market relief

Equity markets have registered small gains following yesterday’s major sell-off. 

Europe

Trading ranges were relatively small today and the decline since lunch time suggests that investors are not overly confident in the bounce back. Fears have simmered but they still exist, and investors remain cautious.

Barclays shares are in demand after the bank confirmed that third-quarter revenue jumped by 18.6% The finance house had a solid performance in terms of dealing, as equity trading revenue jumped by 35% and fixed-income trading revenue rose by 9.7%. The trading division propped up the overall group as corporate lending and banking fees slipped by 29% and 14% respectively. Edward Bramson, an activist investor has talked about trimming the investment banking division, but he might want to reconsider his position in light of today’s update. The stock has been drifting lower since February 2017, and while its remains below the 200-day moving average at 194p, its outlook should stay negative.

Deutsche Bank shares are in the red after the firm revealed a 65% fall in third-quarter profits. Group revenue dropped by 9%. The equity trading division and the bond trading department both revealed a 15% fall in revenue. The bank has been limping along for years and even though it has endured a major restructuring scheme, it appears it is not out of the woods yet. The share price has been in decline throughout 2018, and if the bearish move continues it could target €8.83.   

US

Stocks are a little lower this afternoon as traders remain on edge. Volatility has cooled compared with yesterday, but it is still relatively high compared with recent weeks. Traders are still mindful of the large swings that we saw yesterday, and there is a sense that we haven’t found the bottom yet.

Boeing posted a strong set of third-quarter results as earnings per share (EPS) and revenue topped forecasts. The company upped its full-year EPS guidance to $14.90 to $15.10, up from $14.30 to $14.50. The company also stated its full-year revenue might top $100 billion, which would be a record. The optimistic outlook underlines how confident the company is about its future performance. 

AT&T reported mixed figures as total operating revenue jumped by 15.3% to $45.74 billion, exceeding the $45.65 billion that analysts were expecting, but EPS was 90 cents, and the consensus estimate was 94 cents. The group added 69,000 new phone subscribers, while traders were expecting a decline of 22,000 new subscribers. AT&T lost 359,000 TV customers, and this a major blow to the company seeing as it is trying to be less focused on its phone service.

Tesla will be in focus as the company is due to reveal its third-quarter figures tonight. The fact the company brought its earning release forward could be a sign it has good news to deliver. Elon Musk, has been in the news for the wrong reasons recently, but the CEO suggested in a staff email, that the company is near a profit. 

The manufacturing and services reports were well received, as both updates showed a quickening of the growth rate, and the figures came in above market expectations. New home sales continued to disappoint, as they dropped by 5.5%. Overall, the US economy is still performing well, and the Federal Reserve could still raise rates in December. 

FX

EUR/USD is lower on the session due to disappointing manufacturing and services reports from the eurozone. The flash manufacturing PMI report for the currency bloc was 52.1, down from 53.3 in September, and economists were expecting 53. The services PMI report was 53.3, and the consensus estimate was 54.5. The European Central Bank meeting is tomorrow, and today’s figures don’t bode well for the policy makers.

GBP/USD is weaker ahead of Theresa May’s meeting with the 1922 committee later today. The talk of a vote of no confidence in the Prime Minister has put pressure on the pound, but there doesn’t, appear to be any candidate lined up to replace her. While sterling remains below the 1.3000 mark, its outlook might remain negative.    

USD/CAD dropped after The Bank of Canada (BoC) hiked interest rates to 1.75% - meeting expectations. The BoC like to shadow the Federal Reserve, and seeing as the Fed hiked three times this year it wasn’t a surprise that they closed the gap. The securing of the new North American trade agreement, and a frim core inflation rate along with a solid jobs markets paints the Canadian economy is a positive light.  

Commodities

Gold is a touch higher today despite the firmer US dollar. The uncertainty in US equities seems to have helped the commodity as traders seek out assets that are perceived to be lower risk. The metal has broadly been moving higher since mid-August, and if the bullish move continues it could target $1,265.

Oil saw a surge in volatility after the Energy Information Administration released the latest inventory data. The report showed that stockpiles jumped by 6.34 million barrels – its third large weekly build in a row, but gasoline inventories fell by much more than expected, so oil rallied as a result. The American Petroleum Institute announcement last night showed a major build in US oil stockpiles.     

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