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BP powers the FTSE as Sandy closes US markets for second day in a row
00:00, 30 October 2012
Europe Despite very low volumes, better than expected corporate earnings results across Europe have helped boost sentiment across the board, as investors chose to ignore a bigger than expected rise in German unemployment to 6.9%, with oil giant BP helping the FTSE push to its highest levels in five days. BP announced third quarter profits ahead of expectations and raised its dividend by 12.5% as well as maintaining its outlook going forward. Better than expected results from Germany's Deutsche Bank as well as confirmation of a massive restructuring program by Swiss Banking giant UBS has sent shares in these banks sharply higher. Insurers which had slipped back yesterday over fears about large claims as a result of Sandy has also regained some ground. Other financials have been somewhat mixed with Asia focussed bank Standard Chartered underperforming the FTSE after announcing single digit operating profit, slightly below expectations, on the back of a slowdown in Asia markets. The mining sector is also higher on the back of slightly firmer metals prices, though this in part down to a weaker US dollar, with Rio Tinto and BHP leading the way. Utilities have underperformed with National Grid in particular slightly lower due to concerns about damage caused to its power grids in the US. US US markets have once again been closed today, however some company earnings have been released, with US car giant Ford releasing its latest numbers for Q3, which, painted a contrasting picture with a sharp rise in profits in the US, offset by losses in its European operations. In other company news Apple has undertaken a restructuring of senior management in the wake of the mapping problems on the new iPhone and the mixed response to Siri. Retail chief John Browett will be leaving the company, while John Forstall, who was responsible for the flawed maps software will also depart, after refusing to take responsibility for the problems. In economic news, unlike the latest consumer confidence numbers which have been delayed the latest Case Shiller house price index showed prices rising at their fastest pace on a year on year basis in two years, up by 2%. FX The US dollar has been the worst performer today as risk currencies rise across the board in low volume trade. The yen has been the best performer on disappointment over the latest action by the Bank of Japan sent the Japanese currency higher against the greenback. The single currency has benefitted from a successful Italian bond auction with lower yields, as well as a slightly smaller contraction in Spanish GDP numbers. The bigger than expected rise in German unemployment appears to have largely been shrugged off. The pound has also gained some ground after CBI retail sales numbers for October came in well above expectations as retailers reported a strong increase with the index coming in at 30, well above expectations of 8. Commodities While copper prices have risen as a result of the weaker US dollar, oil prices have continued to trade in a fairly benign fashion, with Brent and WTI prices continuing to trade between positive and negative territory. US prices have pulled off their lowest levels since July, on the back of the more positive bias in equity markets as well as fears about potential shortages due to refinery shutdowns in the wake of the hurricane in the US. Given that Q4 also tends to lend itself to higher demand due to colder weather it seems likely that oil prices will remain fairly well underpinned, once conditions start to return to normal. The prices on Brent remain constrained by the elevated premium to US prices, currently at six month highs above $23. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.