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Reports

US stock market, economy and companies update (October 20, 2014)

October 20, 2014, Monday
 The S&P500 and Nasdaq are seeing modest gains this morning after a wild week, while the DJIA is being weight down by the 8% slide in IBM shares. As of writing, the DJIA is down 0.28%, the S&P500 is up 0.29% and the Nasdaq is up 0.65%. All has been quiet on the Ebola front for the last two days, with no new cases reported in the US and dozens of people released from the watch list in Dallas.

European stock market, economy and companies update (October 20, 2014)

October 20, 2014, Monday
France Econ Min Macron: Confident that EU Commission would not reject Paris's 2015 budget although it breaks EU deficit limits. EU not likely to reject Italy's budget plan but look for clarification. Germany Econ Min Gabriel: To spend more on infrastructure investments without raising debt. ESM's Regling: Greece is in a different position than Ireland and Portugal in terms of exit measures.

UK stock market morning note (October 20, 2014)

October 20, 2014, Monday
 The FTSE 100 is called to open higher this morning following Friday's performance on Wall Street and overnight in Asia on the comments by the Federal Reserve and the Bank of England of the possibility of QE being extended and lower interest rates for longer. There is no major economic data due for release today and it is also a quieter start to the week for major corporate news.

UK stock market commentary (October 20, 2014): Sometimes you just need a good sell off

October 20, 2014, Monday
 European equities are set to open higher this morning as the positive momentum from Friday continues. There’s been no especially positive headlines out over the weekend, and the same storm clods of euro zone recession, ebola, the end of loose monetary policy or whatever anyone else was putting last weeks selloff down to, still hangs over the markets. However, such a steep and rapid move lower seems to have quelled the markets need correct.

Asian stock market, economy and companies update (October 20, 2014)

October 20, 2014, Monday
After falling some 5% last week, the Nikkei225 is leading regional bourses to the upside with an over 3% jump. Along with an impressive rebound on Wall St on Friday and weaker JPY, traders are reacting to a Nikkei report speculating the pension fund GPIF will increase its portfolio allocation for domestic stocks to 25% (from current midpoint of 12%) in a move as early as this month. A note from ANZ suggests the report will help reverse the recent strength in JPY, and indeed the USD/JPY pair is up for the 3rd consecutive session with a 50pip rise above ¥107.30.

Malaysia stock market and companies daily report (October 20, 2014)

October 20, 2014, Monday
 RHB Research has maintained its ‘Buy’ call on Datasonic Group with a reduced target price of RM2.10 based on an unchanged 25 times FY16F price to earnings. CIMB Equities Research has maintained its assumptions that Muhibbah Engineering may secure RM600 million infrastructure job wins for FY14 and RM1 billion for FY15, driven by domestic oil & gas infrastructure. JF Apex Securities said that investors could flock to telecommunication companies’ (telco) stocks in the current market slump, due to the sector’s defensive nature and stable dividends.

News

    Global Worries (And Some Benefits)

    14 October 2014
    In the latest update of its World Economic Outlook, the IMF revised lower its expectations of global growth in 2014 and 2015. None of that should have surprised anyone. At this point, the IMF expects that European GDP will be relatively weak in 2014 (+0.8% 4Q14/4Q13) and should improve in 2015 (+1.6% 4Q15/4Q14). However, risks are weighted predominately to the downside. Weaker European growth and a stronger dollar will have a significant impact on many U.S. firms, but may have some benefits for the economy as a whole.

    Looking Back, Looking Ahead

    30 September 2014
    Real GDP is now estimated to have risen at a 4.6% annual rate in 2Q14. However, the second quarter’s strength must be balanced against the first quarter’s weakness (a -2.1% pace). As the third quarter ends, we still don’t have a complete picture. However, figures are likely to suggest a moderately strong pace of growth and a gradual taking up of economic slack.

    The Dots

    23 September 2014
    As was widely anticipated, Federal Reserve policymakers reduced the monthly pace of asset purchases by another $10 billion and kept the “considerable time” language. Fed policymakers revised slightly their forecasts of growth, unemployment, and inflation. However, the really interesting item in the Fed’s Summary of Economic Projections was the dot plot, the projections of the appropriate year-end level of the federal funds rate for each of the next few years. There is a huge range of uncertainty among Fed officials.

    Mind Your Language!

    16 September 2014
    The Federal Open Market Committee is widely expected to take another trip to Taper Town on Wednesday, reducing the monthly pace of asset purchases by another $10 billion, one step closer to ending the program in late October. The more interesting issue is whether we’ll see any change in the Fed’s forward guidance on short-term interest rates – specifically, whether the FOMC will jettison the “considerable time” language.

    As The World Turns ...

    9 September 2014
    U.S. economic data were mixed last week, but there was nothing in the August Employment Report to suggest that growth is slowing down. A surprise move from the European Central Bank pushed the euro lower, but there appears to be a lot more that the ECB can do. Attention will soon turn to the Fed’s September 16-17 policy meeting, where another $10 billion taper in the monthly pace of asset purchases is factored in. The Scottish Independence Referendum (September 18) has generated more suspense than was anticipated.

    Forex

Global Outlook

Turkey's Position on ISIL Misunderstood

October 20, 2014, Monday
As territory in the Middle East falls under control of the brutal fanatics of ISIL, many Americans may be wondering how this could happen in the backyard of major U.S. allies. In particular, frustration with Turkey's reluctance to move against ISIL, even as it massacres civilians and creates instability on the Turkish border, is growing rapidly. Turkey's political calculation with respect to the crisis reveals just how complex and intractable the crisis may become.

Governments Need Inflation, Economies Don't

October 20, 2014, Monday
In an article in the UK's Telegraph on October 10, veteran economic correspondent Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that inflation is all, and always, about debt management.

The Right Question

October 14, 2014, Tuesday
In this business it has been said, “Sometimes knowing the right question is more important than actually knowing the answer.” Over the years I have found that old Wall Street axiom to serve me well. One example would be reading the footnotes in a company’s annual report. My father taught me that trick years ago along with reading the auditor’s statement. Verily, the first thing I do when opening an annual report is to read the two aforementioned items first.

The 10 Biggest Energy Company Bankruptcies

October 14, 2014, Tuesday
Running a multi-billion dollar energy company isn't easy. Just ask the executives in the corner suites of some of the energy companies that have gone bust over the years. Some, like Enron, were brought down because of insider malfeasance. A few, like ATP, blamed damaging government policies, while others went off the rails due to market forces that left the company and its shareholders flat-footed, deep in debt, and eventually broke.

Recommendations

Market Strategy - Diwali Special (October 2014)

October 20, 2014, Monday
Markets have witnessed a strong rally in the last eight months, which has so far been aided by the deeply beaten down valuations. Going ahead, we believe that acceleration in earnings growth will drive the markets forward. We expect the performance of various domestic cyclical sectors to continue improving going forward on the back of the improving economy and policy environment.

TCS 2QFY2015 performance highlights and results update

October 20, 2014, Monday
For 2QFY2015, TCS posted a 6.4% sequential growth in USD revenues to US$3,929mn V/s an expected US$3,859mn, with volume growth of 6.1% qoq. In constant currency (CC) terms the company posted a 7.4% qoq growth in revenue, of which organic growth during the period was 4.6% qoq (in constant currency terms). The EBITDA margin came in at 28.7%, lower than an expected 30.2%, posting a dip of ~6bp qoq.