by Eli Wright
For better or worse, the main force driving markets continues to be the upcoming U.S. election.
Overnight in Asia, the Hang Seng slipped 0.56%, to 22683.51 . The Shanghai Composite gained 0.8%. The Nikkei was closed today due to the Culture day holiday in Japan.
The Eurozone unemployment rate held steady at 10% in September, for a second straight month, the lowest it's been since June 2011. Both the DAX and the Euro Stoxx 50 are up slightly in early trade.
As US markets open attention will likely be on the UK, where a UK court has ruled that the government can't trigger Brexit negotiations without a Parliamentary vote, immediately driving sterling higher; The Bank of England will be releasing its interest rate decision later this morning. The FTSE 100 is currently down 0.19%.
In the United States, markets will move past yesterday's not unexpected Fed decision to hold interest rates. Consensus for a December hike is now at 62%. However some analysts believe a Trump victory next week might delay any policy change till markets and the US economy digest the election results.
Yesterday’s ADP release missed expectations, which could signal similar for tomorrow's Nonfarm Payrolls report. Initial jobless claims unexpectedly rose in today's release, to 265,000.
The S&P 500 closed down 0.65% yesterday, at 2,097.94 and has slipped an additional 0.05% premarket; the NASDAQ ended the day down 0.84%, at 4,726.91; the Dow edged up 0.09%, to 17,897, gaining an additional 0.05% in premarket trading. The VIX remains little changed from yesterday’s 19.3 close.
Forex
Election concerns continue to weigh on the dollar. The U.S. Dollar Index continues to fluctuate negatively, yesterday reaching 3-week lows, dropping an additional 0.18% today. The yen and euro each continued their upward trajectory, while the Mexican peso remains depressed.
The British pound rocketed to 1.2450 on the Brexit court ruling, up a bit more as of this writing.
Commodities
Gold reached a high of $1305 in early trade, and is currently at $1293. Expect it to trade in range while risk-averse investors flock to the yellow metal in anticipation of next week's events.
The search for safe havens is also driving silver, which reached a peak of $18.7 yesterday, but is down to $18.14 in early trading today.
Brent edged 0.7%, to $47.19 on fears of supply disruptions following an attack on a Nigerian oil pipeline. Crude oil is up 0.6% to $45.62.
Stocks
Yesterday, Facebook (NASDAQ:FB) reported that profits grew 166% from last year, but shares dropped 7.47% nonetheless in after-hours trading after CEO David Wehner warned that “ad load will play a less significant factor driving revenue growth after mid-2017,” later adding that “with a much smaller contribution from this important factor going forward, we expect to see ad revenue growth rates come down meaningfully.” Investors, along with the social media giant may have to bet on new sources of revenue.
Toyota (NYSE:TM) reports Q2 2017 earnings after today's close. According to Zacks, the consensus EPS forecast for the quarter is $2.12, a YoY drop of 43% from last year’s $3.16. Toyota, like many major auto manufacturers, has already said that October sales fell 8.7% to 186,295 units, below forecasts for 189,995. Additionally, the rising yen has weighed on the company's bottom line.
Mass media giant CBS (NYSE:CBS) reports Q3 2016 earnings after the close as well, with expected Q3 EPS of 98 cents, up 11% from the 88 cents EPS from this same quarter a year ago. CBS is still the most watched network, which remains appealing to advertisers. Currently, CBS is looking into a potential merger with Viacom Inc (NASDAQ:VIA). According to analysts at Pacific Crest, CBS's management and board:
"have solid negotiating leverage to gain full control of Viacom, including Paramount. If it gains full control in a merger, we would see the combination as a positive for CBS.”
Starbucks (NASDAQ:SBUX) also reports results today, for Q4 2016. Consensus EPS forecast for the quarter is $0.55, compared to last year’s $0.43. Longer term investors, should watch for information on the company's store-growth strategy in the USA and China.