UK & Europe
Positive results from consumer goods giant Unilever (L:ULVR) and a rise in commodity stocks lifted European shares on Thursday after a three day slide.
Supportive comments from European central banker Nowotny certainly did nothing to temper expectations of easy central bank policies. The suggestion that the European Central Bank is ‘clearly missing its inflation target’ was taken as a sign that the ECB is gearing up to expand its QE program.
A four week high in copper prices boosted miners to the top of the FTSE 100. It was the rebound in commodity prices that carried the FTSE above its September peaks and likewise the correction in commodities this week has put the index under pressure. On Thursday, the mining and oil & gas sectors moved higher as Glencore (L:GLEN), Antofagasta (L:ANTO) and BP (L:BP) shares all rose.
ARM Holdings (L:ARM) was top riser after a third quarter earnings update from Intel (O:INTC) indicated the US chip-maker is failing to make headway with its ‘atom’ processors aimed at tablets. ARM’s area of speciality is chip’s aimed at mobile and tablet devices.
Prospects for a pickup in IPOs in the fourth quarter helped the London Stock Exchange Group (L:LSE) gain over 4%. The volatility brought on by concerns over Chinese growth put off a lot of companies listing in Q3 so that should pass through to into a big Q4.
Burberry shares were sharply lower after missing sales estimates thanks to a slowdown in demand for luxury goods in China. Slowing Asian sales were exacerbated by Chinese consumers spending more abroad in the likes of Europe and Japan where Burberry have less stores than competitors.
US
Stocks in the US opened higher on Thursday but stronger than expected inflation data and mixed earnings from major money centre banks took the edge of pre-market gains.
The US consumer price index fell less than expected in September to 0.0% year-over year when a dip into deflation was expected. Core prices firmed to grow 1.9% year-over-year. Core CPI paints a picture of the Federal Reserve meeting its target; it’s just that Fed tends to prefer the core PCE price index which shows a less lively 1.3% annual inflation.
Goldman Sachs (N:GS) missed expectations for third quarter earnings after market volatility in August rattled investors causing a 34% drop in fixed-income trading revenue and losses in its investing and lending division.
Citigroup (N:C) shares rose after the bank beat earnings expectations as falling revenues were more than offset by a drop in operating and legal costs.
Netflix (O:NFLX) shares dropped over 5% on the open after reporting earnings and US customer growth that missed expectations. The results show strong worldwide subscriber growth but Netflix is priced for perfection so the slower US growth has hit shares hard.
FX
The US dollar was broadly higher on Thursday, helped by stronger than expected CPI data and a bigger than expected fall in jobless claims. The dollar rise was also on the cards as a bounce from a particularly weak day on Wednesday after retail sales data missed expectations.
The euro has seen a choppy rally in the past two weeks as traders try to reconcile weak US data versus the increasing chance of additional QE from the ECB. ECB member Nowotny played into the notion of further ECB stimulus with his comment on Thursday that the bank is clearly missing its target.
The Kiwi dollar was best performer after stronger than expected New Zealand consumer confidence data. NZD/USD extended to 0.69, a fresh 3 ½ month high.
Commodities
Commodities were mostly lower after the dollar got a lift from better than expected CPI data.
Crude oil slipped again on Thursday but remained within Wednesday’s tight trading range. Bullish OPEC and IEA forecasts have been undone by resolutely growing US inventories data that suggests the oil price drop has not yet hit US output.
Gold consolidated after big gains on Wednesday that took it to new three month highs and above its 200 day moving average.
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