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

<p>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 […]</p>

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.


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