ETX Capital Daily Market Bite, 17th October 2013: Markets Unimpressed By Short Term US Debt Fix
October 17, 2013 8:20 am
October 17th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
European markets a little more sober versus the cheerful Asian and US markets overnight after the 11th hour deal in Washington to lift the debt limit and re-open the government. European traders know all about policymakers kicking cans down the road, patching up problems with make-shift bandages and addressing issues at a later date – that’s the euro zone crisis in short.
US lawmakers played the same game on Wednesday, whacking out a short-term debt ceiling fix until February 2014. Although lawmakers in the US now have a little more time to work out their differences, it’s unlikely opinions will change in the space of 5 months — Congress remains deeply polarized and that’s not going to change any time soon, not at least while President Obama remains in power.
So, the initial euphoria has worn off; we rallied on the reports of a deal in Wednesday’s session here in Europe. For that reason, price-action in Europe reflects the forward thinking nature of the market — this temp fix deal was priced-in. The market feels uneasy about the prospects of contending with the same game of political brinkmanship in Washington again early next year. It’s more unwarranted uncertainty at a time when economic growth across the world is anaemic at best. The only silver lining we can take-away from this is that this all does thwart the Federal Reserve’s plan to pull a trigger on the tapering front in 2013, so risk assets are to remain well supported as we head into year-end.
Looking at the immediate picture, European markets are also responding to the downbeat set of earnings hitting the taper. Q3 reports have been disappointing from both the US and Europe — overnight, we heard worrying news from IBM who blamed stalling sales in China as the reason for sliding group revenues. eBay meanwhile warned of tougher trading conditions in the US while Black & Decker blamed the US government shutdown as a reason to warn on profits.
In Europe this morning, we’ve another ugly set of earnings from the likes of Metso, Remy Cointreau [luxury sector posting poor numbers — LVMH missed expectations this week] while KPN shares are under pressure after American Movil pulls out its takeover bid for the Dutch telecom company. Looking at the macro menu Thursday; we have UK retail sales and US weekly jobless claims. Also out of the US, look out for industrial output data and the Philly Fed index.
October 17th, 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist.
European markets a little more sober versus the cheerful Asian and US markets overnight after the 11th hour deal in Washington to lift the debt limit and re-open the government. European traders know all about policymakers kicking cans down the road, patching up problems with make-shift bandages and addressing issues at a later date – that’s the euro zone crisis in short.
US lawmakers played the same game on Wednesday, whacking out a short-term debt ceiling fix until February 2014. Although lawmakers in the US now have a little more time to work out their differences, it’s unlikely opinions will change in the space of 5 months — Congress remains deeply polarized and that’s not going to change any time soon, not at least while President Obama remains in power.
So, the initial euphoria has worn off; we rallied on the reports of a deal in Wednesday’s session here in Europe. For that reason, price-action in Europe reflects the forward thinking nature of the market — this temp fix deal was priced-in. The market feels uneasy about the prospects of contending with the same game of political brinkmanship in Washington again early next year. It’s more unwarranted uncertainty at a time when economic growth across the world is anaemic at best. The only silver lining we can take-away from this is that this all does thwart the Federal Reserve’s plan to pull a trigger on the tapering front in 2013, so risk assets are to remain well supported as we head into year-end.
Looking at the immediate picture, European markets are also responding to the downbeat set of earnings hitting the taper. Q3 reports have been disappointing from both the US and Europe — overnight, we heard worrying news from IBM who blamed stalling sales in China as the reason for sliding group revenues. eBay meanwhile warned of tougher trading conditions in the US while Black & Decker blamed the US government shutdown as a reason to warn on profits.
In Europe this morning, we’ve another ugly set of earnings from the likes of Metso, Remy Cointreau [luxury sector posting poor numbers — LVMH missed expectations this week] while KPN shares are under pressure after American Movil pulls out its takeover bid for the Dutch telecom company. Looking at the macro menu Thursday; we have UK retail sales and US weekly jobless claims. Also out of the US, look out for industrial output data and the Philly Fed index.
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