Navigator October 24, 2014 Solid economic data provides support Indices Current Previous Day (%) MSCI World 1659.97 0.77 Dow Jones 16677.9 1.32 S&P 500 1950.82 1.23 Nasdaq 100 4012.27 1.59 Nikkei 225 15279.83 0.93 SMI 8546.08 0.47 SLI 1266.16 0.56 Euro Stoxx 50 3044.3 1.19 Euro Stoxx 600 328.26 0.66 DAX 9047.31 1.2 FTSE 100 6419.15 0.3 Equity – Microsoft better than its competitors Microsoft reported a clearly better-than-expected Q1 result (EPS of 54 cents vs. consensus of 48 cents). The software company continues to profit from strong demand for smartphones, tablets and cloud services. Microsoft showed a better performance than its peer group. Shares of Amazon.com dropped as much as 13% after market closed, following a higher-thananticipated loss. The world’s biggest chemical maker BASF lowered its 2015 targets as a delayed European recovery cuts demand for basic and specialty chemicals. In Q3, adjusted Ebit of EUR 1.84bn (+9%) exceeded the EUR 1.76bn consensus, but was held back by a decline in Agricultural Solutions business. 3M posted Q3 earnings per share of USD 1.98, two cents better than expected and slightly increased its guidance. Yesterday, shares advanced as much as 6.5%. Indices Emerging Markets Current Previous Day (%) MSCI Emerging Markets 981.75 -0.54 MSCI EM Asia 453.56 -0.25 MSCI EM Eastern Europe 155.25 -0.75 MSCI EM Latin America 2973.02 -2.14 50713.26 -3.24 1109.68 -1.35 Fixed Income – In anticipation of ECB banking stress test Bond market yield increased somewhat in yesterday’s trading as Eurozone aggregate Flash-PMIs indicated an increase rather than a slowdown in economic activity. For the European Central Bank (ECB), success as the Euroarea’s most powerful financial supervisor could begin this weekend with a few failures. On Oct. 26, stress test results will show which of the currency bloc’s 130 biggest banks fell short in the ECB’s year-long examination of both, their asset strength and ability to withstand economic turbulence. After two previous stress tests run by the European Banking Authority didn’t reveal problems at lenders that later failed, the ECB has staked its reputation on getting this exercise right. As ECB President Mario Draghi has said, banks need to fail to prove the losses of the past have been dealt with. Returns Relatively strong economic data from the U.S. and the Eurozone as well as Microsoft’s solid earnings report ensured a positive sentiment on Wall Street and supported equity markets in Asia. The U.S. leading indicators signaled a stronger-than-expected growth trend, climbing 0.8% in September (consensus +0.7%, previous month +/-0%) and the Eurozone purchasing manager’s index (PMI) came in better-than-expected. Markit’s Composite PMI climbed to 52.2 in October from 52.0 a month earlier, signaling that the Euro-area economy at least did not weaken further in October. Economists had anticipated a drop to 51.5. The PMI for Germany showed manufacturing in the region’s largest economy rebounded from last month’s contraction, while the French measure deteriorated further. European stock markets will probably open with a friendly tone, given the gains in Asia and North America. Brazil IBOVESPA Russian Depositary Index NIFTY Index 8014.55 0.23 23292.78 -0.17 HFRX Global HF Index 1213.27 -0.16 LPX50 Listed PE TR (EUR) 1444.51 -0.02 253.86 0.83 Current Previous Day (%) US Treasury Bonds 10Y (USD) 2.25 -1.1 German Bund 10Y (EUR) 0.89 -1.89 Swiss Government 10Y (CHF) 0.46 1.77 United Kingdom 10Y (GBP) 2.24 1.36 Japan 10Y (JPY) 0.47 -1.46 3 month LIBOR (USD) 0.23 0.34 3 month LIBOR (EUR) 0.06 1.16 3 month LIBOR (CHF) 0.01 -8.33 Global IG Corporate Spread 1.15 0 Global HY Corporate Spread 4.26 -1.27 EM Hard Currency Gov. Spread 2.97 -1.06 Hang Seng Index BBG NA REITS 1/3 Earnings calendar Date 24.10. 24.10. 2014 24.10. 2014 24.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 28.10. 2014 28.10. 2014 28.10. 2014 28.10. 2014 2014 Ctry US SE US US US DE US US GB DE US Forex Company BRISTOL-MYERS SQUIBB CO ERICSSON LM-B SHS MOODY'S CORP PROCTER & GAMBLE CO/THE AMGEN INC DEUTSCHE BOERSE AG MERCK & CO. INC. AFLAC INC BP PLC CELESIO AG DU PONT (E.I.) DE NEMOURS Period Consensus EPS Q3 1.78 Q3 4.62 Q3 4.04 Q1 4.41 Q3 8.41 Q3 3.62 Q3 3.47 Q3 6.17 Q3 0.74 Q3 1.24 Q3 40 Economic data calendar Date 24.10. 24.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 27.10. 2014 2014 CET 08:00 12:00 10:00 10:00 10:00 10:00 14:45 14:45 15:00 15:00 - Ctry DE IT EU DE DE DE US US US US DE Indicator GfK Consumer Confidence Consumer Confidence ECB M3 Annual Growth Rate Ifo Business Climate IFO Current Situation IFO Expectations Markit Composite PMI Markit Services PMI Pending Home Sales (m/m) Pending Home Sales (y/y) Retail Sales (y/y) Period Cons Nov 8.1 Oct 100.8 Sep Oct 104.6 Oct 0 Oct 0 Oct P Oct P 0 Sep 0.63 Sep 0 Sep 0 Prev. 8.5 10 20 104.7 110.5 99.3 59 58.9 -1.04 -4.06 1.5 Current Previous Day (%) 1.2659 1.2065 0.953 1.5288 1.6041 107 7.7578 1.2762 6.1197 8.3254 9.1908 0.1028 0.0149 0.1154 0.0458 0.0686 0.2871 -0.0064 0.0705 0 -0.0889 -0.1208 Commodities Current Previous Day (%) Oil Future Nymex WTI (USD) Oil Future Brent (USD) Gold-ounce (USD) Silver-ounce (USD) Platinum (USD) Palladium (USD) JOC Industrial Metals Index S&P (USD)GSCI Index Spot Indx Rogers Int. Commodity Index BBG Commodity Index Rogers Agriculture TR Index 81.72 86.63 1231.22 17.25 1254.25 782.75 116.73 541.93 3189.07 117.23 957.37 -0.45 -0.23 -0.05 0.31 -0.14 0.37 0.22 1.3 -0.7 -0.01 0.89 EUR/USD EUR/CHF USD/CHF GBP/CHF GBP/USD USD/JPY USD/HKD USD/SGD USD/CNY EUR/NOK EUR/SEK Topics LGT looks at Topics Description Regulatory impacts on banks The consequences of the upcoming ECB stress test and the changing reguInvestment Idea latory environment as well as resulting investment possibilities are disResearch publication cussed. 20.10.2014 Profiting on strong USD Transatlantic divergences benefit the USD as the U.S. and Europe drift apart economically and on monetary policy. Selected companies could benefit from these developments. 16.10.2014 Elections in Brazil The uncertainties of the outcome of the heads up between president Investment Idea Rousseff and her contender Neves offer asymmetric investment opportuniThe Beacon ties. 14.10.2014 Gold Call writing strategy on gold offers value in a gold market with support stemming from physical demand out of China and India and the absence of a save haven scenario. Investment Focus 03.10.2014 Investorama 19.09.2014 Market overview Analysis of the broader macro-economic and financial arena as wells as important trends and relevant developments of the financial markets. Publication Type Investment Focus published For further information, please contact your LGT relationship manager. Impressum Published by: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8022 Zuerich Editorial: Alessandro Fezzi, +41 44 250 78 59, email: [email protected] Authors Equities: Georg Ruzicka, Andreas Riedel, Dr. Tilman Dumrese Authors Fixed Income: Maurice Jiszda, Daniel Rotzer, CFA Sources: Bloomberg, LGT Bank (Switzerland) Ltd. 2/3 Risk Disclosure (Disclaimer) This publication is for your information only and is not intended as an offer, solicitation of an offer, or public advertisement to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. 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