Abe poised for snap election, British stocks perform well

After yesterday’s shock recession slide, the Nikkei rallied to open at 17222.5 and close at 17412.5. This comes as the world expects Prime Minister Shinzo Abe to finally announce the delay of the sales tax rise, and more importantly, a snap election that, if called, should occur in December.

Despite the Nikkei’s rally, the yen is still suffering against the dollar, with the USD/JPY resiliently hovering at the 116.5 mark. The murmurs last week that the dollar could reach 120 seem premature in the face of its slow crawl up the charts, but the prospect of significant news out of Japan could see more movement between the currencies.

In the US, the Dow continued to reach its record highs in an increasingly smaller fashion. It closed last night at 17650.5, only 8.5 points higher than the day before. It appears that the weak figures coming from key world players like Germany and Japan, as well as its own recent run of disappointing reports, are beginning to take their toll on the Dow. Whilst it is still hitting record highs, it is looking more and more likely that this run is losing steam. As has been the trend recently, the Dow’s tenacity will be judged against the figures coming from the US today, with the NAHB housing market index, month by month PPI and announcements from the Federal Reserve all arrive this afternoon.

It has been a big morning for British stocks, with earnings releases from EasyJet, Prudential and UK Mail Group, as well as the ongoing saga of Salamander Energy. The budget airline announced a 21.5% rise in yearly pre-tax profits, up to £581 million, after an increase in passenger numbers. Much like Virgin America’s IPO last week, EasyJet will also be benefitting from the 4 year low oil prices that have been a constant feature of the financial landscape of the past few weeks. However, despite these positive figures, EasyJet’s shares fell 2% to 1511, perhaps due to the 2.5% rise in cost per seat EasyJet mentioned in their release.

UK Mail Group’s pre-tax profits more than halved to £4.9 million from £11.9 million in the same period last year, but its reassurance that it had been a ‘satisfactory six months’ led to a minor bump for their shares of 0.2%. Insurer Prudential had their new business profit rise to £1.5 billion form £1.4 billion last year, providing a 0.4% boost on the markets, with shares trading at 1480.75. However it was more bad news for Salamander Energy, as CEPSA, the leader of a Spanish consortium that was reported last week was considering a bid for the oil and gas explorers announced this morning that they were no longer interested in the company, causing Salamander stock prices to plummet 17% to 90.1.

With the FTSE boosted by Draghi’s comments and an overall strong performance from British stocks, the market reached a 7 week high of 6697.7 after opening at 6676.7. The yearly consumer price index came in slightly higher than expected at 1.3, with the retail index price remaining flat at 1.3%, and the PPI input falling to -1.5 from -1.4 last month. The FTSE’s reaction to these figures was positive, remaining at around 6687 after the news.

Finally, after ECB’s comments yesterday, the DAX opened at 9316, up 3 points on yesterday’s close of 9313. Europe will look ahead to the ZEW economic sentiments for both Germany and the Eurozone alike, with the former forecast to be 0.9, up from last month’s dismal -3.6, whilst the latter is predicted to come in at 4.3, slightly up from the previous month’s 4.1. Europe will be desperately hoping for these figures to be positive in order to combat the consistently dismal numbers that are leaking from the continent.