After another week of big falls in the US, Asia markets have struggled for direction with Chinese shares once again having a difficult session, after industrial profits slowed for the fifth month in a row.
It’s been a difficult month for equity markets in general with US markets in particular on course to post their worst month since the financial crisis.
The extent of the falls this month could well introduce an element of caution into the mindset of investors as we head into year end.
Today’s European session has got off to a positive start with the FTSE100 managing to hold above its lows this year, however markets elsewhere in Europe have had a more difficult time of it, trading at levels last seen in 2016.
Ratings agencies continue to pull their punches on Italy after S&P only changed its outlook to negative on Friday, leaving its rating unchanged at triple B, which has helped give Italian banks an early boost this morning.
It’s been a difficult year for HSBC's (LON:HSBA) share price, however we’ve seen a decent rally this morning off two year lows, after the Asia focussed bank posted a decent set of Q3 numbers, with pre-tax profit coming in at $5.9bn, an increase of 28%, on revenues of $13.8bn. Year to date profits were at $16.6bn as management pointed to an improvement in cost control. More encouragingly despite the concerns about a slowdown in China the bank saw Hong Kong contribute a decent chunk to its profits, on the back of improved margins.
Elsewhere transport provider FirstGroup (LON:FGP) shares have edged higher on the back of weekend speculation that the company might be broken up, with some shareholders reported to be unhappy with the lack of direction and underperformance of certain areas of the business.
Just Eat (LON:JE) shares are sharply lower after being on the receiving end of a downgrade from Peel Hunt on the basis of rising competition concerns.
It’s set to be a big day for the poundahead of today’s UK budget, however any measures announced today are likely to be highly contingent on the outcome of the ongoing Brexit discussions, nonetheless the public finances are in much better shape than most of the forecasts that predicted doom and gloom in the wake of the June 2016 Brexit vote, and are back at levels last seen in 2007.
The Chancellor will be expected to look at the rising costs to small business as a result of the recent changes in business rates, while also announcing yet another freeze in fuel duty to keep a check on recent rises in fuel prices, though higher VAT receipts have helped cushion the worst effects of this.
In M&A news IBM’s $34bn purchase of RedHat is set to be top of mind ahead of the US open as one of the US’s most iconic tech brands looks to build on its diversification into cloud services. Buying the company most closely identified with the open source Linux operating system, will allow IBM (NYSE:IBM) to be able to better compete with Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) into cloud computing.
On the data front we’ll get to see the latest inflation and spending data for September in the wake of last week’s better than expected US Q3 GDP numbers which showed a 3.5% expansion.
The strength of the numbers served merely to reinforce the likelihood of a December rate rise, but also have raised the stakes with respect to how many more we can expect as we head into 2019.
Today’s PCE inflation numbers, which the Federal Reserve uses to determine the underlying price pressures building in the US economy are expected to remain steady at 2% for September.
More importantly the latest personal spending numbers are likely to show whether US consumers have reined in their spending, though these numbers may well have been affected by the hurricane season.
Dow Jones is expected to open 12 points higher at 24,700
S&P500 is expected to open 5 points higher at 2,663
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