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  • Dow, Nasdaq, S&P 500 set to open higher after strong reports from Shell, Sanofi-Aventis and Dow Chemicals 0 comments
    Oct 28, 2010 9:19 AM | about stocks: RDS.A, RDS.B, DOW, SNY

    US markets are set to open on a more upbeat mood Thursday, buoyed by some strength in the European markets after a series of strong earnings results from key single name benchmarks. That said, speculation that the coming Fed program of quantitative easing (QE) next week will not be as extensive as first thought, is still gathering steam across the markets.

    A relatively light day is expected on the US calendar today, although the initial jobless claims are a number to watch out for; general consensus expecting a 3,000 increase on last weeks data to 455,000. The weekly US Department of Energy (DoE) underground gas storage figures are also due up today, published at the normal time of 1030EST by the Energy Information Administration (NYSEMKT:EIA), and the Fed is set to sell $29 billion of 7-year notes later in the day.

    As highlighted, US equity markets are set to open on a firmer note Thursday, coming off the back of strength in the European markets following strong earnings results from Royal Dutch Shell, France Telecom and Sanofi-Aventis. In a move mirroring that of the US Securities and Exchange Commission (SEC), the International Organisation of Securities Commissions published several papers overnight, suggesting that the trading of shares in dark-pool exchanges, such as the Turquoise exchange, should be made public with regulators prioritising ‘transparent’ orders over those done in the dark pool. It brings further regulator scrutiny to the ever growing market, with 50% of European stocks estimated to be traded in dark pools, compared with the US figure of 10%.

    Dow Chemicals has released better than expected Q3 results before the bell today, with an adjusted earnings per share (NYSEARCA:EPS) of $0.54 compared with estimates in the $0.41 region. Colgate-Palmolive also released its Q£ results, which came in as expected with an EPS of $1.21, while Motorola reported a better than expected EPS of $0.16, versus estimates of $0.11. Also due up to release results today are Exxon Mobil, and Microsoft.

    In the corporate credit market, most sectors have been seeing a fairly positive session, helped by the strength in the equity arena, although financials have been failing to match the more robust sectors. In the sovereign market, Eurozone periphery spreads have been seeing weakness again today on the back of ongoing budgetary concerns, with Portuguese and Irish debt underperforming particularly, their spreads around 22 basis points (bps) and 15bps wider respectively. US credit spreads are expected to consolidate near current levels having widened yesterday, with US stock futures pointing towards a more upbeat tone for the market.

    With this increased risk in European peripheries, the euro has failed to make any headway against most of the major currencies today; the US dollar being an exception on the back of the broader retracement in the greenback. That said, better than expected Eurozone indicators this morning did help buoy trade in the single currency, with traders also reporting some fairly strong demand coming from hedge funds today. Cable has been following the euro-dollar for the most part today, with sterling making good gains more broadly as the week’s positive GDP number continues to boost sentiment.

    US Treasuries have been managing to hold on to gains made yesterday, with focus on a NY Fed Dealer Survey about expectation of the size and extent of the expected QE package. The moves also mirror the gains in bunds during the session, as the Eurozone peripheries weaken against the benchmark; with 5 and 7 years notes particularly seeing good demand before the open.

    Disclosure: no positions
    Stocks: RDS.A, RDS.B, DOW, SNY
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