After another big sell off yesterday, European markets still look a little shaky after the vertigo inducing drops seen so far this week, with a modest stabilisation in early trading ahead of this afternoon’s ECB rate meeting.

With a huge swathe of earnings numbers to digest, and the economic prospects for Europe looking bleaker by the day, after France followed Germany into introducing a one-month partial lockdown of its economy, all eyes will be on the ECB later this afternoon.

While no policy changes are expected ECB President particular Christine Lagarde will have to navigate the tricky path of keeping all its options open while at the same time not acknowledging that its monetary toolbox is pretty threadbare in the absence of further fiscal stimulus as Europe wrestles with the prospect of new economic lockdowns.

Standard Chartered

Following on from HSBC’s decent results earlier this week Asia peer Standard Chartered has continued that theme, with adjusted pre-tax profit for Q3 of $745m, while impairment charges eased to $353m. On both counts the numbers beat expectations, with the bank saying that it expected loan losses to ease in the second half of the year, however that hasn’t stopped the shares slipping back in early trade.

A large part of the reason for the improvement is undoubtedly down to the fact that the Asia region is performing much better, as well as the banks low exposure to the UK market, where it has a very limited presence.

The bank, like HBSC also said it was looking to restart dividends and buybacks at the end of the year, however as with its peers that will depend on the regulator the PRA buying into that. This seems unlikely given the Covid second wave sweeping across Europe, as well as the US, with the numbers cutting little ice in Hong Kong with the shares dropping sharply.

Lloyds Banking Group

Lloyds Banking Group also posted its latest Q3 numbers, and like its peers, these were also better than expected, due to lower loan loss provisions. Net income came in at £3.4bn a fall of 19%, from the same period a year ago, though mortgage applications came in at their best levels since 2008, which gives a decent indication as to how lower margins have impacted profits for banks across the board.

Statutory profits before tax for Q3 have come in at £1.04bn, while the bank set aside another £301m in respect of non-performing loans, which was slightly lower than expected, bringing the total provisions year to date to £4.1bn.

More encouragingly the bank revised its estimate for full year loan losses to the lower end of a £4.5bn to £5.5bn range, however this could well change if the UK follows France and Germany into another lockdown in the next few weeks.

UK lending data

In terms of the UK economy, as well as the banks, today’s latest UK lending data is likely to be important in the context of the recovery in loan demand seen since May.

In August mortgage approvals surged to their best levels since 2008, at 84.7k. this is unlikely to be repeated in September, given banks are becoming more discerning about their lending criteria, however we still expect to see a fairly decent 76.1k.

Consumer credit is also expected to rise by £700m, up from £300m in August.

Royal Dutch Shell

Moving back to the earnings picture, having heard from BP, earlier this week. Royal Dutch Shell’s latest Q3 numbers painted a similar picture of weak refining margins, and a slowdown in its trading business, as profits fell sharply from the same quarter a year ago, however there was a silver lining.

Due to outperformance in its marketing business, which include its petrol stations and convenience stores, the company managed to surprise the markets, with a better than expected profits performance, and a surprise increase in the dividend.

Shell’s adjusted net income came in at $955m, beating expectations across the board, while increasing the dividend by 4%, only six months after taking the axe to it. This decision appears all the more surprising when you look at its debt levels, which sit at $73.5bn, and a gearing level of 31.4%, though we have seen a decent reduction here.

Last month Shell also announced that it was taking further steps to try and future proof its business away from fossil fuels, as well as taking between $1bn and $1.5bn in impairment charges in Q3. The company also said it would be looking to cut 9,000 jobs between now and the end of 2022.

BT Group

UK telecoms giant BT Group has had its fair share of problems over the years, as it strives to fend off competition in its home market from the likes of O2 and Vodafone, but also in terms of its Openreach operation where there has been constant speculation, that they could be forced to split the business off due to monopoly concerns. Openreach is the jewel in the crown for BT, with a valuation estimated to be well in excess of BT’s own market cap.

Today’s first half numbers are encouraging in the context of BT’s performance in one of its major markets after the company earned more revenue than expected in Q2, with the shares climbing sharply in early trading.

This outperformance prompted CEO Philip Jansen to raise the lower end of its guidance threshold for the current year to £7.9bn for 2022/23, as more people upgraded their broadband requirements through having to work from home.  

This outperformance also reinforces the challenges facing BT when it comes to financing the lofty goals, while at the same time competing with Telefonica and Liberty Global in the quad play space of home phone, broadband, TV and mobile contracts into a one size fits all package.

Today’s numbers also reinforce the importance of Openreach to its future growth prospects. In May there was some chatter that BT was looking at selling off a multibillion-pound stake in Openreach, in order to help fund its investment in accelerating the build of its FTTP network, with a target of 20m homes by the mid to late 2020’s, and a target of over 2m in 2020/2021. Over the last year the company said it had doubled the number of FTTP orders as well as expanding its 5G network across 112 towns and cities across the UK.

LVMH

The dispute between LVMH and Tiffany over the takeover price that was agreed prior to the pandemic appears to have been resolved with a lower price of $131.50 being agreed to complete the deal, with the deal set to be finalised by the end of 2021. To recap the previous price was $135 a share so today's lower price should now draw a line under the court case which was due to take place at the beginning of next year in a Delaware court. The $425m reduction in price may be small beer to LVMH, but it is also likely to be welcomed by Tiffany shareholders as LVMH finally put a ring on a deal that looked like it could collapse into bitterness, acrimony and litigation.  

US Open

In the US, we also have the latest numbers from the likes of Amazon, Apple and Facebook, with US markets set for a more positive open, ahead of the latest US Q3 GDP numbers as well the latest weekly jobless claims numbers, which are expected to see further falls, holding below the 800k level to 770k. Continuing claims are also expected to fall further 7775k.

On the US economy we look set for a significant rebound in Q3 economic output, with a 32% expansion, helping to reverse a 31.4% decline in Q2, with a 38.9% rebound in personal consumption likely to be the fuel that drives that economic rebound. The big question is whether that is sustainable as we head into Q4?

Starting with Apple, today's Q4 numbers in terms of product, like handsets and tablets aren’t expected to rip up any trees, though investors will still want to see further inroads with respect to its services revenues, which slipped back a little in Q3. This was disappointing as it slipped back from the level seen in Q2 to $13.1bn. If Apple is serious about Apple TV+ in competing in the same sandbox as Amazon Prime Video and Netflix then it needs to do better.

In the last two months we’ve seen two separate product launches so consumers are unlikely to splash out on new items ahead of the launch of new iPhones, iPad and Watch the sale of which will be important in terms of its Q1 numbers, which last year saw the company post record income and revenue $91.8bn and $22.2bn respectively.

Today’s guidance will be crucial in terms of whether we see a rebound in the share price from the highs we saw earlier this month. Early indications do look positive with pre orders for the new iPhone in China looking strong.

Amazon saw a big rise in costs in Q2, coming in at $4bn, as the company hired 175k new staff, as it expanded its grocery delivery capability by 160%. Management said they expected to spend another $2bn in Q3 with sales expected to come in between $87bn and $93bn.

Facebook also saw a decent Q2, while being circumspect about its Q3 performance, saying it only expected to see revenue growth of around 10%. In Q2 the company generated $18.7bn up from $16.9bn with profits nearly doubling to $5.18bn.

Dow Jones is expected to open 160 points higher at 26,680.

S&P500 is expected to open 25 points higher at 3,296.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.5% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD hits highest since September amid upbeat mood

EUR/USD has surpassed 1.1920, the highest in around 10 weeks as markets cheer the US transition and upcoming vaccines. A busy data day awaits traders ahead of the Thanksgiving holiday. 

EUR/USD News

XAU/USD stages a modest recovery from multi-month lows

Gold witnessed some short-covering move on Wednesday from the $1800 mark. COVID-19 vaccine optimism might cap any strong gains for the safe-haven metal. Investors now eye US macro data, FOMC minutes for a fresh directional impetus.

Gold news

GBP/USD advances toward 1.34 amid Brexit hopes

GBP/USD is rising toward 1.34 after EC President von der Leyen said there is progress in Brexit talks. UK Chancellor Sunak's speech and US data are awaited later in the day.

GBP/USD News

WTI rally continues despite large US inventory build

Oil has climbed to fresh multi-month highs, extending Tuesday's price gains as optimism emanating from potential coronavirus vaccines overshadows inventory build-up in the US. The API reports a large buildup of inventories in the weeke ended Nov. 20.

Oil News

Black Friday 2020 Discounts!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info

Forex Majors

Cryptocurrencies

Signatures