US stocks look to catch breath after QE-fuelled rally

After a strong QE-fuelled rally yesterday US stocks are looking to make a more sedate start today, with the death of Saudi Arabia’s King Abdullah and its implication for Saudi oil policy a major focus early on.

Late morning futures were indicating the Dow Jones would kick off around 40 points higher at 17,775, with the S&P 500 up a couple of points. Yesterday the Dow finished the session 260 points, or 1.5%, stronger at 17, 813

Investors watch Saudi oil strategy post-King Abdullah

As with European markets this morning, New York early on will be looking to assess the implications of news that Saudi Arabia’s King Abdullah has died. Investors are especially keen on knowing if there will be a change of Saudi oil strategy under the new king, Salman bin Abdul-Aziz Al Saud.

King Abdullah was widely regarded as the prime mover behind Opec’s strategy of not cutting oil production to drive smaller players, including many US shale companies, out of business

Oil prices rose in the wake of the news King Abdullah’s death. Midday Brent crude was up 1.8% to $49.38.

Eurozone QE means economics takes a back seat

Economic concerns have preoccupied investors recently, but now that the European Central Bank has committed to the €1trn ‘big bazooka’, they are likely to play a smaller role, at least for the duration of the ECB’s bond buying.

Jasper Lawler, analyst at CMC Markets, says: “QE means risky assets will again be the flavour of the month, especially if oil prices come close to a bottom. That could lead to an end to the recent sideways action in equity markets.”

Lawler reckons the ECB bond purchases are a possible game-changer for the relative valuations of European versus American assets. In this respect, the outlook for US markets may now not be as rosy as those in Europe. “Valuations are more attractive in Europe and though the European economy is going down the tubes, European corporations now not only have record low borrowing rates to use but central bank liquidity flowing into their equities.”

Read this article by Moneyweek editor John Stepek to find out how you can cash in the eurozone bonanza.

Big Mac for breakfast?

Before the opening bell, McDonalds, General Electric and the Bank of New York Mellon will be in focus as they enlighten on fourth-quarter performance.

Starbucks is set to be a winner today after declaring impressive fourth quarter numbers after hours yesterday. In pre-market trade this morning its shares were up 4.75%.

Bloomberg notes that of the 82 companies that have reported quarterly earnings so far, 79% have topped projections.

More cyberbarrassment for Sony

The technology and entertainment giant is postponing the release of its third quarter results because of the cyberattack it suffered last year. Sony is reported to be bracing itself for more embarrassment as the hackers prepare to release more of emails.

Reports say executives at Sony Music are especially jittery about details of salaries and artists’ contracts and performance riders being released by hackers Guardians of the Peace. Artists signed to Sony labels include Beyoncé, David Bowie and Adele.

Merryn

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