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Q3 earnings season weighs on US markets - 14.10.2016

US stocks retreat as Q3 earnings season started

US stocks were looking down on Thursday due to weak performance of financial sector and after weak Chinese trade data came out. Financial sector fell 1.1% as Deutsche Bank and Wells Fargo stocks declined ahead of quarterly earnings data from Wells Fargo, JPMorgan Chase and Citigroup. Profits of S&P500 could have fallen 0.7% in Q3, according to market valuations. Additional negative came from China where exports slumped 10% in September, falling short of market expectations. The decline of stocks market indices was limited by strong performance of energy sector as oil prices rose. US dollar index, a measure of a greenback’s value against a basket of six major currencies, added 0.1% to 97.615. S&P 500 index dropped 0.31% to 2,132.59. Dow Jones industrial average lost 0.25% to 18,099.35 having touched an intraday low of 17,959.95. Nasdaq composite slipped 0.49% to 5,213.33. Today at 14:30 CEST the advance retail sales data came out in line with expectations. A handful of inflation data for September came out at the same time. At 16:00 CEST the University of Michigan investors’ confidence index will be released. At 19:00 CEST the Baker Hughes US rig count will come out.

European stocks on the rise today

European stocks edged higher on Friday rebounding from the losses of the previous day with mining and telecoms sectors advancing most. EURUSD pair slipped 0.5% to $1.1009 today having touched the 2-1/2 month low of $1.0985 the day before. STOXX EUROPE 600 added 0.8%. It lost 8% this year so far but analysts expect it to regain some ground. Deutsche Bank stocks surged 2.3% on hopes the deal will be reached on its MBS-case with US Justice Department. As for mining stocks, the lifted up on the positive inflation data from China which means potential rise in demand for metals from world second-biggest economy. Speaking of particular companies, stocks of French telecoms group SFR advanced 5.1% while the shares in UK’s hedge fund Man Group sky-rocketed more than 10%. British pound lost today 0.5% to $1.2192 on track to lose 1.9% this week.

Chinese inflation picks up

Japanese Nikkei closed 0.5% higher on Friday as strong gains in Fast Retailing Co offset the weak performance of US stock market indices overnight. Stocks of Fast Retailing Co, which owns Uniqlo clothes brand, advanced 5% on the news the company expects its operating profit to sky-rocket 38% to record 175bn yen. Topix index added 0.4% to 1,347.19. USDJPY gained 0.5% to 104.22 yen.

Chinese stocks closed almost flat on Friday on mixed economic reports while investors anticipate Q3 GDP data next week to have a better understanding of economic situation. Inflation data came out positive on Friday with producer prices on the rise for the first time in almost 5 years after weak import and export data on Thursday. CSI 300 index added 0.1% to 3,305.85. Shanghai Composite index advanced 0.1% to 3,063.81. In Hong Kong, Hang Seng index swelled 0.9% to 23,233.31 on Friday with energy and financial shares leading the growth but closed this week 2.6% lower.

Oil prices remain steady after US crude data

WTI oil prices remained steady near $50 a barrel on the official data US fuel stockpiles fell last week while crude stockpiles grew. US crude stockpiles rose 4.9mln barrels for the first time in 6 weeks instead of expected rise of 0.9mln barrels. November WTI oil futures rose in price by $0.27 to $50.71 a barrel while December Brent crude futures edged up by 0.05% to $52.08 a barrel.

Gold retreats on Friday on stronger US dollar

Gold was looking down on Friday as US dollar index rose 0.4% on expectations of retail sales data and comments from Fed officials that may hint on December rate hike in US. Spot gold dipped 0.4% to $1,253 an ounce while US gold futures slid 0.3% to $1,254 an ounce. Speaking of other precious metals, silver dropped 0.2% to $17.42 an ounce. Platinum advanced 0.2% to $934 an ounce having lost 3.6% this week.

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