Assets to Watch for today: European Session: GBP/USD, EUR/GBP, GBP/CHF, FTSE 100 U.S Session: DOW, S&P 500, Nasdaq, Gold European Markets Set to Open High on US Debt Deal Speculation European markets are expected to open higher this morning amid hopes that U.S. lawmakers will reach a deal to lift the countrys borrowing limit before the deadline, which is less than 24 hours away. Asian equity markets were in a holding pattern on Wednesday as investors awaited a possible fiscal deal from U.S. Senate lawmakers after talks on Tuesday failed to produce a fiscal deal. Meanwhile, Fitch credit agency placed the U.S. AAA-rating under review for a downgrade as the impasse over the debt limit and government funding continued. Italys government unveiled its 2014 budget law on Tuesday in which it lowered the tax rate on labour. After withdrawing planned cuts to the health-care budget, Prime Minister Enrico Letta called it the countrys first budget without tax hikes or social cuts in years. Presenting its budget for next year on Tuesday, Portugal said it will slash public wages, pensions and social benefits next year to meet agreed budget targets as it hopes to exit its 78 billion euro ($105 billion) bailout next June. European markets moved firmly higher yesterday as U.S. lawmakers appeared to be making progress in ending the fiscal standoff and as Germany’s DAX 30 closed at an all-time high after upbeat sentiment data. Some experts believe that this rally does feel a bit overdone. We haven’t gotten anything signed and delivered in the U.S. yet, so it’s too early to start cheering. Among notable movers in the FTSE 100, shares of Rio Tinto PLC gained 4.3% after the heavyweight miner said its iron-ore output rose to a new quarterly record. German data further provided investors with a reason to celebrate. The ZEW sentiment survey showed that the economic expectations indicator rose further above its long-term average in October, to 52.8 points from 49.6 points in September—beating economists’ expectations for an unchanged reading. Germany’s DAX 30 index jumped 0.9% to 8,804.44, the highest closing level on record. U.K. Unemployment Figures Set to be Released Today Today at 9:30 am GMT the U.K.’s Office of National Statistics is set to release the employment report. The report is composed of two main components: The claim count change counts the number of people claiming unemployment-related benefits every month (the lower the number, the better). The unemployment rate measures the number of unemployed workers and is measured once every quarter (the lower the rate, the better). Investors and traders watch he jobs data closely simply because the Bank of England (BOE) uses this data to help guide their monetary policy decisions. If you recall, the central bank’s forward guidance strategy states that it will continue its QE program to stimulate the economy until the unemployment rate reaches around 7.0% or if the BOE thinks that the inflation rate will reach 2.5% or more in the next 18-24 months. With the U.K.’s jobs numbers exceeding market expectations since April, the bullish British Pound reactions are not surprising in the past two releases. The previous figure for the claimant count change was -32.6 the consensus is for a drop to -24.3 predicting a drop in the number of people claiming unemployment benefits. The unemployment rate is expected to remain the same at 7.7 percent. U.S. markets end near session lows as DC Debt deal dram Continues Stocks closed sharply lower in volatile trading Tuesday, with the Dow and S&P 500 snapping their four-day rally, as ongoing worries over the impasse over the debt ceiling continued to weigh on the markets. Major averages took a leg lower in the final hour of trading after Senator Dick Durbin said Senate fiscal negotiations have been suspended until House Republicans work out plan to proceed on debt limit and government funding. At the other end of the spectrum, the worst-case scenario of a debt or spending default is still possible but is probably not as big a threat as many investors thought a week ago when the two parties appeared to be at an impasse. The most likely scenario is for lawmakers to agree to a modest increase in the debt ceiling that avoids default and gives lawmakers time to negotiate over political differences during the next few months. On the earnings front Citigroup Inc. fell 1.5% after the bank reported earnings below estimates and Coca-Cola Co. shares dropped 0.7% after the beverage maker reported a rise in third-quarter profit. The picture emerging from the first big day of the third-quarter reporting cycle today is a mixed one, with weak-looking results from Coca-Cola and Citigroup and a handy beat from Johnson & Johnson. We now have third-quarter results from 35 S&P 500 companies. While still early, fourth-quarter earnings estimates have “come down a bit in recent days. The coming days of estimate cuts could become a more serious headwind for the market than Washington worries
Posted on: Wed, 16 Oct 2013 09:46:18 +0000
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