Automatic Data Processing showed that private sector employment in the US rose more than expected in October. Upbeat third-quarter earnings led Devon Energy (DVN), Chesapeake Energy (CHK) and EOG Resources (EOG) to surge 10%, 6.9% and 6.5% respectively.
Southwestern Energy (SWN) gained 4.4% after a broker initiated coverage on the stock with an “outperform” rating. A rebound in oil prices also lifted energy sector stocks. Time Warner (TWX) advanced 4% after the company reported third-quarter earnings above market expectations.
Covidien (COV) rose 1.4% on the back of stronger-than-expected fourth-quarter earnings. Cognizant Technology Solutions (CTSH) rallied 8.1% after the company posted an increase in its third-quarter revenue and raised its full-year revenue forecast. Philip Morris International (PM) added 0.5%. The company announced that it would enter into a partnership with Universal Corporation (UVV) and Alliance One International (AOI) to buy its tobacco instead of working directly with farmers.
On the other hand, TripAdvisor (TRIP) plummeted 14.1% after the company reported lower-than-expected third-quarter earnings. Pioneer Natural Resources (PXD) slid 4.5% after the company priced its public offering of 5.8 million shares of its common stock.
Europe Stocks: Likely to open in negative territory
The DAX and the CAC are expected to open 15 points and three points lower, respectively.
Key economic indicators scheduled for release today include German Factory Orders and Swiss State Secretariat for Economic Affairs Consumer Climate. Moreover, investors will track the ECB’s monetary policy statement and press conference later today.
Siemens AG (SIE), Deutsche Telekom AG (DTE), Credit Agricole SA (ACA), Societe Generale SA (GLE), Muenchener Rueckversicherungs-Gesellschaft AG (MUV2), Beiersdorf AG (BEI), Commerzbank AG (CBK), and Heidelbergcement AG (HEI) are scheduled to report results.
According to Bloomberg, Siemens AG’s (SIE) supervisory board has approved the sale of the company’s hearing-aids division to EQT Partners AB for about EUR 2.1 billion.
Finmeccanica SpA (FNC) has raised its full-year guidance for orders, sales and profits after it reported that its net loss for the first nine months of 2014 narrowed.
Banca Monte dei Paschi di Siena SpA (BMPS) stated that its board of directors has approved a rights issue of up to EUR 2.5 billion in order to cover the capital shortfall of EUR 2.1 billion exposed by the European Central Bank’s stress test.
Macro Update
Economic recovery in Japan likely to continue, indicates BoJ minutes
The minutes of the Bank of Japan’s latest monetary policy meeting have indicated that policymakers remained confident that the nation’s economy would continue to recover at a moderate pace. Further, they expect the effects of the sales tax hike in April 2014 to ease gradually. The minutes also stated that the nation’s economy faces some downside risks from the lingering economic problems in the US and Eurozone.
Australia’s unemployment rate remains unchanged
The seasonally adjusted unemployment rate in Australia has remained unchanged at 6.2% in October, in line with market expectations.
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