Markets Round-Up 27th October 2017.
Stock Markets
Last night in the US the Nasdaq edged down 7.12 points or ⇓0.1% to 6,556.77, but the Dow rose 71.40 points or ⇑0.3% to 23,400.86 and the S&P 500 inched up 3.25 points or ⇑0.1% to 2,560.40. The mixed close on Wall Street came despite positive sentiment generated by news that House Republicans voted to approve a Senate-passed budget resolution, taking a key step toward tax reform.
Asian shares gained as technology shares were boosted by upbeat earnings from US hi-tech giants while the euro hovered near three-month low against the dollar after the European Central Bank extended its stimulus. (Japanese Nikkei ⇑ 1.24%, Hong Kong Hang Seng ⇑0.84%, The Chinese CSI 300 ⇑0.71%, Taiwan TAIEX ⇓0.24% Korean Kospi ⇑0.64%, Australian ASX ⇓0.22% and the Indian Nifty ⇓0.1%.)
An interesting day in the UK as London shares edged higher. RBS had mixed results as attributable profit in the third quarter of £392mln, was down from £680mln in the second quarter but up from a £469mln loss in the same period a year earlier. This comes after Lloyds had positive results which benefited from a slowing PPI claims market. Hopefully this trend will continue into the future and lessen the profit hampering we have seen for UK Banks. On a positive note Shire defied recent market sentiment to deliver good results. Their shares climbed over 2% and it will be interesting to see whether their guidance has been priced in or if they have further to go. The FTSE 100 was up ⇑0.3% to 7505 and the 250 fell ⇓0.1%
European stocks hit a five-month high today, underpinned by strong earnings and a sharp drop in the euro a day after the European Central Bank took a cautious route to scaling back stimulus. The Catalan regional parliament has voted to declare independence from Spain, while the Spanish parliament has approved direct rule over the region. Catalan MPs backed the motion 70-10 in a ballot boycotted by the opposition. Spanish Prime Minister Mariano Rajoy earlier told senators direct rule was needed to return “law, democracy and stability” to Catalonia. (Euro Stoxx 50 ⇑0.4% 3652.2, German Dax ⇑0.64%, French CAC40 ⇑0.71% , Spanish IBEX ⇓1.45% , Italian MIB ⇓0.62%)
In the US stocks have opened all guns blazing. The Nasdaq is up so far over 2%. with the S&P dragging behind at 0.8% as amazon gains over 13%. The trend extended to Microsoft, Alphabet and First Solar all of whom reported strong numbers that has seen their shares rise sharply today. With more corporate earnings due in the coming week US investors can be hopeful of fresh record highs.
Currency
The pound is up against the Euro to €1.1311 and fat against the dollar at $1.3109 US Dollars.
Commodities
Oil prices inched higher, with Brent crude approaching $60 a barrel (WTI $53.8) amid tightening market expectations, buoyed by comments from Saudi Arabia’s Crown Prince backing the extension of OPEC-led output cuts.
Gold drifted in a narrow range after hitting a near three-week low in early trade as the dollar gained against the euro after the European Central Bank extended its bond buying programme and is currently up marginally at $1270.25.
Other News
International Consolidated Airlines Group’s third quarter operating profits rose to €1,455m before exceptional items – up from €1,205m a year ago. Passenger unit revenue for the quarter rose by 0.7% – up 2.2% at constant currency. Non-fuel unit costs before exceptional items for the quarter were down by 1.7%, up 2.5% at constant currency. Fuel unit costs before exceptional items for the quarter were down 7.5% and down 8.4% at constant currency.
RBS posted a large rise third quarter profit compared to the same period a year earlier, though profits slid compared to the second quarter. Third-quarter pre-tax profit was £871m, more than triple the £255m posted a year earlier, but down on the £1.24b recorded in the second quarter. Net attributable profit was £392m, swinging from a loss of £469m a year earlier. Revenue slipped to £3.16b from £3.31b in the previous corresponding quarter.
Google parent company Alphabet Inc. reached record price levels in after-hours trading Thursday and could top a $700 billion market capitalization if it holds the gains through Friday’s trading session. Shares gained about 3% in late trading after the internet company announced third-quarter earnings that easily beat expectations Thursday afternoon. The stock would need a 3% gain for Alphabet to become just the second U.S. company after Apple Inc. to achieve a $700 billion market cap.
Amazon.com Inc. shares jumped after reporting a big earnings beat in its first quarterly report since closing on the acquisition of Whole Foods Market Inc. The e-commerce giant reported third-quarter net income of $256 million, or 52 cents a share, on sales of $43.7 billion, up from $32.7 billion a year ago. Analysts on average expected earnings of 2 cents a share on sales of $41.6 billion, according to FactSet. Amazon shares jumped about 6% immediately after the report was released, topping $1,030 after closing at $972.43.
Billions of euros of British taxpayers’ money could remain locked into an EU bank for more than thirty years after Brexit, the UK has been warned. Alexander Stubb, vice president of the European Investment Bank – in which the UK is a 16% shareholder – said it would not be fully repaid until 2054. He described Brexit as a “travesty” but denied the move was a punishment.
The US economy expanded at an annual pace of 3% during the three months to the end of September, which was stronger than expected. The growth extended the robust activity reported in the previous quarter, when US GDP grew at an annual pace of 3.1%. Analysts had been expecting a sharp slowdown after back-to-back hurricanes battered several states in the quarter. But consumer spending held steady, despite a drop in homebuilding investment.
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