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Good Morning,
Europe
The German DAX led European indices into positive territory yesterday as it ended its session at 9456.53, adding 1.61%. Spain’s IBEX 35 followed the German Index into the green as it added 1.20% to its valuations, closing at 10432.90. The closely followed EURO STOXX 50 added 1.16% ending its session at 3120.42 whilst the CAC 40 saw the lowest gains in percentage terms, as it added 0.86% to reach 4262.38.
European markets reacted to the news that emerged from Asia overnight into yesterday’s early trading, however the positive news that developed from within the European bloc managed to overcome the early nerves that had set in. Abe hinted towards early elections together with a delay in sales-tax increase. Later on, it was confirmed that the Japanese will go for an early election with the 14th December being a possible candidate for Election Day. The announcement was made after it emerged that the world’s third largest economy shrinked by 1.6% in Q3. The Nikkei 225 ended its trading higher, adding 2.18% reaching 17344.
European markets were then pushed further into positive territory after the highly awaited ZEW Economic Sentiment Index rebounded for the first time this year coming in at 11.5, beating the anticipated figure of 0.9. This is a significant improvement when compared to October’s reading of -3.6. This extended the positive run for European markets into a second session consecutively.
Easyjet, being one of the most prolific airlines in the low-cost market, declared that it managed to improve full year earnings by more than a fifth during its FY14. The company also stated that it will be expanding its capacity to successfully reach its aim in carrying more passengers. The airline’s pre-tax profit stood at £581m, improving on its previous year pre-tax profit of £478m. A posting of £578.8m was expected by analysts.
The positive news was not just in the air, but also on the ground as European car sales rose 6.2% in October moving the auto market closer to its first annual gain since 2007. This rise has been induced by price cuts being offered by certain car manufacturers, discounts and record low borrowing costs.
US
Trading in the US followed European markets into positive territory as the major American indices posted increases. The highly respected S&P500 index rose 0.51% to reach a new record high of 2051.80. The Dow Jones Industrial Average also added to its valuation, rising by 0.23% to reach 17687.82. The NASDAQ saw the largest increase in percentage terms as it rose to 4702.44, adding 0.67%. Health care companies together with small cap shares rallied, rebounding from their recorded losses on Monday. The S&P index has rallied throughout this earnings season as around 79% of the 500 companies reported earnings that have beaten their profit estimates. 59% of the companies within the index beat their sales projections as well.
Meanwhile, industrial production in the US came in slightly lower in October, shedding 0.1% from its previous month levels. An increase of 0.2% was expected by analysts. Capacity utilisation still remains a problem as the reading decreased to 78.9% for the month of November.
What to Look out for Today
Investors will be keeping a close eye on the publication of the FOMC minutes from the Fed meeting held on October 29. A detailed record of the meeting will provide in-depth insights into the economic and financial conditions that influenced the vote on US interest rates. This should help investors determine the timing of any Federal Reserve interest rate increase.
The Building Permits figure will also be published later on today. This should give investor a better idea of the new residential building permits issued during the month of October. Traders will also be looking out for the number of Housing Starts and Crude Oil inventories being published today.
Have a nice day,
Karl
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