Briefly becalmed Europe still in shadow of rampant US

The most anticipated news of the afternoon, the European Central Bank announcement by Mario Draghi, was much as expected, with the ECB choosing to maintain their record low interest rates at 0.05%. Despite mounting pressure on Draghi to form some kind of stimulus plan, there were no concrete announcements in that direction for the time being, though the President did reassert his commitment to take action when needed. In similarly stagnant European news, the Bank of England announced their intention to keep their borrowing rates at 0.5%, the level they have remained at since 2009, until at the earliest mid-2015. This, alongside the ECB news, lead to a stable afternoon in the major European markets, with the DAX maintaining just over 9300 after a lower opening this morning, and the FTSE hovering in the 6540s.

There were major third quarter announcements today, with AstraZeneca posting their quarter of revenue growth this morning, with Q3 revenue up 5% to $6.542 billion, up against the estimated $6.46bn. One of the key reasons given for this rise is the surprisingly strong sales for Nexium, a heartburn and ulcer medicine that, despite it losing its patent, has no generic competition in the market. Their fortunes look set to continue, with the announcements of European regulatory backing for an ovarian cancer medicine, the transition of Almirall's respiratory franchise to the company, and approval last week by the FDA for a two-in-one diabetes pill called Xigduo XR, a significant development for a market plagued by obesity. Importantly, AstraZeneca continued to grow in China, up 22%, as well as a general growth of 12% in emerging markets.

There was potentially bad news for the Big Four banks, as the Competition and Markets Authority declared its intention to investigate the stranglehold Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have on the UK’s banking landscape. These banks have a 77% monopoly of personal current accounts, and an 85% hold on small business bank, and despite multiple investigations over the last ten years, there has been no real change in these figures. The CMA intend to analyse the potentially damaging effects this lack of true banking competition has on the consumer.

The US markets are still benefitting from their recent fit of positivity. The Dow Jones opened at 0.09% higher at 17466, reaching highs of 17559.5. The dollar is slightly down against its 115.041 yen per dollar high, but is still holding strong at 114.552. The Bank of Japan’s stimulus package and the Feds’ announcement to end quantitative easing was joined yesterday by the Republican’s record sweep of House and Senate in the midterm elections. These three factors have been instrumental in strengthening of the Dow and dollar in the past two weeks. All eyes will be on Congress to see whether the recent promises by Obama, Boehner and McConnell to reach some kind of bi-partisan comprise will yield results. Tomorrow sees the announcement of the monthly non-farm employment change, with a forecast of 229k compared to last month’s actual figure of 248k. We shall see if this figure stalls the US market’s rampant run of good fortune.