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ISEQ higher as US markets reopen

Wednesday, October 31 09:10:41

The ISEQ is slightly higher this morning at 3,262, up 6 points as European markets take heart from some positive earnings reports.

The US reopens today and sentiment is expected to be positive despite the destruction caused by Sandy according to Davy Stockbrokers:

With US markets closed for a second consecutive day, European markets made gains yesterday. The STOXX 50 closed up 1.5pc and the FTSE 100 up 0.95pc. Overnight, Asian markets bounced on an unusual joint statement from the Bank of Japan (BoJ) and the Japanese government, reconfirming their commitment to combating deflation.

The Nikkei 225 closed up 1.53pc and the Hang Seng up 0.41pc. This statement has been interpreted as a signal of further extraordinary policy measures in the coming quarters over and above yesterday's underwhelming easing of monetary policy by the BoJ. Yesterday, markets fell on the BoJ's latest asset purchases target, dubbed 'QE9', in which the bank increased the size of asset purchases by Yen 11 trillion to Yen 66 trillion. The bank also followed the Bank of England's lead in introducing a low-cost lending scheme, similar to the latter's 'Funding for Lending' scheme.

But with expected inflation of just 0.8pc this year, below the BOJ's 1pc target, allied to the negative market reaction, the joint BoJ-government statement has now raised expectations of extraordinary measures to stimulate demand in the coming quarters; however, the independence of the central bank has also been called into question.

Today European markets will focus on euro-zone CPI (October) and unemployment (September). CPI is expected to fall back to 2.5pc from 2.6pc as energy price pressures wane, but food prices may well have pushed up on the index in October. The unemployment rate is likely to have ticked up to 11.5pc from 11.4pc, with the outlook poor for the coming months given weak German labour market data yesterday according to Davy Stockbrokers.