European shares higher on stimulus hopes
- China demand hitting corporate earnings
- Banks higher on FTSE
- Tesco (L:TSCO) shares higher on site sales
- US stocks to open higher
- Mattel (O:MAT) shares to drop
Hopes of a delayed rate hike in the US and additional stimulus from Europe and China is helping global stock markets finish the week on a high. Shares across Asia have hit a two month high while the Shanghai Composite is setting up for its best weekly performance since early June.
Weak US inflation data, albeit above expectations, further bruised the case for a Federal Reserve rate rise. Markets are looking ahead to next week when the ECB meeting and China’s GDP report provide opportunities for the European Central Bank and the People’s Bank of China to increase stimulus.
The impact of slowing demand in China is becoming a reoccurring theme in third quarter corporate results. Nestle lowered its full year profit forecast because of a noodle scandal in India and lower demand in China. Wynn Resorts casino was been hit by the ongoing slowdown at China’s main gambling hub Macau. Hugo Boss has cut sales and profit targets based on slowing demand from China.
Volkswagen (DE:VOWG) shares are lower on Friday after the car giant’s registrations in Europe rose 8.3% in September, slower than the 9.8% increase in the overall market, according to the European Automobile Manufacturers’ Association.
The FTSE 100 is being led higher by financials and oil & gas sectors. Banks are still basking in the sunlight of the U-turn by the UK Treasury on its unpopular “guilty until proven innocent” rule that could have meant reduced risk-taking and the loss of senior talent in the industry.
Reports that Russia is will to discuss oil price-bands and a possible production cut in its meeting with OPEC next week is supporting the oil prices as well as shares of Royal Dutch Shell (L:RDSa) and BP (L:BP), both rising over 2%.
Asset sales are providing more power for Tesco’s turnaround machine. The sale of 14 development sites is helping Tesco shares higher by over 2%.
AstraZeneca is near the bottom of the UK benchmark share index after the US Food and Drug administration didn’t approve its diabetes treatment using two of its existing products.
US markets look set to rise alongside global markets on Friday’s open. The Dow Jones close back above 17k is encouraging a return to risk-taking amongst investors despite a mixed bag of corporate earnings.
Mattel (O:MAT)shares are expected to drop by as much as 2% after the company missed top and bottom line third quarter earnings expectations. Falling Barbie and other toy sales are hurting the toymaker as kids turn to iPad games and competition from Disney’s own character dolls instead.
USA pre-opening levels
S&P 500: 7 points higher at 2,030
Dow Jones: 25 points higher at 17,166
Nasdaq 100: 14 points higher at 4,432
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