By James Langton
(October 19 – 09:00 EST) – Stocks look set to rally. In the U.S. the CPI number came in exactly as expected, and traders immediately began throwing off much of the inflation fear they had acquired over the past week or so. The CPI came in up 0.4% for September, in line with expectations, and 0.3% on the core rate. S&P futures popped up 10 points or so.
A much higher number than expected would likely have slaughtered stocks, and that has kept traders cautious in anticipation. These numbers seem to confirm that inflation is subdued in the U.S. economy. It was also reported that housing starts slipped 3.2%. Look for a rally on the news.
In Europe stocks were already up before the CPI release, thanks to a couple of big mergers. Banco Bilbao Vizcaya SA is said to be buying Argentaria SA for US$11.5 billion,a deal that would create Spain’s second-biggest bank. This has financials up. There is also a big deal in the telecom area – Mannesmann AG, Germany’s biggest cell phone firm, is talking with U.K. cell phone provider, Orange PLC, about a possible deal. As a result the FTSE 100 is up about 30 points. The German DAX is up more than 30 points, as is the CAC 40 in Paris.
Overnight in Asia, traders focused on the U.S. CPI. That knocked their markets back a bit. The Nikkei closed down 21 in Japan, and the Hang Seng was off by 165 points.
In other business news Air Canada is expected to announce its alternative to the Onex bid at 10:30 EST in Montreal. It is expected to offer a plan that also includes Canadian Airlines Corp. and its international partners, such as United Airlines and SAS.
Blue chip giant Suncor Inc. is reporting improved third quarter earnings – 61¢ per share up from 44¢ per share in the quarter last year, although through the first nine months of 1999, earnings are down to $1 per share from $1.31 in 1998.