Europe
Shares in Europe spluttered back to life on Thursday recouping a small portion of the losses seen this week after the European Central Bank’s targeted LTROs saw a pickup in demand since the first round but still missed consensus estimates which increased calls for quantitative easing.
The total take-up between the two TLTRO auctions has been €212bn around half of the total cap of €400bn offered by the ECB.
Inflation remains stagnant in the core of Europe with inflation in Germany and France at 0.5% and 0.4% year-over-year respectively, well below the ECB’s target for the Eurozone of 2%.
Low inflation and the poor TLTRO results both point to more action needed from the ECB which only really leaves QE. There has been a pullback in European stocks this week because a large degree of uncertainty surrounds the lack of consensus for QE within the European Central Bank’s governing council.
UK shares were being dragged down by the heavily-weighted mining sector as gold, silver and iron ore prices were soft reflecting the slowdown globally and within China. While the Chinese government continues to attempt its fine-tuning of the economy and holds off going whole-hog on stimulus, metals and mining shares will be vulnerable.
Whitbread, the owner of Costa coffee, Premier Inn and Beefeater, reported strong third quarter like for like sales growth although shares fell slightly as the rate of growth was down on the prior quarter.
Sports Direct Intl Plc (LONDON:SPD) posted an 11% rise in first half earnings and reiterated its full year guidance but shares traded lower on the prospects of further profit-sapping acquisitions as part of the company’s expansion plans.
US
Better retail sales helped US markets into a higher open on Thursday offsetting some of the damage inflicted on energy shares from the continued drop in oil prices.
Retail sales grew by the largest amount in eight months largely supported by a huge month for auto-sales. The rise in sales ex-auto suggest that some of the savings at the pump maybe starting to be spent by consumers.
FX
The US Dollar was broadly stronger today with an especially large turnaround in the yen and the Norwegian krone extended its downtrend after Norway’s central bank lowered interest rates for the first time in two years.
USD/NOK rallied over 1.5% to beyond its 2008 peak to above 7.29 after Norway’s central bank cited 2015 growth fears thanks to falling oil prices as a reason to reduce interest rates by 0.25% to 1.25%.
The Russian Central bank raised interest rates to 10.5% with no discernible effect on the ruble as USD/RUB traded over 1% higher with oil prices continuing to trend lower and pressuring Russia’s biggest industry.
The SNB left rates on hold and reiterated its pledge to peg EUR/CHF at 1.20 on Thursday as was widely anticipated but did mention a negative deposit rate was a possibility if further easing was necessary.
Commodities
It was a volatile day across the commodity complex with Gold, Silver and oil moving in and out of positive and negative territory.
WTI crude oil failed to break below the round number of $60 per barrel that has been mentioned by multiple oil ministers as their projected floor for oil prices. The big figure may offer interim support but the strong trend lower with no imminent chance of a supply cut from OPEC means any bounce in oil could be short-lived.
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