Europe
Stocks in Europe have been on a rip since Mario Draghi twice mentioned the prospects of further monetary easing in the Eurozone last week and continued higher today when the latest German GDP reading confirmed the country avoided a technical recession with 0.1% growth in Q3.
In the UK, mortgage approvals dropped to the lowest in 17 months according to industry body the BBA. The fall in approvals highlights the ongoing deceleration of the UK housing market which stands to weigh on house builders and estate agents shares. Mortgage approvals peaked in January leading the slowdown in house prices which saw the fastest rate of annual growth in July.
Blue chip UK shares traded around break-even levels after DIY retailer Kingfisher (LONDON:KGF) saw a decline in like-for-like sales where poor results in France dragged down strong UK numbers.
UK supermarkets were also taking a few point off the main index going ex-div while Tesco (LONDON:TSCO) shareholders have decided to take legal action for the profit misstatement. Tesco shareholders maybe shooting themselves in the foot; the law suit will just knock confidence in the shares even lower.
US
US markets stalled out somewhat on Tuesday as mixed data befuddled investors blowing away expectations to the up and downside as consumer confidence dropped off in October while the second GDP reading jumped.
US GDP in the third quarter expanded by 3.9% faster than the first estimate of 3.5% when a drop to 3.3% was expected.US Personal Consumption rose to 2.2% from 1.8% and encouragingly business investment was also up 7.1% from the 5.5% initial estimate.
The stronger than expected GDP reading confirms a mid-2015 timetable for the Fed to hike rates which looks a lot closer than anybody else is likely to come including the UK.
The gap between actual and estimated third quarter GDP was a big one, but what is of increasing import is the gap between the economy of the US and the rest of the world especially Europe and Japan.
Shares in Twitter Inc (NYSE:TWTR) dropped today after CFO Anthony Nolan accidentally tweeted about a potential acquisition which he later deleted. Let’s just hope this is some clever PR rather than an embarrassing lack of ability to use his own platform.
Shares in Tiffany & Co (NYSE:TIF) and Campbell Soup Company (NYSE:CPB) rose on strong earnings.
FX
The US Dollar was down slightly against a basket of major currencies as the euro edged out some gains thanks to Germany posting positive GDP growth in the 3rd quarter and talk from a few ECB members on the need for waiting for current stimulus measures to take effect before doing more.
The Bank of England Treasury hearing was a reiteration of the dovish stance taken by the central bank in recent statements which highlighted the increased global threat from the slowdown in Europe and Japan. The hearing sent the British pound slightly lower against the US dollar and the euro.
Commodities
The Saudi Oil Minister raised the stake for Thursday’s OPEC meeting by stating there was an oversupply in the market. A natural solution to oversupply is to cut supply, i.e. a cut in production from OPEC counties. Crude Oil prices have not made a new low in over a week ahead of this Thursday’s OPEC meeting.
Copper dipped back below $3 per lb. despite the interest rate cut from China on Friday. The weakness in the face of good news doesn’t bode well for the industrial metal and perhaps speaks to a wider mistrust over the likely effectiveness of the change in policy.
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