Europe
ECB Vice President Constancio took the wind out of shares in Europe on Wednesday which flat lined after he suggested full sovereign quantitative easing would not come until next year, if at all, while investors are awaiting the outcome of Thursday’s OPEC meeting.
UK shares were trading around breakeven levels after the second estimate for third quarter GDP came in as expected at 3% year-over year with a significant drop in business investment.
Constancio’s comments are the strongest indication yet that policymakers wish to wait for the results of existing stimulus measures before implementing more.
This adds even greater importance to the results of the second round of TLTRO's in December. Should there be a better take up of the cheap loans from banks, the chance of QE would be diminished and there could be a big short squeeze in the euro and pressure on European equities.
Telecoms shares BT Group (LONDON:BT), Sky Network Television Ltd. (ASX:SKT) and Vodafone Group PLC (LONDON:VOD) were top risers as speculation mounts the companies will expand to offer customers a quad play of phone, broadband internet, pay TV and mobile phone services.
In the new-normal; the shares of potential acquirers have been gaining even though it would mean a hit to profits available to shareholders. It’s far from conclusive that customers want all telecommunications services under one roof or that that for example, BT buying O2 (XETRA:O2Dn) would provide any cost-savings, if anything it reduces competition and could raise prices.
BP Plc (LONDON:BP) and Weir Group (LONDON:WEIR) were big fallers as Crude Oil prices dropped on expectation of no cut in production to be announced from the Organisation of the Petroleum Exporting Nations.
Kingfisher (LONDON:KGF) clawed back losses after missing estimates on Tuesday.
US
An escalation in tensions in Ukraine, uncertainty surrounding the OPEC meeting and the upcoming Thanksgiving holiday saw US equities trade apprehensively on Wednesday as a host of US economic data missed expectations.
The S&P 500 surpassed 2,070 and the Dow 30 came close to 17,900 and there just hasn’t been quite the catalyst to get any further. Tuesday’s improvement in US GDP was a double-edged sword of an improving economy which threatens the first rate-hike from the Federal Reserve coming sooner.
Durable goods orders excluding transportation fell in October and the University of Michigan and Chicago PMI for November both declined.
It’s really only been surging vehicle sales thanks to low financing rates that helped overall durable goods rise, other less leveraged sectors fell back.
Shares in Hewlett-Packard Company (NYSE:HPQ) fell after the company reported
Shares of Apple Inc (NASDAQ:AAPL) made new all-time highs but Google shares were down slightly with the search engine being pushed to extend ‘forgotten requests’ to its main US web portal.
FX
The US Dollar was down against most major currencies on Wednesday after a series of disappointing economic data releases. The buck didn’t get much of a boost yesterday from the better than expected GDP numbers which suggests the trade maybe getting a little crowded.
GBP/USD made a two-week high after GDP estimates came in line with expectations, the data initially sent cable lower but when the selling ran out of steam it broke back higher in a big reversal back through 1.58.
Without Mario Draghi to the rescue there was short-covering in EUR/USD as VP Constancio basically cancelled any lingering misplaced hopes of Sovereign QE in the December meeting of the ECB.
Commodities
Gold and Silver were making small losses on Wednesday with gold hanging around the $1200 per oz round number.
Oil prices were making new intraday multi-year lows heading into the OPEC meeting which is widely believed to result in no cut in production.
The announcement of a cut in production could well send WTI Oil and Brent Oil futures lower but losses maybe short lived. The OPEC result has seemingly been pretty well-telegraphed by oil ministers so it may turn into a “sell the rumour buy the fact” event.
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