ADVFN III Daily Markets Bulletin.

US Market

The major U.S. index futures are pointing to a mixed opening on Friday, with apprehensions returning amid governmental efforts to reach an agreement to raise the U.S. debt ceiling. Despite both parties expressing intent to clinch a solution, talks ended inconclusive. Last night’s efforts did not yield any results, although both parties did hint that they might agree on a short-term solution for avoiding a default, thereby giving additional time for discussing broader policy issues. Although a consumer sentiment reading and some earnings, including those from JP Morgan and Wells Fargo, could provide some direction, the overwhelming influence on the market could be the progress made by lawmakers to resolve the debt ceiling issue. Hopes of a Congressional deal to temporarily raise the U.S. debt ceiling helped U.S. stocks stage a notable rebound on Thursday. The major averages opened higher and advanced steadily until early afternoon trading. After moving sideways until late trading, the indexes experienced a short spike before moving sideways yet again. The Dow Industrials added 323.09 points or 2.18 percent before closing at 15,126, the S&P 500 Index jumped 36.16 points or 2.18 percent before closing at 1,693 and the Nasdaq Composite closed at 3,760, up 82.97 points or 2.26 percent. All thirty Dow components closed higher, with American Express,  Boeing, Disney, JP Morgan Chase, Nike, UnitedHealth and United Technologies leading the gains. On the economic front, the Labor Department reported that jobless claims rose sharply by 66,000 to 374,000 in the week ended October 5th, with the Labor Department attributing the spike to a computer glitch in California and the partial governmental shutdown. The four-week average climbed to 325,000 from 305,000. Continuing claims, calculated with a week’s lag, fell 16,000 to 2.905 million for the week ended September 28th. Deal hopes helped the Dow Industrials to move further away from its 200-day MA currently at 14,738, which served as support on Wednesday. Notwithstanding the over 2 percent advance yesterday, the index is still in oversold territory, as reflected by its 14-day RSI, which is currently at 38.5. If talks towards a deal face any further bottleneck, the index could retrace some of its gains and in that case the index has support around the 15,066, 14,994, 14,922 and 14,833 levels. On the upside, the index has resistance around its 50-day currently at 15,195, 100-day MA currently at 15,215 and 21-day MA currently at 15,249 as well as the 15,322 level.

US Economic Reports

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Reuters and the University of Michigan are scheduled to release the preliminary results of their consumer sentiment survey at 9:55 am ET. Economists expect the index to decline to 75 in October from 77.5 in September. Federal Reserve Governor Jerome Powell is scheduled to speak on monetary policy to the IIF in Washington at 11 am ET. Additionally, Boston Federal Reserve Bank President Eric Rosengren will speak on communicating monetary policy at the zero bound in New York at 1 pm ET.

Stocks in Focus

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Micron Technology reported fourth quarter earnings of $1.51 per share compared to a loss of 24 cents per share last year. The company noted that the recent results included $1.31 per share in purchase accounting gains related to its recent acquisitions and $32 million in restructuring and impairment costs. Sales rose 45 percent to $2.84 billion, ahead of the $2.71 billion consensus estimate. JP Morgan Chase reported a loss of 17 cents per share compared to a profit of $1.40 per share last year, as the bottom line was dragged down by legal charges. However, core earnings exceeded estimates. Revenue fell to $23.9 billion, from the year-ago period’s $25.86 billion, roughly in line with the $23.94 billion consensus estimate. Wells Fargo reported third quarter earnings of 99 cents per share, exceeding the consensus estimate of 97 cents per share. Revenues fell to $20.5 billion from $21.2 billion in the year-ago period, slightly shy of the $20.97 billion consensus estimate. Gap said its September net sales were flat with last year, while its comparable store sales were down 3 percent year-over-year compared to a 6 percent increase in the year-ago period. The company acknowledged that September proved to be challenging. Potash Corp. of Saskatchewan said it expects third quarter earnings of about 41 cents per share, down from its previous estimate of 45-60 cents per share, reflecting lower than forecast potash volumes late in the quarter. Analysts estimate earnings of 46 cents per share for the quarter. Infosys reported better than expected second quarter earnings and in line revenues. The company also raised its full year revenue forecasts. Amazon announced an agreement o buy TenMarks, which provides innovative math curriculum to students. The company did not reveal the terms of the deal. The acquisition is expected to close in the fourth quarter of 2013. Newmont Mining announced preliminary third quarter attributable gold and copper production of 1.283 million ounces and 34 million pounds, respectively. Copper production represents a 3 percent year-over-year decline and flat sequential performance. Sales of gold and copper were 1.263 million ounces and 35 million pounds, respectively. The company lowered its 2013 attributable copper production outlook to 135 million pounds to 145 million pounds from 150 million pounds to 170 million pounds. Raytheon said it has been awarded a $385.742 million cost-plus-incentive-fee contract for the development of Air and Missile Defense S-Bank Radar and Radar Suite Controller by the U.S. Navy. If all options are exercised, the contract has a cumulative value of $1.633 billion.

European Market

Stocks rise on Yellen nomination FTSE 100: 1.07% DAX: 1.34% CAC 40: 1.56% FTSE MIB: 1.88% IBEX 35: 1.89% Stoxx 600: 1.18% Markets in Europe reacted positively to the nomination of Janet Yellen as new Federal Reserve Chair and to the US government’s progress on debt ceiling negotiations. President Barack Obama last night announced he was nominating Federal Reserve Vice-Chair Yellen to take over as the head of the central bank from Ben Bernanke next year. Yellen, who has supported the Fed’s stimulus programme, was a widely expected and favoured choice among investors. At the same time the Fed released the minutes from last month’s meeting which showed it was a close call in the central bank’s decision to maintain its $85bn per month in bond purchases. The Fed came close to announcing a tapering of quantitative easing but said there needs to be further signs of recovery in the US before taking action. The central bank’s decision last month to keep its monetary policy unchanged shocked economists who expected a tapering of between $10bn to $15bn. It is now not expected to announce a tapering until the end of the year, though the ongoing shutdown of the US government could mean that the taper will be pushed out into 2014. On another bright note for markets, House Republican and Senate Democratic leaders are considering a short-term increase in the $16.7trn debt limit in order to stave off a possible default, according to reports. Congress has until October 17th before reaching its borrowing limit and running out of cash to pay its bills. The government is in the second week of a shutdown after failing to agree on a budget bill by last Monday’s deadline. Lawmakers have continued to butt heads over the budget and raising the borrowing limit. “Obama is scheduled to meet Republicans later today but the market is not too optimistic we will see lawmakers make any significant headway,” according to Ishaq Siddiqi, Market Strategist at ETX Capital. “Seems as if an 11th hour deal may now be the most likely scenario to be played out.” Bank of England, ECB The Bank of England (BoE) has decided keep its monetary policy unchanged, as expected. The Bank’s Monetary Policy Committee held the interest rate at 0.5% and the asset purchase programme at £375bn. The central bank has vowed to maintain the key rate at a record low until the unemployment rate falls from its current level of 7.7% to 7%. The European Central Bank (EC), on the other hand, is expected to unveil new liquidity measures at its next policy announcement, according to economists. Almost three in four of economists predict President Mario Draghi will reveal new liquidity measures such as longer-term refinancing operations, surveys by Bloomberg showed. The majority of forecasters also say interest rates will remain unchanged through the first half of 2015. Separately, the ECB and the People's Bank of China (PBC) have established a bilateral currency swap agreement “in the context of rapidly growing bilateral trade and investment between the euro area and China, as well as the need to ensure the stability of financial markets”. The swap agreement will be valid for three years and have a maximum size of 350bn yuan when yuan are provided to the ECB and €45bn when euros are provided to the PBC. CGG, Tryg CGG advanced after the oilfield surveyor posted a 94% increase in third-quarter vessel production. Tryg rallied after the Nordic property and casualty insurer reported third-quarter pre-tax profit of 907m kroner, compared to the forecast for 885m kroner. Hays rose after the UK recruitment agency posted a 2% rise in first-quarter net fees compared to last year on a comparable basis. Ladbrokes gained after an undisclosed buyer bought a stake in the UK bookmaker, The Telegraph reported. Givaudan declined after the fragrance maker reported third-quarter sales that missed estimates. Other asset classes climb The euro rose 0.03% to the 1.3528 US dollar. Brent crude futures jumped $0.818 to $109.960 per barrel on the ICE.

Asian Markets

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Wall Street’s buoyancy on deal optimism rubbed off on the Asian markets, as the major averages in the region all ended solidly higher. Japan’s Nikkei 225 average opened higher and moved roughly sideways throughout the session before closing up 210.03 points or 1.48 percent at 14,405. A majority of stocks advanced, with export, financial and resource stocks seeing notable buying interest. Meanwhile, Fast Retailing slid over 3 percent on a weak forecast for the year ending August 2014. Australia’s All Ordinaries opened higher and rose sharply in early trading. Thereafter, the average went about a consolidation move, as it closed 82.60 points or 1.61 percent higher at 5,229. The market witnessed broad based strength, with energy, financial, healthcare and material stock leading the gains. Hong Kong’s Hang Seng Index closed at 23,218, up 267.02 points or 1.16 percent, and China’s Shanghai Index ended up 37.22 points or 1.70 percent at 2,228. On the economic front, a report released by the Bank of Japan showed that its index measuring corporate goods prices rose 0.3 percent month-over-month in September. Economists expected a 0.2 percent increase for the month. The annual pace of growth of 2.3 percent was also in line with expectations.

Currency and Commodities Markets

Crude oil futures are slipping $1.24 to $101.77 a barrel after rising $1.40 to $103.01 a barrel on Thursday. Gold futures are currently declining $9.70 to $1,287.20 an ounce. In the previous session, gold fell $10.30 to $1296.90 an ounce. Among currencies, the U.S. dollar is trading at 98.25 yen compared to the 98.16 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3567 compared to yesterday’s $1.3520.