Here is what you need to know.
The ECB rate decision is coming. The European Central Bank will announce its latest interest rate decision at 7:45 a.m. ET. Market expectations are for the ECB to keep its benchmark interest rate at 0.05%, but possibly lay the groundwork for more quantitative easing as inflation remains subdued. Mario Draghi’s press conference explaining the decision will occur at 8:30 a.m. ET. The euro is down 0.3% at 1.1311 ahead of the decision.
China downplayed the recent yuan devaluation. Reuters reports, Wang Xiaoyi, the deputy head of China’s State Administration of Foreign Exchange (SAFE), explained the recent yuan devaluation was normal government conduct rather than a large scale intervention. The devaluation was done to stabilise cross-border capital flows, Wang said. China’s yuan is weaker by 2.4% at 6.3581 per dollar since the August devaluation.
Retail sales surged in the UK. September retail sales climbs 1.9% compared to last month, well ahead of the 0.3% advance that economists had expected. Ruth Miller, UK economist at Capital Economics, noted, “There are plenty of reasons to remain upbeat about the outlook for spending in the run up to Christmas. The boost to households’ discretionary spending power should persist thanks to solid pay increases and inflation staying close to zero for the rest of the year.” The British pound is stronger by 0.3% at 1.5467.
American Express whiffed. The credit card behemoth earned $US1.24 per share in the third quarter, missing the Bloomberg estimate of $US1.31 by a wide margin. Revenue eased 1.3% to $US8.2 billion, just shy of the $US8.3 billion that analysts were looking for. In it’s release, the company noted, “Results for the quarter were significantly affected by higher spending on growth initiatives, earlier changes to certain renewed co-brand partnerships, and the stronger US dollar.” AmEx cut its full-year earnings per share outlook to $US5.20-to-$US5.35, which is notably below the $US5.49 that was expected.
EBay beat on the top and bottom lines. The online retailer announced adjusted earnings of $US0.43 per share, surpassing the $US0.40 that analysts were expecting. Revenue slipped 2.4% to $US2.1 billion, but that was ahead of the $US2.09 billion that was anticipated. CEO David Wenig noted in regards to the spinoff of PayPal, “We drove solid results in the quarter in which we completed a complex separation.” The stock is up almost 9% in pre-market trade.
John Thain is stepping down as CEO of CIT. The Wall Street Journal reports, John Thain announced he is retiring as CIT’s CEO. Thain’s departure comes after five years at the helm, and at a time when the company is looking to sell assets. He will be replaced by Ellen Alemany, who is a CIT board member and former executive at RBS Citizens Financial Group and RBS Americas. Thain will remain Chairman of the Board.
AT&T warned on revenue. Telecommunications giant AT&T warned Wall Street’s third quarter revenue estimate is “inflated.” Currently, the Bloomberg consensus estimate calls for revenue of $US39.86 billion, which has been revised down 3.1% over the past four weeks. The company believes many analysts might be incorrectly counting revenue from DirecTV. “It is clear many revenue estimates for DirecTV include the full month of July. Under GAAP we are only allowed to include revenue beginning July 25,” AT&T spokesman Brad Burns told Reuters.
Markets around the globe trade mixed. China’s Shanghai Composite (+1.5%) paced the gains in Asia while Japan’s Nikkei (-0.6%) lagged. In Europe, Germany’s DAX (+0.3%) leads the way higher. S&P 500 futures are higher by 7.75 points at 2016.25.
US economic data picks up. Initial and continuing claims are due out at 8:30 a.m. ET before the FHFA Housing Price Index crosses the wires at 9:00 a.m. ET and existing home sales and leading indicators are released at 10 a.m. ET. Natural gas inventories are scheduled for 10:30 a.m. ET. The US 10-year yield is up 2 basis points at 2.04%.
Earnings reporting is heavy. 3M, Caterpillar, Dow Chemical, Eli Lilly, McDonald’s, Pulte Homes and Under Armour highlight the names set to release their quarterly results ahead of the market open. Alphabet, Amazon, AT&T, Capital One and Microsoft are among the names reporting after the closing bell.