European shares traded sideways in morning deals but they followed new highs in Asia and on Wall Street. As David Pollard reports, investors are expecting more positive news as corporates prepare to release their third quarter earnings.
Take-off time for Lufthansa as its shares post strong gains in Europe. The German carrier a top index performer on news it may get the first bite of assets of insolvent Air Berlin. Otherwise though the mood mostly grounded .... Europe for one day at least bucking the bullish trend elsewhere. (SOUNDBITE) (English) LCG SENIOR ANALYST, JASPER LAWLER, SAYING: "Just look at the Dow Jones and the S&P 500 just registering multiple record highs in the lead up to this earnings season. So it seems to be general confidence that earnings are going to continue to move higher." Helped, it seems - at least for energy stocks - by crude's 20 per cent rise in prices since June. A possible 80 per cent chance of a Fed rate hike by year end doing little to dampen enthusiasm either. SOUNDBITE (English) SWISSQUOTE BANK HEAD OF MARKET STRATEGY, PETER ROSENSTREICH, SAYING: "We're still talking about very loose monetary policy. And if you take a backdrop of good global growth, low inflation, supportive monetary policy it means that investors are willing to take a lot of risk." Europe ready for risk too - it could outstrip US earnings growth. 5.3 per cent pencilled for STOXX 600 numbers - a full percentage point ahead of S&P 500 estimates. As for sectors: banks are described as an 'easy bet' by some. Others may look to another type of risk, to cash in. SOUNDBITE (English) SWISSQUOTE BANK HEAD OF MARKET STRATEGY, PETER ROSENSTREICH, SAYING: "The world has become significantly more unstable with a US Donald Trump presidency ... So we suspect that the military or defense sector will improve enormously. Things like Lockheed Martin, Boeing." On the day, a stronger euro was blamed for taking the edge off appetite in Europe. Traders nervous about its impact on exporters. But after multiple index highs in Asia, Samsung is to report on Friday. A record set of results expected - that many hope will be a taste of the earnings to come.