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    BOJ Stays Pat, Oil Boosting Energy Sector, Samsung Back in Business

    Asian markets are largely supported by the rally in the energy sector. There is no doubt that there has been an enormous amount of blood squeezed out of this sector due to constant slide in the oil price. The rebound in oil price started yesterday afternoon during the European session as investors are becoming blind once again on the back of the OPEC comments. The reality, which is largely ignored is that there is still no sign of any OPEC meeting before December and Kuwait has already ruled out of any possibility of meeting up before December. Therefore, we are skeptical about this upward move in crude oil.

    Investors were left scratching their head when the Bank of Japan stayed pat on their monetary policy decision. Given the Tankan survey tanked last week and this created much hope amid traders that the BOJ will do what it does the best- announce more stimulus package. But, on the contrary, this was not the outcome this time and the institution is comfortable with their position for the time being. This is the main drag for the Nikkei index as China still remained closed for their long bank holiday.

    The IMF downgraded the global growth estimates yesterday, but this has not made much of an impact on the markets. Nonetheless, if you are talking about the sentiment – yes, surely, it will feed into this once the news is fully digested. Given China is closed, the indices have not had the chance to fully react to any of these news. The IMF downgraded of World Growth yesterday and this was primarily based on the commodity rout, which itself is mainly due to the sluggish growth in China.

    In terms of stock, much of the spotlight will be on the mobile phone giant – Samsung, which has exceeded investors exceptions. The company is expected to deliver its first quarterly gain in nearly 24 months. It’s estimated profit is set to soar by 79.8 percent – a number which is much easier to say than to deliver. Samsung is also hoping to beat on its revenue number and this may surge by nearly 7.5% as compared to the last year. These numbers are unquestionably very welcoming and we expect many investors to jump back in this stock who previously abounded this ship. If earnings are on track and numbers are promising, there is no reason why would you hold back and not invest.

    European futures are also trading higher as the markets remain poised to start where they left off. In terms of economic data, German industrial production number will be heavily looked at by the investors given the recent scandal around its Volkswagen. The German factory order data were very disheartening yesterday and traders are anxious how much dent this Volkswagen scandal will hurt the made in Germany brand. The DAX index performance remains very much concern as the one month returns are -1.35% and the picture for 3 months is even uglier. The number is -7.25%. Given the budget surplus the country has and with migrant crisis, this will be the perfect opportunity for Germany to spark some new investment projects which can improve its economic shape. France on the other hand is surprisingly performing much better as structural reform are undespotlight. The CAC 40 index could not help but to shine when you look at one month and three month numbers, which are 3.04% and 1.22% respectively.

    Later this morning, we have the manufacturing production data for the UK. After discouraging services PMI number earlier this week, the hope is that manufacturing may show a decent sign of confidence. The forecast is for 0.4% when the previous reading was at -0.8%. Although, given the slowdown in China and Europe, we do think that the number is a bit too much optimistic and if the final number does fall short of expectations, this will make the Bank of England to take the more dovish approach in relation to rate hike expectations. Under this circumstance, we could see the euro sailing higher against the GBP and the sterling could also lose more ground against the dollar.


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