-Eurozone manufacturing sectors slightly above consensus, but in contraction
-Alcatel plunges after reporting Q3 loss
-Beiersdorf lifts revenue outlook
-Rumors that Deutsche Telekom to cut dividend
FTSE Mibtel 30: -0.24%
Ibex 35: +1.05%
Stoxx 600: +0.42%
After yesterday's 1 per cent rise, and with technical resistance levels looming large, on average European equities decided to take a breather in what was a bit of a roller-coaster ride of a session.
From a more fundamental stand-point, markets had a rather curious reaction to the stronger than expected employment numbers out today Stateside. At first glance the data came out far stronger than expected, with the only caveat being that salaries and hours worked rose less than forecast. Yet even on this front economists saw decent momentum.
Then why the sudden reversal in equities? As markets are sometimes wont to do, from time to time good economic figures are taken to signify that less economic stimulus will be forthcoming. That at least is what most pundits seem to be saying. As well, even if the "bill" for insurers from Sandy turns out to be modest, the degree of ecobomic disruption may be far larger some now hold. Finally, market commentary is now putting emphasis on the negative aspects of election uncertainty in the US.
Not to be missed however, and perhaps explaing the true reason behind many investors´ nervousness, may be the still deep seated worries concerning the economy. Thus, in today's Financial Times James Mackintosh tells readers that recent market moves -gains led by cyclicals- show that there is quite a bit of optimism regarding economic growth. In his opinion, however, that is only justified if one believes that central banks have more ammunition left in their armouries, but not if they do not -as Governor King has recently suggested.
Other considerations -although they seem to point in the opposite direction- to be taken into account by the shortest-term investors and traders are that the last two months of the year are usually amongst the best for equities and the still relatively "bearish" sentiment (as a contrarian indicator) of small investors, according to the latest weekly survey data out from AAII.
Alcatel burns a hole in investors´ pockets
Company earnings continued to scare some investors on the Old Continent. Today, Alcatel Lucent plunged almost 6% on the Cac 40 after reporting that it swung to losses in the third quarter. According to Bloomberg data, out of the 164 Eurostoxx 600 companies that have reported earnings, only 54% have managed to beat consensus.
Nevertheless, that also means that there also are some positive reports to be seen, at least as regards companies´ perfromance on the bottom line.
The maker of Nivea, Beiersdorf, jumped 7% after increasing annual revenue forecast.
Unfortunately for the bulls, its fellow Dax 30 member Deutsche Telekom plummeted almost 3% after the German business daily Handelsblatt reported that the company is considering slashing its dividend by up to a third from 2013 onwards.
By sectors, the worst performance in the DJ Stoxx 600 was to be seen in companies within the following industrial groups: Telecommunications (-0.42%), Utilities (-0.28%).
Eurozone PMI slightly ahead of forecasts
While waiting for the US macro data, we've had a barrage of manufacturing sector figures cout in the Eurozone. In general terms, both the individual countries and the sector as a whole narrowly beat forecasts. However, it should be noted that all of the readings remained below 50, implying a contraction in the sector. Furthermore, there are those who fear that the situation is still worsening in the "core" countries, the most improtant of all.
The Markit Eurozone purchasing managers index for the month of October has come in 45.4, versus last month´s reading of 46.1 (Consensus: 45.3).
The Markit German purchasing managers index for the month of October has come in 46, versus last month´s reading of 47.4 (Consensus: 45.7).
The Markit French purchasing managers index for the month of October has come in 43.7, versus last month´s reading of 42.7 (Consensus: 43.5).
Single currency dropping towards technical support ahead of data
The euro/dollar was down by 0.91% to 1.2829.
West Texas crude futures were off by 2.64% to $84.79