European Central Bank meeting in focus - 26.10.2017

Downbeat earnings reports weigh on US indices

US stocks closed lower on Wednesday as a string of corporate reports missed expectations. The dollar weakened: 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, slipped 0.3% to 93.618. The S&P 500 fell 0.5% to 2557.15 led by telecom and industrial shares. All 11 main sectors ended lower. The Dow Jones dropped 0.5% to 23329. Nasdaq composite lost 0.5% to 6563.89.

Indexes pulled back despite majority of companies which have reported quarterly results so far beat expectations. Markets shrugged off good economic data too: durable goods orders rose 2.2% in September, above a 1% forecast. Capital goods orders remained steady at 1.3%. New home sales jumped 18.9% over month and 17% on year in September.

European stocks extend losses

European stocks continued the retreat on Wednesday as traders were cautious ahead of the European Central Bank meeting. The euro accelerated gains against the dollar and British Pound ended higher against the greenback erasing all of previous day losses. The Stoxx Europe 600 index fell 0.6%. Germany’s DAX 30 lost 0.5% to 12953.41. France’s CAC 40 slipped 0.4% and UK’s FTSE 100 dropped 1.1% to 7447.21. Indices opened mixed today.

German stock index fell despite the Ifo think tank’s report German business sentiment surged to a record high in October. Pound rose after surprise acceleration of Q3 GDP to 0.4% on quarter from 0.3% in second quarter raised chances of a Bank of England interest rate increase on November 2. At the ECB meeting today the central bank is expected to announce about reducing its 60 billion euros monthly bond purchases. However, there have been suggestions the ECB may extend the bond purchases program as it reduces the size of monthly purchases in light of persistent low inflation. A more dovish statement than expected may weigh on euro. The ECB conference starts at 14:30 CET today.

EU 50

Asian indices advance

Asian stock indices are mostly higher. Nikkei rose 0.2% to 21755 supported by strong earnings and resumed yen weakness against the dollar. Chinese stocks are mixed: the Shanghai Composite Index is 0.3% higher while Hong Kong’s Hang Seng Index is down 0.3%. Australia’s All Ordinaries Index added 0.2% as Australian dollar added to previous day’s sharp losses following a weaker than expected inflation report.

Oil slips as US crude inventories rise

Oil futures prices are edging lower today. Prices ended higher yesterday despite US Energy Information Administration report domestic crude supplies rose by 856 thousand barrels last week. That was above the 519 million barrel build reported by the American Petroleum Institute late Tuesday. At the same time US crude oil output rebounded 1.1 million barrel per day (bpd) to 9.5 million bpd. Brent crude rose 0.2% to $58.44 a barrel on Wednesday.