Article / 01 November 2016 at 13:05 GMT

Mid-session Europe: Stocks trade mixed on patchy earnings

Saxo Markets
Denmark

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Foreign exchange
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European stocks traded mixed this morning after disappointing earnings from major companies.

China's official manufacturing PMI beat expectations, offering a ray of hope for the world's second-biggest economy.
 
The Bank of Japan and Reserve Bank of Australia left key interest rates unchanged.

US companies reporting quarterly results today include Archer-Daniels-Midland, Freddie Mac, Occidental Petroleum, Pfizer and Thomson Reuters.


Watchlist
  • Canada August GDP m/m (0.2% m/m; 1.3% y/y exp.) (1230)
  • US October final Markit Manufacturing PMI (53.2 exp.) (1345)
  • US September construction spending (0.5% m/m exp.) (1400)
  • US October ISM Manufacturing (51.7 exp.) (1400)
           
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Forex developments

The Bank of Japan and Reserve Bank of Australia meetings offered no surprises to FX traders as the policy stance remained unchanged. But the BoJ pushed back the inflation target date, as it now expects to achieve it in 2018. BoJ governor Haruhiko Kuroda said the economy continued to recover moderately and that the bank would maintain yield curve control as long as needed.

USDJPY was back around 105.00 with the focus still mainly on the US dollar ahead of the November 8 presidential election. 

The RBA statement was a bit hawkish and, coupled with strong China PMI data and rising commodities in recent days, helped AUDUSD to trade firmer towards 0.7675 highs, with 0.77 the next important resistance level. 

EURUSD is generally firmer on expectations of another pass from the Federal Open Market Committee tomorrow, while the probability of a December US rate hike stands firm at 75%. The pair managed to claw back up above 1.1000, but flows remain subdued, with a lack of follow-through for now. 

GBPUSD holds on to 1.2245-50 area after stronger UK Manufacturing PMI data confirming 3d straight month of expansion today and earlier news that BOE’s Carney to keep his position for another 3 years. 


FX Options volatilities
 
Vols
Volatilties TABLE
 
The market is very bid again today for upside EURUSD options, and we see risk-reversal skew pointing more towards EUR calls. JPY vols are trading lower after a drab BoJ meeting, with 1-month down 0.3 vol afterwards. AUDUSD vols also trading lower after the RBA kept its cash rate unchanged at 1.50% as expected, but we did see AUD spot trade higher on a less dovish statement. 1-month AUDUSD was down 0.35 after the event. 

Fixed income
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Commodities
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Equities
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European equities traded mixed this morning after disappointing earnings from several major companies.
BP fell 3% despite posting a 35% rise in third-quarter profit. Weir Group, the energy engineering firm, fell 4.5% after warning of missing full-year profit targets, and Standard Chartered fell 5% after describing its financial performance as “not yet acceptable” as pretax profits of $458 million missed market expectations.
Royal Dutch Shell, however, rallied 3% after beating analysts’ forecasts with an 18% rise in underlying net profit, and the price comparison website Moneysupermarket.com jumped 8% after announcing a 12% rise in third-quarter revenue.
Pandora, the Danish jeweller is down 2% despite plans to open more stores and reiterating full-year revenue forecasts.
Rolls Royce trades down 0.6% on reports that the aircraft engine manufacturer used bribes to secure contracts.
US companies reporting today include Archer-Daniels-Midland, Freddie Mac, Occidental Petroleum, Pfizer and Thomson Reuters.


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Read more

Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

US:        US Market Wrap: Sterling rises as Carney extends term

Asia:      Morning Report APAC: China shines, but oil plunge curbs Asia

Europe: Morning Markets: Japanese inflation still a future dream 




USD and yen




















USDJPY was back around 105.0.


— Edited by John Acher

The Global sales Trading desk is a multi-asset team providing customised trading solutions

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