Having seen the Dow post its first decline in seven days US markets look set to continue in that vein this morning as weakness in bio-techs and some disappointing earnings numbers start to weigh on sentiment.
JP Morgan Chase (N:JPM) earnings after the closing bell last night saw the bank post Q3 numbers of $1.32c a share below expectations of $1.37c a share. With revenues also falling over 6% on the back of disappointing trading and mortgage business the shortfall would appear to suggest that the US economy may not be firing on as many cylinders as it was in the second quarter of this year.
The disappointment surrounding these numbers particularly on the domestic front could resonate further if we get similarly disappointing numbers later today from Wells Fargo (N:WFC) and Bank of America (N:BAC) Merrill, who make up the rest of the bulk of the US domestic mortgage market.
On the plus side chipmaker Intel (O:INTC) did beat expectations on both earnings and sales, though you wouldn’t have known it judging by the after-hours reaction.
With open dissent starting to break out within Federal Reserve ranks todays US retail sales and PPI data will bear sharper scrutiny than usual with September retail sales likely to see a 0.2% gain while price pressures on the factory floor set to remain subdued at -0.8%.
This morning’s disappointing Chinese inflation data with producer prices stubbornly negative at -5.9%, where they have been since April 2012, suggests that concerns about deflationary forces and a lack of demand aren’t about to dissipate any time soon.
Here in Europe markets have continued where they left off yesterday, currently lower for the third day in succession with housebuilding stocks leading the laggards after posting some decent gains yesterday.
On the plus side Hargreaves Lansdown (L:HRGV) has shot higher after announcing an increase in new clients and an 11% increase in revenues to £78.5m. The downside to today’s numbers was that assets under management slid 1% but given the volatility seen over the past few months perhaps that’s not too surprising.
With precious metals continuing to edge higher Randgold Resources (L:RRS) and Fresnillo (L:FRES) are getting a fair wind from gold prices hitting their highest levels since early July.
In the UK the latest wages and unemployment data showed that the UK economy is still adding jobs with the number of people in employment at the highest level since records began at 73.6%. The unemployment rate dipped further from 5.5% to 5.4%, with the single month rate for August coming in at 5.3%.
These numbers helped push the pound sharply higher, in stark contrast to yesterday where the inflation numbers pulled it lower.
Average weekly earnings including bonuses also increased, albeit by less than expected, gaining 3% in the three months to August, in so doing maintaining the balance between weak price pressures which could delay a rate rise and strong wage growth which could still prompt an earlier move by the MPC.
The Dow Jones is expected to open 36 points lower at 17,046
The S&P500 is expected to open 5 points lower at 1,998.69
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