Guest post provided David Wilson of BinaryOptionsDailyReview.com
US stocks ended mostly higher with the S&P 500 finishing at a record high. Investors’ attention has now switched to corporate earnings now there has been a temporary fix for the fiscal dilemma. So far IBM, which traded down 6.7% and Goldman Sachs, which traded down almost 2.5% are the main Dow constituents to report disappointing earnings. The S&P 500 finished up 11.61 points at 1,733.15. The Dow was at one stage over 140 points easier but rallied and late in the session did break into positive territory before finishing down 2.18 points at 15,371.65.
After hours Google reported earnings that beat estimates and in after hours trading the shares surged 7% to $950.50 on heavy volume.
The FTSE extended its winning streak to the sixth straight session helped by well received earnings from SABMiller PLC and British Sky Broadcasting PLC and upbeat economic news in the form of retail sales. The FTSE finished the session up 4.57 points at 6,576.16.
European stocks are expected to open higher this morning boosted by data showing acceleration in China’s economic growth. The Chinese economy grew 7.8% in the third quarter, the fastest pace of growth this year as rising foreign and domestic demand lifted factory production and retail sales. The FTSE is expected to open around 30 points higher, the DAX around 23 points higher and the CAC around 15 points higher.
The Nikkei closed down 24.97 at 14,561.54, the Hang Seng was on track to close higher, it was last seen up 232.51 points at 23,327.39.
The US Department of Labor reported that the number of people filing for initial jobless benefits last week declined by less than expected 15,000 to a seasonally adjusted 358,000, however data is still being affected by computer issues in California. The Philly Fed manufacturing index came in ahead of expectations with a reading of 19.8 against an expected reading of 15.0.
The UK Office for National Statistics said that retail sales in the third quarter grew 1.5% on the second quarter that makes the largest calendar quarter increase since the first quarter of 2008, which was when economic output hit its peak.
The Dollar eased against most major currencies as the possibilities grew that the Federal Reserve would continue its bond buying programme well into next year due to the fallout from the debt crisis. After the Dollar rallied yesterday on the news of the deal it soon turned easier as investors focused on the damage to the fragile US economy and the chance that the whole issue could be replayed early next year. The Dollar was sharply lower against the Yen with the USD/JPY dropping 0.88% to ¥97.90. The Euro rose to an eight month high against the Dollar with the EUR/USD advanced 0.99% to $1.3670. Sterling rallied strongly on the back of strong retail sales data with the GBP/USD climbing 1.26% to $1.6149. The Dollar lost ground against the Canadian dollar with the USD/CAD losing 0.35% to CAD$1.0291. The Dollar was easier against the Australian and New Zealand dollars with the AUD/USD ending the session up 0.86% to a four month high of $0.9634 and the NZD/USD climbed 0.93% to a six month high of $0.8503.
Gold prices ended the US day session sharply higher as heavy short covering was prominent as well as some safe-haven buying interest. The sharply lower US Dollar index was also a bullish factor for the precious metals markets. December gold was last up $37.90 at $1,320.80 per ounce. Spot gold was last quoted up $38.50 at $1,321.50. December silver last traded up $0.56 at $21.925 per ounce.
Crude oil futures settled lower and close to the $100 a barrel level following data from a trade group which showed a much bigger-than-expected jump in crude supplies coupled with the possibilities that the government shutdown may have impacted on energy demand. November crude dropped $1.62 to settle at $100.67 per barrel. December Brent crude fell $1.48 to $109.11 per barrel.
Debt ceiling sorted, budget sorted and US government is back to work everything is rosy, or is it? The deal that was struck is only a temporary fix and the band aid will come off early next year if a permanent solution is not found, meaning we could be back to square one and going through all this again early in the new year. The euphoria in the markets on the news that a deal had been struck soon evaporated when the details were published and the brakes were put on any further headway. It will be an interesting few days in the markets as all the news is digested, expect a fair bit of volatility in the DOW, USD and gold, making for some ideal short term trading opportunities.