Equities
EUROPE: We expect the European markets to open 1.3% higher Wednesday. The US stock indices gained more than 1.5% after close and the S&P future is currently trading flat. US financials rebounded 4.74% after the close in Europe and we believe that the banks will lead the gains in Europe as well. Market volatility is very high and the movements depend on the rumours at large. Monday’s speculations about Fannie Mae and Freddie Mac were rejected after a regulator said the mortgage-finance companies shouldn’t have to raise more capital. We recommend buying Bank of Ireland, Royal Bank of Scotland and Deutsche Bank.
GERMANY: German financials are expected to benefit from the general European trend. We expect UBS, Commerzbank and Hypo Real Estate to outperform companies such as Deutsche Postbank. US parcel service companies gained yesterday on the back of the oil price drop. We expect Deutsche Post can benefit from this trend as well. Actelion, Switzerland’s biggest biotechnology company, is being added to the country’s benchmark SMI Index on Sept. 22, the SWX Swiss Exchange said.
US: U.S. stocks rallied the most in a month, led by banks and transportation companies, after JPMorgan Chase & Co.’s CEO said credit market losses will ease and oil posted its biggest drop since March. Bank of America Corp. advanced the most since 1990, leading financial shares to their best gain in more than three months, after JPMorgan’s Jamie Dimon said buyers are returning to some types of mortgage products.
ASIA: Asian stocks rose the most in almost three months, led by banks and industrial companies, after JPMorgan Chase & Co.’s CEO said that credit market losses will ease and oil prices had their biggest drop since March. Macquarie Group led a rebound among financial stocks, which yesterday traded at their cheapest in at least a decade. Korean Air Lines climbed for the first time in 12 days as crude tumbled more than USD 5 per barrel. Komatsu Ltd., the world’s second-largest producer of earthmovers, gained in Tokyo after Japan’s machinery orders rose more than economists forecast.