Stocks were generally higher in Europe after global growth fears were eased somewhat by a smaller than expected decline in China’s third quarter GDP. The backdrop of possible European Central Bank easing this week was supporting shares on the mainland with the German DAX and French CAC both higher. Weakness amongst China-sensitive commodity stocks dragged the UK’s FTSE 100 from early gains to losses.
Stocks have bounced nicely off the lows in late September with stocks in the UK and US nearing two month highs. The worry is that this has just been a correction before a new leg lower. The mere hope of new stimulus in Europe and China, and a delayed rate hike in the US, may not be enough to tempt more investors back into the market at these higher prices.
Shares of Deutsche Bank (DE:DBKGn) were trading near two month highs after the German bank announced a massive restructuring including the ouster of several executives. There has been a perceived lack of determination to address shortfalls in the chain of command that had led to the LIBOR rigging fines. Incoming Chief Executive John Cryan is making it very clear to shareholders that big change is on the agenda. The risk is that this level of change can be more destabilising than motivational. Investors are cheering Mr Cryan’s determination today but the bank will need to see results improve or concern will creep in that he’s tried to do too much at once.
The rebound in oil and metal prices has supported the rebound in equities but commodities were generally lower on Monday following further evidence of the slowdown in China. As such, basic resource shares were propping up the bottom of the FTSE 100 with Randgold (L:RRS) and Fresnillo (L:FRES) top fallers as the price of gold slips back for a third day.
Shire (L:SHP) was one of the biggest fallers on the FTSE after the UK pharmaceutical group said that the US Food and Drug Administration not approving the company’s new eye drug would delay a possible launch of the treatment until 2016.
ITV (L:ITV) shares were flat on news it has bought the television assets of Northern Irish broadcaster UTV for £100m. The UTV deal is good for ITV’s market reach in Ireland but does depart from the broadcaster’s recent strategy of moving away from advert-depend businesses.
US markets are set for a lower open on Monday as investors prep for another week of earnings releases. Morgan Stanley (N:MS) and Halliburton (N:HAL) report before the open while IBM (N:IBM) reports after the closing bell.
USA pre-opening levels
S&P 500: 3 points lower at 2,030
Dow Jones: 32 points lower at 17,183
Nasdaq 100: 3 points higher at 4,441
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