Earnings Season Reaches A Peak, Activity Slows In The EU, Hope Is Supporting The Market
The U.S. Market Moves Higher
Futures trading in U.S. markets points to a higher open for stocks on Thursday. The move is supported by a round of better than expected earnings reports but the news is not all that great. About 30% of the S&P 500 have reported earnings for the 3rd quarter and 80% of those have beaten their consensus estimate for earnings. The problem is the margin of difference is less than expected and on top of an already low bar. This, along with deteriorating forward outlook and a fair number of downward revisions to guidance, will weigh on market sentiment.
The Dow Jones Industrial Average is up about 0.10% in early trading while the S&P 500 and NASDAQ Composite are in the lead. The S&P 500 is indicated up about 0.15%, the tech-heavy NASDAQ Composite about 0.45%. Shares of MSFT and TSLA are aiding the advance, both companies reported solid results and provided a positive outlook for the 4th quarter. Microsoft’s strength remains in the expansion of its cloud-computing business which is growing at a near 60% YOY pace. Tesla is expecting to open its Shanghai plant anytime.
In economic news, Durable Goods Orders were weaker than expected and supported by government spending. The news is another sign of slowing economic activity in the U.S. and points to weakness in GDP for the quarter. Initial claims figures continue to trend at long-term lows suggesting underlying strength remains in the economy.
European Markets Move Up
The EU markets are moving higher at midday despite weaker than expected PMI readings. The flash readings for services and manufacturing PMI contracted more than expected from the previous month suggesting economic slowdown will continue. This news comes a day before a very important ECB meeting, the last meeting for outgoing President Mario Draghi. Draghi is widely expected to deliver his swan song, a final round of economic stimulus for the EU before he hands the reins to Christine Lagarde.
The UK FTSE 100 is in the lead with an advance near 1.0%. The DAX and CAC are both up about 0.50%. In stock news, earnings misses from RBS and Nokia have shares of those stocks moving lower. Nokia is at the bottom of the rankings with a loss of -20.0%. Shares of BASF are moving higher despite a drop in YOY profits.
Asia Is Mostly Higher On Thursday
Asian indices are mostly higher on Thursday as traders around the world wait on key events. In the EU and along with the ECB meeting traders are waiting on word on Brexit. The UK has decided to wait a little while longer, now it’s up to the EU to grant the extension. The Shanghai Composite is the only index to post a lost and that a mere -0.02%. The Hong Kong Hang Seng led the market with an advance of 0.87%.