market relief

Bullish sentiment in Europe continues as the Continent’s political and macroeconomic outlook has improved. 

The DAX is playing catch-up after being closed yesterday due to Reformation Day, and the index has reached yet another record high.

Mining companies likes Rio Tinto, Anglo American, BHP Billiton and Glencore are higher after the Chinese manufacturing sector kept expanding at the same pace. The Caixin survey of Chinese manufacturing came in at 51, meeting expectations, and unchanged from the previous month.

Next shares are down 5.05% after the retailer announced that total full-price sales rose by 1.3% in the third quarter, while analysts’ were expecting a 4% increase. The retailer blamed the mild autumn for the weaker than expected revenue. Next described the market condition as ‘volatile’, and this added to the negative sentiment. The stock bounced off 4501p this morning, and that price region has been significant over the past year, so if it can hold above it, the share could retake the 5000p mark.

Paddy Power Betfair had a good third-quarter as revenue grew by 9%. The bookmaker had strong performances at their Australian and American branches. The company raised its full-year outlook slightly, and that triggered the bullish move this morning. The stock is up 4.3%.

GBP/USD is largely unchanged on the day after respectable gains were made in the UK house prices. The Nationwide house price index showed a 0.2% increase on a month-on-month basis, and a 2.5% rise on a year-on-year basis. UK manufacturing PMI came in at 56.3, up from 55.9 in September. 

It is a quiet day in terms of economic indicators from the eurozone, and France and Italy are having bank holidays, so movement on EUR/USD is likely to be small.

We are expecting the Dow Jones to open 93 points higher at 23,470, and we are calling the S&P 500 up 8 points at 2583.

At 12.15pm (UK time) the US will announce the ADP employment report, and dealers are expecting a reading of 200,000, and that compares with the September report of 135,000.

At 2pm the US will release the ISM manufacturing PMI report for October, and economists’ are expecting the reading to be 59.5, down from 60.8 in September.

The Federal Reserve will make their monetary policy decision at 6pm. Traders are expecting rates to remain on hold, but the statement could provide a clue as to what they might do next month. Jerome Powell is tipped to be name as the next head of the Fed, and we could hear about that announcement tomorrow.  

Denny’s, Facebook, GoPro, Kraft Heinz and Tesla will announce their quarterly results.  

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