Caution ahead of US election ARM and M amp S please the market

European markets have risen on another morning of thin trading volumes as investors sit on their hands, reluctant to make any big or bold moves in the lead up to the US presidential election. Polls have indicated that the race to the Whitehouse between President Obama and Mitt Romney is too close to call and therefore the risk of a change in policy in the world’s largest economy is keeping investors out of the market.

Additionally, continued uncertainty over a Greek Parliamentary vote tomorrow has done little to entice traders into the markets. The austerity measures need to be voted through the Greek Parliament in order to secure the next tranche of international aid. However, it is looking increasingly uncertain as to whether Prime Minister Samaras will actually achieve such a task, raising fears once again of a Greek eurozone exit. Greece has already been through several rounds of austerity, which have shrunk the economy by a fifth but so far still failed to actually get their finances into order. The euro is currently at a two-month low versus the dollar.

Across wider Europe, economic data released showed that the downturn in Europe deepened as the combined output in manufacturing and services was at the sharpest level since July 2009. Furthermore this downturn has now spread to the core economies of the Euro bloc, where the big four economies all saw falling output in October. Perhaps a sign that the contraction in Germany is gathering pace is particularly concerning given the important role that the powerhouse could play in stimulating growth in weaker economies across the eurozone.

Focusing on the UK markets, topping the leader board on the FTSE was ARM Holdings, up almost 5% in early trading after it revealed it is heading an industry consortium which will buy a number of patents from MIPS Technologies (a US semi conductor design company). The idea is for the patents to be jointly owned by several companies so as to reduce the number of patent infringement suits. ARM is now trading at £7.30 per share, up 57% from its low in July this year and up a staggering 629% since March 2009.

Also on the gainer board, Marks and Spencer’s pushed higher after its interim profits came in ahead of expectations and its total revenue was up 2.5% on the previous year. The strong revenue was driven mainly by a solid contribution from food sales and from international stores which saw sales rise 6.1%, however, they remain cautious about the outlook for the rest of the year as pressures on customers disposable income shows no signs of easing.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.