The major high impact news events and policy decisions in today’s trading sessions concern the interest rate setting in the UK and by the ECB for Europe. Both rates expected to remain static at 0.5%. The notes and speeches accompanying each rate setting decision will be more eagerly awaited than the decisions, given the potential capacity to surprise.
Many analysts and investors expect the ECB to announce some form of monetary easing scheme over the coming months as deflation could now be a concern with prices falling and the E.U. economy showing signs of fatigue. The euro was sold off sharply during last week’s trading sessions due to speculation mounting that a revisiting of the LTRO scheme could be imminent. The long term refinancing operation added liquidity to banks, whilst staying inside the ECB remit, which restricts certain types of asset purchase schemes.
Later on this afternoon we’ll receive the data concerning the USA GDP, expected to print at 2%. The unemployment numbers, affected by the 16/18 day govt. shutdown should have balanced out by now and the expectation is for a print of circa 336K. Tomorrow the NFP print may shock with some estimates suggesting that the USA only added circa 125K jobs in the month of October.
Consumer confidence in Switzerland remains fairly stable
Consumer confidence in Switzerland remained fairly stable during the first part of the year and between July and October 2013 as well. With a value of -5 points the consumer confidence index improved slightly on the result of the previous survey (-9 points in July) and was consequently also up on the long term average (also -9 points). On the one side this development reflects the more optimistic expectations of private households with regard to the economic prospects and the labour market over the next 12 months.
Twitter sets IPO price at $26, set to raise $1.8B
Twitter has set a price of $26 for its initial public offering of stock, which means the company’s shares can begin trading Thursday on the New York Stock Exchange. The price values Twitter at more than $18 billion based on its outstanding stock, options and restricted stock that’ll be available after the IPO. The pricing means the short messaging service will raise $1.8 billion in the offering, before expenses. Twitter has never turned a profit in its 7 years.
Australia Labour Force; unemployment rises
Employment decreased to 11,636,600. Unemployment increased to 710,000. Unemployment rate increased by less than 0.1 pts to 5.8%. Participation rate decreased to 64.8%. Aggregate monthly hours worked increased to 1,647.9 million hours.
Market snapshot at 9:30am UK time
Asia’s markets have continued to show nervousness ahead of China’s Communist party meeting that begins Saturday. The ECB’s interest rate setting decision is due later today, as well as US third quarter GDP numbers. The Nikkei index closed down 0.76%, the Hang Seng down 0.67% and the CSI 300 down 0.55%. European bourses are mainly in the red; UK FTSE down 0.24%, CAC up 0.02%, DAX down 0.01% and STOXX index down 0.19%.
WTI oil on ICE is down 0.19% at $94.66 per barrel, NYMEX natural up 0.23% at $3.51 per therm, with COMEX gold down 0.24% at $2311.60 per ounce. Looking towards the New York open the DJIA equity index future is down 0.02%, with the SPX down 0.07%, suggesting that the USA markets will open flat.
The euro traded at $1.3519 early in London after yesterday rising 0.3 percent. The common currency climbed 0.1 percent to 133.41 yen. The dollar was also little changed, at 98.69 yen. The U.S. Dollar Index, which tracks the greenback versus 10 major currencies, was little changed at 1,013.87 after dropping 0.3 percent to 1,013.48 yesterday.
The Australian dollar dropped 0.5 percent to 94.8 U.S. cents late in Sydney after touching 95.43 yesterday, the highest since Oct. 29th. The 10-year yield slid five basis points to 4.16 percent after peaking at 4.22 percent yesterday, a level unseen since Oct. 16th. Australia’s dollar tumbled from near a one-week high after a report today showed the nation’s full-time employment dropped by the most in more than a year.
Benchmark 10-year notes yielded 2.65 percent in London. The price of the 2.5 percent security due August 2023 was 98 3/4. The yield is still less than the average of 3.51 percent over the past decade. German 10-year bond yields were little changed at 1.75 percent. The European Central Bank and Bank of England will keep interest rates unchanged at meetings today, based on Bloomberg News surveys of economists. The benchmarks in both regions are at record lows of 0.5 percent.
« Is price random? The random walk hypothesis, the Philadelphia 76ers basketball team and our debt to Eugene Fama… ECB rate cut takes the market by surprise, Twitter IPO flies, USA unemployment falls, GDP rises, yet the main USA markets fall… »