The Draghi-rally continues, U.S. tech giants surge and it's PMI day in Europe. Here are some of the things people in markets are talking about today.
While the European Central Bank did not change interest rates or add any new stimulus at yesterday's meeting, ECB President Mario Draghi's comments in the press conference where he signaled further easing, including a possible deposit rate cut at the central bank's December gathering), led to the biggest equity rally in Europe following any ECB meeting since July 2013. The Stoxx Europe 600 was trading 1.4 percent higher at 11:00 a.m. London time and is on track for its strongest one-month gain in four years. After U.S. equities staged a big rally yesterday, S&P futures are pointing to further gains today.
Euro-area sovereign debt
It's is not just equities that were boosted by Draghi's comments, with Euro-area bonds rising sharply in the aftermath of yesterday's meeting. German sovereign securities now yield less than zero out to six years with the two-year bond yield dropping to a record low. Meanwhile Spanish and Italian two-year yields dropped into negative territory. The euro traded at $1.1110 at 10:50 a.m. London time, down over 2 percent from yesterday's open.
Amazon.com Inc., Alphabet Inc. and Microsoft Corp. all reported earnings after the bell yesterday with all three beating analyst expectations and rallying strongly, adding a possible $100 billion to their combined market capitalizations based on after-market trading. Each company's impressive earnings can be attributed to the industry's shift to the cloud, a move that is coming at the expense of legacy firms.
The latest Purchasing Managers’ Index from Markit Economics for Germany shows that manufacturing in Europe's largest economy grew at the slowest pace in five months in October as the index fell to 51.6 from 52.3 in September. The services sector in that economy, however, showed the strongest growth in seven months, lifting the composite gauge to 54.5. The composite gauge for the Euro-area as a whole unexpectedly rose to 54, with Markit warning that forward-looking indicators are pointing to a risk of a slowdown. Manufacturing PMI for the U.S. is due for release at 9:45 a.m. ET.
Oil price takes toll
Tumbling crude prices continue to take their toll on the oil and gas industry. With earnings season just beginning, companies have already taken $6.5 billion in write-downs, a number that Barclays analysts expect to rise to over $20 billion for just six of the producers reporting. In Norway, western Europe's biggest producer, weak crude prices may force the central bank to cut interest rates, already at a record low, to zero as recession risks rise. West Texas Intermediate for December delivery rose 10 cents to $45.48 a barrel on the New York Mercantile Exchange at 11:15 a.m. London time.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Bill Gross could still make money for Pimco investors.
- Brazil is the new hot spot for many stock pickers.
- Remember the Greek market shutdown? Time to take another look.
- The Benchmark Podcast: How to keep a robot from stealing your job.
- Big electric shocks big oil.
- Benghazi panel isn't even politics. It's entertainment.
- Matt Levine on odd hedge funds and rogue traders.
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