Market Commentary: Euro-region economic, industrial, consumer, services confidence reports due today

Markets are trading higher this morning after the positive vibe on the US economy from the FOMC meeting which ended yesterday. Federal Reserve officials dismissed recent turmoil in global financial markets, and focused instead on solid employment gains. The Federal Open Market Committee maintained its commitment to keep interest rates low for a considerable time.

The Dollar continued to strengthen against the Euro after the meeting and we are now seeing the EURUSD at $1.2571. The Euro weakened 8.68% year-to-date. This is a positive for many European companies selling their products abroad making and making them more competitive.

The Euro Stoxx 50 is down 2.8% year-to-date compared to the S&P 500, which is up 7.25%. The difference in performance between the two indices shows that investors are confident in the US recovery and less so on a European one.

However, with the weakness in the Euro and the increasing probability of the ECB adopting a US form of quantitative easing, the discount for purchasing European stocks starts to look much more attractive.

US GDP probably rose an annualized 3% last quarter, after expanding 4.6% in the previous three months, according to the median of economists’ estimates before today’s data.

Euro-region economic, industrial, consumer and services-sector confidence reports are due today, while Germany will update its jobless rate.

In corporate news, Bayer AG raised its forecast for the year, citing growing sales of new medicines and the addition of Merck & Co.’s consumer-health business.

Sales will be about 42 billion euros and earnings before interest, taxes, depreciation, amortization and special items will rise by a mid-single-digit percentage. Previously Bayer predicted 41 billion euros of sales and low- to mid-single-digit percentage growth in EBITDA.

Barclays, the UK’s second biggest bank by assets, said third-quarter profit unexpectedly rose in the third quarter as the bank set aside 500 million pounds to settle probes into currency markets.  

Adjusted pretax profit rose to 1.59 billion pounds from 1.39 billion pounds in the year-earlier period. That beat the 1.1 billion-pound average estimate of analysts. Pretax profit in the investment bank dropped to 284 million pounds from 465 million pounds a year earlier.

Volkswagen AG, Europe’s largest automaker, reported third-quarter profit that beat analyst predictions on sales growth at the Audi and Skoda brands. Earnings before interest and taxes rose 16 percent to 3.23 billion euros. The figure exceeded the 2.81 billion-euro average of analyst estimates. Sales rose 4.1 percent to 48.9 billion euros.

Royal Dutch Shell Plc said third-quarter profit rose, beating estimates, as earnings from refining and natural gas offset the impact of lower crude prices at Europe’s biggest oil company. Profit excluding one-time items and inventory changes gained 31 percent to $5.8 billion from $4.5 billion a year earlier, the Hague-based company said today in a statement. That beat the $5.48 billion average estimate of analysts.

This article was issued by Calamatta Cuschieri, visit www.cc.com.mt for more information.

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