While the Spanish results were able to keep European markets afloat although without giving a clear view of the Spanish political situation, weak corporate results and outlooks from US bellwether Caterpillar increased concerns on the US economy future, reason why as we write most US stocks are trading near the flat line.
Caterpillar Inc third-quarter earnings rose 49%, however the company lowered its 2012 outlook amid weaker-than-expected global economic conditions. The company now expects per-share earnings of $9 to $9.25 on revenue of about $66 billion, compared with its prior estimate for earnings of about $9.60 and revenue of $68 billion to $70 billion. For next year, Caterpillar expects sales and revenue to be about the same as 2012, plus or minus 5%. Analysts polled by Thomson Reuters recently expected per-share profit growth of 6% and revenue growth of 4%. Shares in pre-market trading were down 1.1% to $82.90 just to rise 1.37% to $85.09 while we are writing.
The DJIA at european cash close traded 0.17% lower to 13,321.30, the SPX inched down 0.14% to 1,431.17 with energy stocks falling the most and technology sector as the sole advancing among the 10 industry group leading the Nasdaq 0.16% higher to 3,010.50.
Initial CAT losses weighted on European benchmarks which closed the session in negative territory: the broader STOXX50 fell 0.44% to 2,531.10, the German Dax led losers down 0.71% to 7,328.05, in Southern Europe, Italian Ftsemib managed to close in the green 0.03% higher to 15,866.78 while our today’s lighthouse the Spanish Ibex closed down 0.46% to 7,877.10.
While the 10 year Spanish government bond yields rose 12.3 basis points to 5.495 percent, Italian peers were steady at 4.766 percent, underlying the fact that the contagion problem is something investors are not thinking about at the moment. The hypothesis is highlighted by the common currency’s performance versus the greenback, the euro rose 0.28% to 1.3061$, a divergence with the Spanish bonds yields that is foods for our brains tonight.
Commodity wise, the Crude for November delivery fell 0.60% to $89.51 on the NYMEX as traders eyed the expected restart of a key North American pipeline (The Keystone pipeline, which sends about 500,000 barrels per day from Canada to the Midwest, was shut last Thursday but was reportedly due to restart Monday, a day later than expected) well as developments in the Middle East ahead of the November crude expiration. Gold for December delivery traded 0.16% higher to $1,726.80 an ounce on the Comex division as a weakness in the greenback provided modest support to dollar denominated commodities.
Again today we had the proof that the market does not like the lack of clarity, the election results as we said in our Spanish election focus were unable to offer a clear view on the political situation in Spain; eyes are all for the next regional election in Catalonia on November 25, where the current President Artur Mas pledges to hold a referendum on independence if he’s re-elected. The question is are investors be willing to wait another month? or Is the “spoken” safety net going to keep the Spanish market afloat for so long?
Have a great evening.