Good Morning,


Major US indices ended yesterday’s trading session in negative territory. The Dow Jones Industrial shed 0.68% to close at 17,055.87 whilst the S&P500 dropped by a lower margin of 0.58% to end the day at 1982.77. The Nasdaq recorded the lowest drop ending its session at 4508.69, 0.42% lower.

Investors moved their capital to safer assets as Treasuries increased extending their positive run to four consecutive days; its longest rally in two months. Meanwhile small-cap stocks shed value for the third day running. This has pushed the yield on the 10 year notes down to 2.54%. Meanwhile the Federal Reserve upheld its commitment to keep interest rates near zero for an extensive time period.

The preliminary report for global factory output issued by Markit Economics showed that the index for U.S manufacturing held at the 57.9 level for September.

Geo-politcal concerns are once again taking centre stage. Airstrikes have recommenced on Syria in order to stop advances made by ISIS. Furthermore, we have seen that countries like Saudi Arabia, Jordan, UAE, Qatar and Bahrain are also in some participating or supporting these airstrikes, showing a universal understanding between the East and the US.


European stock indices led yesterday’s drop in the US as the closely followed Euro Stoxx 50 closed off at the 3,205.93 level, sliding 1.58%. The German DAX matched this loss in percentage terms as it ended trading at 9595.03. The CAC 40 suffered most as it dropped 1.87% to close at 4359.35 whilst the Spanish IBEX 35 was the most successful in minimising its losses as it declined by 1.33% to close at 10801.80. The Euro Stoxx 600 fell 1.4% to 341.89; its biggest slump since July 8. Slower manufacturing growth in the Euro area and a growing concern that tougher American tax rules will dampen the attractiveness of takeovers are possible explanations for the downward movement. China’s discouraging tone on a possible boost in its stimulus also supported the tumble. It is interesting to note that all sixteen industries which for the Stoxx Europe 600 index were on the decline yesterday.

In its preliminary report, Markit Economics has revealed that the PMI for manufacturing in the Euro is expected to come in slightly below the August reading of 50.7 to read 50.5.


Venezuelan debt was downgraded last week to CCC+ by Standard and Poor’s. The rating agency predicts that there is at least a 50% chance of non-payment in the following two years. Although some may argue that most of this was already priced in, markets did experience a sell off. This has pushed the yields on government notes to an average of 15.7% and this appears to have become increasingly attractive for hedge funds to step in. Venezuela is becoming even more appealing as an alternative for hedge which aim to invest in distressed securities. Followers of the sovereign believe that the country has enough money to pay its debts in the short term even though foreign reserves hover near an 11-year low. On the other hand, some economists are expecting the country to go through its worst contraction since 2009.

Company News

Air France-KLM Group

CEO Alexandre De Juniac stated that the air line may consider scrapping its plan to expand its low-cost Transavia unit as the pilots’ strike continues to take its toll on the company’s earnings. The CEO said that if an agreement is not reached through the discussions taking place with the pilot, the project will have to be shelved for the time being. Around 60% of the Air France pilots have been on strike since Monday causing the company to suffer an operating loss of EUR20mln a day.

Astra Zeneca PLC

The company’s share price slid more than 3.6% yesterday as it was the target of a failed bid by Pfizer Inc. The equity ended the session at 4414 pence. The pharmaceutical company also suffered as the US made it harder for companies to move their tax base abroad.

Have a great day,