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Markets are called to open lower this morning. This is what's happening today:
Today the US markets are open after two days of being closed because of hurricane Sandy. Expect alot of volatiility in the US markets this afternoon after the hurricane hit the US. So far the futures in the US are looking flat though the markets are expected to drift lower as trading starts in the US. You will have investors who will sell out of their holdings because they would need cash to pay for the damages caused by the hurricane. On the other hand you will have investors sell out of equities because they aree worried retailers will suffer in Q412 because of the hurricane. Also expect to see a sell-off in insurance businesses because of the disaster caused by the hurricane.
There are many US companies who suspended earning releases for Q312 and will issue them later on this week. Keep in mind that there is already a general consensus in the markets that US companies have rallied much more compared to Europe and the hurricane will only create more volatility as investors evaluate their position in US names.
Moving on to Europe we had a good sesssion yesterday with BP, UBS and Deutsche Bank all reporting good results. Here is a snapshot of what the companies reported:
Greece is again in the spotlight today. European officials are grappling over ways to fill Greece’s financing gap two weeks before a decision is due on whether to give the country a further round of emergency funds. While German Chancellor Angela Merkel has signaled her desire to stand behind Greece’s euro membership, Prime Minister Antonis Samaras’s coalition is still at odds over the steps needed to secure more money. Finance ministers will hold a conference call at 12:30 p.m. Brussels time and may release a statement afterwards.
Japan’s Finance Ministry lowered its economic assessment of eight of 11 domestic regions. The downgrades come a day after the Bank of Japan expanded its asset-purchase program by 11 trillion yen ($138 billion) and unveiled a new program of unlimited loans intended to shore up the world’s third-largest economy. The steepest fall in industrial production since last year’s earthquake and a 10 percent decline in exports are increasing the odds of a contraction in the second half of this year.
Stock to watch: Ford Company (Price $10.36, Price Target $13)
Deutsche Bank comments – Q312 profit came in well above our $0.32 est and consensus of $0.30. The upside was fully accounted for by lower-than-expected tax rate (2 cents) and higher than expected profitability in North America (pretax of $2.3 bn (12.0% margin) vs. our $2.0 bn (10.0%) est). While most of the NA upside was derived from a $200 MM warranty adj and a $100 MM commodity hedging gain, we’d note that wholesale shipments were 17k below guidance (supply bottlenecks on Fusion launch), a ~$135MM negative impact. Adjusting for these factors, underlying earnings were $0.04 better than the Street. We maintain Buy rating based on valuation.
For further information on Ford or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
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