Markets Set to Rise on QE3

Strong gains are expected today as the latest round of quantitative easing boosts investor confidence.

Roland Head
Roland Head
Sep 14, 2012 at 12:00AM

LONDON -- The Dow Jones Industrial Average (INDEX: ^DJI) and the S&P 500 (INDEX: ^GSPC) may open higher this morning as yesterday's QE3 surge looks set to continue. At 7 a.m. EDT, futures markets were pricing in an opening gain of more than 0.4% for both markets.

Today's economic data will include a raft of data from August, starting at 8:30 a.m. EDT with retail sales, which are expected to remain flat at 0.8%. Also at 8:30 a.m. EDT, the Consumer Price Index is expected to be 0.7%, up from 0% in July, while at 9:15 a.m. EDT, industrial production is expected to show a 0.3% drop after July's 0.6% gain. At 9:55 a.m. EDT, the latest University of Michigan Consumer Sentiment Index is expected to show a slight drop from 74.3 to 74, and then at 10 a.m. EDT, July's business inventories are due, with analysts expecting a 0.4% rise after a gain of 0.1% in June.

Companies that could be actively traded include Home Depot, which announced this morning that it will close its remaining big box stores in China, cutting 850 jobs. Also in focus is office superstore Staples, which is currently the subject of private-equity buyout talks, according to a report in Fortune. Analogic shares could also be in demand after a strong quarterly revenue report lifted the shares 9% in after-hours trading last night.

European markets
European markets were just as pleased as U.S. markets by the Fed's bond-buying announcement yesterday. All the main markets rose strongly this morning, despite reports in the Dutch newspaper Het Financieele Dagblad that Spain is in the advanced stages of negotiating a 300 billion euro bailout.

At 7 a.m. EDT, the DAX was up by 1.5%, the CAC was up by 2.1%, the FTSE MIB was up by 2.3%, and the IBEX was up by 2.9%. In London, the FTSE 100 (INDEX: ^FTSE) was up by 1.5%, with miners leading the way with massive gains. Vedanta Resources and Kazakhmys were both up by more than 12%, while giants Anglo American and Rio Tinto were both 6% higher.

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