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European stocks rose, with automakers leading the fray as investors assessed valuations after the region’s equity benchmark posted a four-day losing streak. Auto-related companies recorded the best performance of the 19 industry groups on the Stoxx Europe 600 Index.
The German DAX is leading the group of European bourses, up around 1% followed by the French CAC 40 up 0.4%. Miners Rio Tinto Group and BHP Billiton Ltd. dragged a gauge of miners to its lowest level since October 2003 as commodity prices slipped further. A measure of energy stocks slid as oil extended declines from the lowest close in more than 12 years. WTI crude is now trading at USD 30.75 with analyst projections expecting the resource to fall even further on the back of the strengthening USD.
Among stocks moving on corporate news, Debenhams Plc jumped 16 percent after the British retailer reported 19-week holiday sales that exceeded analysts’ projections. Wm Morrison Supermarkets Plc rose 12 percent as the supermarket chain unexpectedly snapped a four-year record of declining sales. Michael Page International Plc dropped 5.1 percent after saying profit growth slowed at its U.K. unit.
Credit also traded marginally higher this morning, with the Xover tighter by 1.7 points as well as the ITRX CDSI marginally tighter. Best performing companies within investment grade credit this morning are Safeway Ltd, Telekom Austria AG and Marks and Spencer PLC. Worst Performing include Credit Agricole SA, LafargeHolcim Ltd and Total SA. In high yield, Grupo Isolux Corsan is leading gains followed by Premier Foods Finance and Ardagh Packaging Finance. Worst performing companies include Financiere Quick SAS, Care UK Health & Social and TUI AG.
Yesterday in the US we saw a late rally on Wall Street in the last hour of trading bringing to an end three consecutive days of heavy losses for the S&P 500 after the index crept into positive territory (+0.09%) by the closing bell. There was no shortage of volatility however after markets initially opened with a positive tone, shrugging off those steep falls in China, only to then fall as low -1.1% intraday before that late rally as attention quickly turned to more huge falls in the Oil.
With earnings season around the corner, all eyes will be on the quarterly reports in the energy sector. Yesterday saw Alcoa unofficially kick off the earning season. Despite a miss at the top line, earnings beat consensus (4c vs. 2c expected) which helped in sending the shares up a couple of percent in extended trading although it’s worth highlighting that previous market forecasts for the quarter were as much as 14c at the beginning of October, so it shows how far expectations have fallen in the last few months.
Looking at today’s calendar, main releases are out of the UK where we’ll get the November industrial and manufacturing production reports. Over in France we’ll get the December business sentiment reading. This afternoon in the US the main release of note is the JOLTS job opening report for November where the quits and hiring rates are set to be closely watched. As well as this we will receive the January IBD/TIPP economic optimism print and December NFIB small business optimism reading. Today’s Fedspeak is set to come from Lacker who is due to speak on the US economic outlook. US President Obama’s State of Union Address will also be worth keeping an eye on. There’s little to report on the corporate earnings front before the banks at the end of the week.
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