European equities open higher after ECB's stress tests

Monday, October 27, 2014

European equity markets opened the trading session higher this morning as the CAC, IBEX, AEX reported fresh gains around 0.5% in early trade, while the London benchmark index edged higher 0.4% above 6,400. The euro held firm at 1.27 against the US dollar after the European Central Bank's stress tests found smaller capital deficits than initially expected among European banks. Italy’s central bank was under pressure over the weekend as its banking sector seemed to be “the standout loser” in health checks. According to Financial Times, officials at the Bank of Italy criticised parameters in regulatory stress tests as unrealistically harsh on Italian banks.  

EURUSD Spot

EURUSD Curncy (EUR-USD X-RATE)  2014-10-27 09-02-21

Asian equity markets were fairly mixed overnight. The Nikkei index recovered recent losses and climbed higher 0.63% to retest 15,390. The Hang Seng index missed the uptrend and retreated sharply more than 150 points (-0.7%) towards 23,140. Hong Kong’s imports increased by 6.3% in September beating analysts’ expectations of a 4.6% rise, while exports rose 4.5% y/y in September below analysts’ estimates of a 6.0% increase.   

Hang Seng index

HSI Index (Hong Kong Hang Seng I 2014-10-27 09-03-08

Crude oil prices were fairly missed this morning, struggling for clear direction. The WTI front month futures have been consolidating around $81/per barrel this morning ahead of the release of key US economic indicators which could set the tone for the trading session. Brent front month futures extended losses below $86 per barrel after testing a high on Friday at $87.19 to finish the week at $86.83. Goldman Sachs cut its price forecasts for both the Brent contract and for the WTI in the Q1 of 2015 by $15.

Brent front month futures

COZ4 Comdty (BRENT CRUDE FUTR  D 2014-10-27 09-03-37

It is a busy day on the macroeconomic front, with the main focus turning to the release of the German Ifo business climate and current assessment, as well as US Markit Services PMI preliminary, Dallas Fed manufacturing activity in October and pending home sales figures for September.    

 

Events for today:

 

1000

DE

Oct

Ifo Business Climate

1345

US

Oct

Markit Services PMI

1400

US

Sep

Pending Home Sales

1430

US

Oct

Midwest Manufacturing

 

All times UK Local Time

Topics: Asia, Europe, ECB, Brent, WTI, EUR
More from: Myrto Sokou