US Stocks Pull Through

US stocks recovered and reduced the weakening this week. Earnings were higher than projections while consumer confidence attained a seven-year peak.

Meanwhile, investors believed central banks will put in additional stimulus.

Schlumberger, the biggest provider of oilfield services, vaulted 3.7 percent after indicating revenue and announcing that falling crude prices will not have any significant impact on businesses.

Morgan Stanley had 2.1 percent as third-quarter revenues nearly doubled.

Standard & Poor’s Index increased 1.3 percent to 1,886.76 at the NYSE and trimmed the previous recovery of 1.9 percent. The gauge dropped one percent this week. It was the fourth week of losses and the longest collapse since 2011.

Dow Jones increased 263.17 points. This was 1.6 percent or 16,380.41 and the first gain in one week. NASDAQ Composite Index went up by one percent.

The ECB will begin to acquire assets under its new program as support for the economy.

Consumer confidence rose this month to the greatest level during the last seven years. Energy prices dropped while the labour market gained. Thomson Reuters and the University of Michigan initial sentiment index for October stepped up at 86.4 which is the most formidable since July of 2007.

US Versus Euro and Yen

usd vs euro and yenThe US currency was up against the Japanese yen and the single currency after potent US economic data supported the perception that the selloff of the dollar was exaggerated.

Figures from the US Labor Department indicated that the number of citizens seeking new claims for unemployment benefits dropped to the lowest in the last 14 years. Meanwhile, a report from the central bank indicated production in factories and mines and utilities moved higher than expected at 1.0 percent in September.

Economic observers believe that the economic viewpoint has not changed significantly.

An auction of debt and data in Spain underscored deflation hitting five unimportant euro zone countries last month.

Consumer inflation at the 0.3 percent rate did not change based on Euro Stat estimates last September 30.

Italy, Spain, Greece, Slovakia, and Slovenia and Spain showed indications of depreciation in September due to recurring low household demand.

The dollar gained moved forward after reaching a three-week slump against the common currency, the Swiss Franc and Japanese yen.

The dollar reduced gains following comments made by US Federal Reserve in St. Louis President James Bullard that the central bank may retain bond-buying longer than expected with the decreases of inflation expectations.

These remarks increased the UK sterling’s rise versus the dollar. It enhanced the outlook that the Bank of England can strengthen monetary policy before the Federal Reserve does.

The euro was down 0.23 percent versus the dollar at $1.2807 after it reached $1.2885. The euro was down against the Japanese yen.

Oil Extends Rebound

Oil prices rose for the second straight day as US and Japanese futures as well as Aussie stocks increased. Futures in Standard & Poor’s 500 Index gained 0.3 percent in Tokyo after the benchmark gauge in the United States negated a decline of 1.5 percent.

On the other hand, stock average futures in NIKKEI 225 went up 0.6 percent in Chicago while the Australian ASX index increased 0.8 percent. Gold held back losses while Aussie bonds moved back after Treasuries stopped their advance. Oil in New York climbed up 0.5 percent after cutting down a three-day low. Palladium also rallied from a near eight-month slump and added 0.9 percent.

Global stocks decreased roughly $3.3 trillion in value this month which accounted for the highest monthly loss since May of 2012.

Factory output in the US recovered in September and claims for unemployment benefits went down to a 14-year trough.

The US Federal Reserve started unwinding its $85 billion program of monthly bond acquisitions since the beginning of 2014. It is about to withdraw the last $15 billion before October ends.

Economists said that inflation in the Euro region has become stable last month as data showed yesterday that consumer-price growth remained at 0.3 percent one year ago.

The central bank is expected to finish Quantitative Easing (QE3) as scheduled prior to its meeting in October 29.The Dow Jones Industrial Average dropped for the sixth day and lost 0.2 percent while futures recovered 0.3 percent.

Gold hardly moved in the spot market. It reflected a price of $1,238.32 per ounce after decreasing 0.3 percent yesterday.

USD/JYP Update

  USD/JPY PairFour points were added to the USD/JPY trading at 107.10 ahead of industrial Japanese production numbers expected later today. According to BOJ, its potential economy’s potential growth rate is around 0.5% and Gov. Haruhiko Kuroda Hayakawa said the estimated cuts of the bank has given its outlook report on the 31st. The bank will probably reduce its forecast for the expansion of the economy covering the current fiscal year until March while controlling its projected inflation. The growing criticism of the public for the weakness of the yen means the BOJ is unable to carry out its current plan to achieve 2% inflation.

BoJ Governor Kuroda believed that the frailty of the yen adds economic factor as the yen’s movements reflect its fundamentals. Masayoshi Amamiya, executive director of BOJ said in the parliament that although the frailty of the yen is an exporters’ advantage but it plays negative role in household incomes, as well as companies that are importing goods.

The increasing dollar is a sign of global weakness driving investors toward the growing strength of America’s economy. As it gained more than 6.5% since the end of June, the dollar index gives signs of recovery in the world’s biggest market versus that weakness of data signaling from China, Japan and the euro zone. In more than four years, as of today, China has the slowest consumer inflation; meanwhile, producer prices that have not shown an increase since January of 2012, dropped more than estimated.