Europe
European equity markets are enjoying a positive run as the bullish sentiment from the European Central Bank (ECB) meeting last week is still doing the rounds.
Anglo American (LON:AAL), Rio Tinto (LON:RIO), BHP Billiton (LON:BLT) and Glencore (LON:GLEN) are all in demand today after the Chinese manufacturing sector kept growing. The Caixin survey of Chinese manufacturing had a reading of 51 in October, in line with expectations, and no change from the September report. As the reading was above 50.0, it tells us the industry is still in expansion. These days Beijing are trying to focus more on the services industry, but the manufacturing sector is still ticking along.
The DAX is the standout performer in Europe today after being shut yesterday for Reformation Day. The German market more than caught up with the rest of the Continent and soared throughout the session, and hit a new record high.
Paddy Power Betfair (LON:PPB) shares are up 5% after the company posted a 9% rise in third-quarter revenue. Both the Australian and American divisions saw double digit rises in revenue. To add to the positive performance for the recent three months, the bookmaker upped its full-year profit forecast.
Next (LON:NXT) announced that total full-price sale rose by 1.3% in the third-quarter, which was below analysts’ estimates, they were anticipating an increase of above 4%. The retailer stated the trading environment was ‘volatile’ and they expect fourth-quarter sales to fall by 0.3% - this is what prompted the sell-off in the share price, and it is down 9.2% today.
US
All another round of record highs for the Dow Jones, S&P 500 and the Nasdaq 100 as solid corporate earnings and economic indicators add to the bullish momentum.
Estee Lauder shares hit a record high after the company revealed strong first-quarter profits and issued a positive outlook for the year. Earnings per shares (EPS) was $1.14, a 44% improvement on last year’s figures, and it easily topped the 79 cents that was expected. Demand is high for their products in Eastern Europe and the Far East, and that helped the company raise its quarterly dividend by 12%.
The ADP employment report came in at 235,000, while traders were expecting 200,000 jobs to have been added. I was also an impressive improvement on Septembers 110,000. The strong report has set the tone for the US non-farm payrolls report on Friday.
The Federal Reserve will reveal their monetary policy decision at 6pm (UK time). Dealers aren’t expecting any change to the policy, but the statement could give us an indication what the Fed are thinking. Tomorrow, we could hear who will be the head of the US central bank.The market chatter is that Jerome Powell is tipped for the role, and when it comes to interest rates he is one of the more neutral members of the Fed.
FX
GBP/USD hit a 2 week high today, helped along by better than expected manufacturing PMI figures from the UK. Profit taking on the pound set in ahead of the Bank of England meeting tomorrow, and the markets are anticipating a rate hike. The BoE probably don’t want the Fed racing away with interest hikes, while they are standing still, so the UK central bank could raise rate tomorrow to try and keep the gap between them and the US relatively small. The Fed are tipped to hike again in December, so the UK may look to reserve their rate cut last year.
EUR/USD drifted lower due to a broad move higher in the US dollar. A strong ADP report and a robust manufacturing update kept the greenback in demand. Traders suspect the ECB could keep their stimulus plan in place for some time after the eurozone’s inflation rate slipped yesterday.
Commodities
Gold is a touch higher ahead of the Federal Reserve update. Dealers are not fearful of a rate hike tonight, as they will be deciphering the statement to try and figure out if the US central bank will pull the trigger in December. The talk of Jerome Powell being announced as Fed chair tomorrow is also helping gold, as Mr Powell is neutral on interest rates.
WTI and Brent Crude are in the red as US oil exports reached a record high, and production in the country is nearing its all-time high. Earlier in the day, both energy contracts hit levels not seen since June 2015, so traders were looking an excuse to book profits any way.
The latest energy information administration figures showed that US oil stockpiles fell by 2.43 million barrels – broadly in line with estimates. There was a much larger than anticipated drop in gasoline inventories.
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