Stocks are Mixed Following ECB Rate Decision

European shares are mixed in the wake of the ECB decision to keep rates unchanged.  While central banks will likely be the focus, the U.S. election and the Brexit will likely provide the volatility associated with the capital markets.  Weaker than expected retail sales data underpinned the U.K.’s underperformance. U.S. futures are higher in the wake of the last U.S. presidential election debate which was seen as strengthening Hillary Clinton’s lead.

The ECB left rates unchanged and confirmed their quantitative easing program, with no discussion of tapering asset purchases.  The ECB sees a path to higher inflation and will continue to keep the door open for additional stimulus.

Riskier assets gained traction following Wednesday following the U.S. Presidential election debate, which kept the needle unchanged, with Clinton holding the edge in the polls by more than 12 points.  A Clinton victory would generate a status quo scenario, and the markets would likely rise slightly and then a refocus on the Fed.  A Trump victory would like create global market chaos, where volatility spikes and Mexico tumbles.  The markets are barely pricing in this situation, which by the way was similar with the Brexit vote.

The retail sector in the UK underperformed in September revealing a reading of unchanged month over month in September compared to expectations of a 0.4% increase.  The year over year figure was expected to come in at 4.8%, and it also disappointed coming in at 4.8% year over year.  Overall, while sub-forecast the data still paints a picture of a buoyant consumer sector, which has held up much better than many had feared following the Brexit vote.

Spanish refinancing costs fall in bond auctions. Spain sold EUR 1.481 billion of 10-year bonds with a coupon of 5.90% at an average yield of 1.043%, compared to a yield of 1.072% at the previous auction of a 10-year bond on October 6, which had a coupon of 1.30%. Spain also sold EUR 1.154 billion of 2019 bonds at an average yield of -0.122%, down from -0.098% at the previous auction. The bid to cover ratio still improved to 2.56 from 1.67.

EMU current account surplus widened in August. The Eurozone posted a current account surplus of EUR 29.7 billion in August, while July’s surplus was revised up markedly to EUR 27.7 billion reported initially. The trade surplus widened in August, which helped to compensate for a slightly lower surplus in the services balance. The unadjusted current account surplus in the 12 months to August stood at EUR 345.4 billion, up from EUR 315.4 billion in the 12 months to August last year, with Germany the main contributor.

Oil prices are pulling back slightly following Wednesday surge in prices in the wake of the larger than expected draw in crude oil inventories reported by the Energy Information Administration.  Imports were the catalyst for the decline, which was offset slightly by higher U.S. production.  Inventories dropped nearly 6 million barrels, compared to the 2.4-million-barrel increase expected.