Europe
Stocks in Europe have slipped back from their positive start as the buying momentum dissipated. When you consider how much ground the FTSE 100, DAX and CAC have made in the past couple of months, a pullback back of this size isn’t anything thing of the ordinary.
The European Central Bank (ECB) chief, Mario Draghi gave a speech this morning about banking supervision. Mr Draghi stated he doesn’t see any evidence that the credit availability in the eurozone is fuelling a property bubble. Mr Draghi also, stated that if banks want to boost profitability they should trim costs. Even though he knows full well the ECB’s loose monetary policy is keeping bond yields low, which makes it harder for banks to make money.
Associated British Foods (LON:ABF) announced a 22% increase in full-year operating profits and a 19% rise in revenue. There was a 12% increase in the total dividend. It was a solid set of numbers, but the company stated adverse foreign exchange moments would hit the bottom line in the first-half of next year. The share price is down 4.2%, but seeing as it hit a record-high last Tuesday the wider bullish move is still in place.
US
The Dow Jones, S&P 500 and the NASDAQ 100 all reached new record highs shortly after the open of trading in the US. The equity benchmarks are off the highs of the session, but the bullish sentiment is still doing the rounds. It seems that every new day brings a new record high for the US equity benchmarks.
The job opening and labour turnover summary (JOLTS) for September came in at 6.09 million, while dealers were expecting to a reading of 5.98 million, and the August figure was revised higher from 6.08 million to 6.09 million. It is encouraging to see that a steady flow of new jobs being created. This is a nice compliment to the very average US jobs report we saw last week.
The Investor’s Business Daily (IBD) economic optimism survey for November jumped to 53.6 from 50.3 in October. This is a survey of consumers about how they feel about the economic climate. A healthy reading likes todays, could lead to consumers going out and spending money.
FX
EUR/USD is weaker on the session after Germany posted disappointing industrial production numbers for September. The report showed a drop of 1.6%, while traders were expecting a decline of 0.7%. The previous report saw an increase of 2.6%. When you factor in the worse than expected services PMI reports from the major eurozone economies yesterday, it paints a picture of economic softness in the region.
GBP/USD has been hit by a broad rally in the US dollar. The UK announced solid house price data this morning but the push higher in the greenback got the better of the pound. The Halifax average house price index, for the three months until October increased by 4.5%, and that compared with the previous report of 4%. The better than expected JOLTS report from the US helped the US dollar creep higher.
Commodities
Gold is still stuck in its narrow range, and the metal hasn’t moved much from its 100-day moving average at $1275. The metal was nudged lower by the strong JOLTS and IBD economic optimism survey, but it has been making up for lost ground. Even though investors are clearly in risk-on mode, we haven’t seen a corresponding sell-off in the metal, which may suggest buying pressure.
WTI and Brent Crude oil have turned lower as profit taking kicked in. The energy market hit a new 28 month highs, and traders decided to take some money off the table. Brent Crude is still above its 200-week moving average at $62.71, which is a good indicator of how strong the market is. WTI is eying its 200-week moving average at $58.58. The bullish trend that oil has been in since June is still intact, so pullbacks might attract new buying.
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