Corporate earnings boost market sentiment - 19.10.2016

US stocks rise on strong corporate reports

US stocks closed higher on Tuesday as better than expected earnings reports lifted market sentiment. The dollar ended little changed.

The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed one basis point lower at 97.841 Tuesday. The Dow Jones industrial average gained 0.4% to 18161.94 led by shares of Goldman Sachs and UnitedHealth Group. The gains of the blue chip index were limited by 2.6% drop in IBM shares after the company reported earnings miss late Monday. The S&P 500 rose 0.6% settling at 2139.60 led by health-care, materials and utility stocks. The Nasdaq index climbed 0.9% to 5243.84 boosted by a rally in biotechnology stocks. The Consumer Price Index rose 0.3% over month in September, the largest increase in five months. At the same time the core inflation, measuring price increases without volatile energy and foods items, rose by just 0.1% in September after 0.3% gain in August. Treasury yields declined on slower core inflation rise, reflected also in marginal reduction of Fed rate hike likelihood in December: the probability of a rate hike fell to 60% from 64% in the previous day according to CME FedWatch tool. In other economic news the index of home builder sentiment slipped two points to 63 in October, after surging to its highest in a decade in September. Today at 13:00 CET Mortgage Applications will be released in US. At 14:30 CET September Housing Starts and Building Permits will come out, the outlook is positive for US dollar. At 14:45 CET Federal Reserve Bank of San Francisco President John Williams speaks at a conference in Newark, New Jersey. At 16:00 CET today the Bank of Canada will release its interest rate decision, no change in policy is anticipated.

Bank shares lead European markets higher

European stocks firmly higher on Tuesday following bank shares. The euro slipped against the dollar while British Pound rebounded on better than expected inflation.

The Stoxx Europe 600 index jumped 1.5%: Royal Bank of Scotland rallied 5.7% and France’s Credit Agricole ended up 1.6%. The DAX 30 gained 1.2% to 10631.55. France’s CAC 40 rose 1.3% and UK’s FTSE 100 closed 0.8% higher at 7000.06. Today the labor market report came out in UK: the unemployment rate during the past 3 months ending in August remained unchanged at 4.9%, with average earnings growth unchanged at 2.3%.

China’s GDP steady at 6.7 percent

Asian stocks are rising today with Australian stocks the best performers as data showed China’s economy stabilized on the back of government spending and housing market boom. Chinese gross domestic product growth was steady at 6.7% in third quarter, in line with expectations, with retail sales up 10.7% in September. The Shanghai Composite Index is 0.05% higher with Hong Kong’s Hang Seng index down 0.4%. Australia’s All Ordinaries Index rose 0.5% with Australian dollar edging lower against the greenback. Nikkei closed 0.2% higher at 16998.91 despite the continued strength in yen against the dollar.

Nikkei

US inventory drop lifts oil prices

Oil futures prices are advancing today after the American Petroleum Institute industry group reported US crude stockpiles fell 3.8 million barrels to 467.1 million barrels last week. December Brent crude finished 0.3% higher at $51.68 a barrel on London’s ICE Futures exchange on Tuesday. Today at 16:30 CET US Energy Information Administration will publish US Crude Oil Inventories.