Article / 14 October 2016 at 11:42 GMT

Mid-session Europe: The big bank theory

Saxo Markets


Foreign exchange
In stock markets bank and tech shares are watched today. Samsung in recent days managed to gain back some of the losses it has made in the light of the fire issues plaguing its model line. Apple shares have clearly been on the rise since its mobile tech rival got itself in trouble concerning its quality. This European morning, however, it was Samsung that was up again while Apple fell. 

Financials are getting a lot of attention as today JP Morgan Chase, Wells Fargo and Citi Group deliver their Q3 earnings results this afternoon. Wells Fargo will have to do particularly well to regain investor trust after it recently came to light that employees had created fake accounts. Italian banks did well after a loan selloff.

Also interesting is that among mining shares, Boliden AB added 1.5%, iron ore and copper producer Anglo American picked up 2.2%, and steel producer ArcelorMittal SA advanced 2.6%.

  • US September Advance Retail Sales (+0.6% exp.) (1230)
  • US September PPI Final Demand (0.2%) (GMT 1230)
  • US August Business Inventories (0.1%) (GMT 1400)
  • US October Preliminary Michigan Confidence (91.9 exp.) (GMT 1400)

  • Fed’s Rosengren to speak (GMT 1230)
  • Fed’s Chair Yellen to speak (GMT 1600)
Forex developments
EURUSD: The euro continues to trade weak this morning. 

USD: More focus has been on USD over the last 12 hours with a lower USDCNY fix causing a quick USD selloff; on the horizon this afternoon is US retail sales and Michigan consumer confidence with the market expecting strong data meaning the risk is weak numbers and further USD correction. Overnight in Asia, USDTHB collapsed 1% on open whilst USDSGD sold off to 1.3375 in the the MAS policy announcement before rallying 7% higher to trade at 1.3894

GBP: Sterling traded a relatively tight range by recent standards with some focus towards the US data later. With a 1.21 technical base, traders are looking at recovery spikes in GBPUSD with 1.2420, 1.25 as the first resistance.  

The lower than expected USDCNY fix overnight lead to some short covering in AUD and NZD. Positioning is said to be lighter over the past few weeks so both ccy’s have some room to the topside if today’s US data is weak.  

FX Options volatilities
Vols trading a bit softer so far today. The GBP vol curve still looks frightened by last week’s flash crash in spot and the vol curve is still trading at high levels, but is slowly coming a bit lower now. We have seen a few buyers of Monday GBP options which could be a protection against the risk of a gap on the Sunday opening. Otherwise market has been offered today. 

Fixed income




European stocks stepped higher Friday. Dax added 1.2% to 10,535, while CAC 40 was up 1.3%, and the UK FTSE 100 rose 0.6% to 7,017.

Bank shares rose and mining stocks got a lift from upbeat inflation news out of China. Consumer price inflation rose more strongly than expected to 1.9%, while producer prices edged up 0.1% in September. That marks the first time the factory-price gauge has been positive in more than four years. Burberry Group shares were also buoyed by the Chinese data, rising 2.1%. The luxury-goods maker takes in more than 14% of its revenue from mainland China. Among mining shares, Boliden AB added 1.5%, iron ore and copper producer Anglo American picked up 2.2%, and steel producer ArcelorMittal SA advanced 2.6%.

Meanwhile, bank shares rose, with Banca Popolare dell’Emilia Romagna up 4.1%. The Italian lender has sold a 618 million-euro portfolio of bad loans, and it will hold a shareholder vote this weekend on a proposed merger with Banca Popolare di Milano. Milano’s shares rose 5.4%.

In other moves, Man Group rallied 13% after the investment firm said it plans to buy back up to $100 million of its own stock. It reported it had 6% more funds under management at the end of September, compared with three months earlier.

Attention will turn later Friday to monthly U.S. retail sales, while Federal Reserve Chairwoman Janet Yellen is scheduled to speak in Boston after European trading closes.

The replay of our Morning Call can be found here 

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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.

Asia:      Morning Report APAC: Impact of soft China trade data felt across Asia

Europe: Morning Markets: Skittish stocks boost safe havens

Samsung Underground

Samsung shares have dipped in the light of the S7 scandal. Photo: iStock

— Edited by Clemens Bomsdorf

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


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