Hargreaves Lansdown shines whilst markets await a catalyst for their next move

European markets remained in the red and range-bound for most of the final trading session of the week. Ahead of expectations, results from JP Morgan Chase and better than expected US consumer confidence figures did little to inspire this side of the Atlantic where markets were looking for a catalyst for their next move. Even news that the European Union won the Nobel Peace Prize failed to inject a sparkle.

JP Morgan Chase kicked off the reporting season for banks in the US with better than expected third quarter results, with profits rising 34% to $1.40 a share, up from $1.02 a share. Despite this news the stock did open slightly down. Wells Fargo lost over 3% after results showed it was short on revenue, despite profits jumping 22%.

Banks were also the focus here in Europe as Deutsche Bank lifted the sector to overweight from neutral. Standard Chartered gained 2.7% and Lloyds 1.6% on the back of this. However it was Hargreaves Lansdown that topped the gainer board after it announced a ‘pleasing start’ to its new financial year with assets under administration and client numbers at record levels in July – September (traditionally the quiet period).

Mining stocks added pressure to the FTSE 100 as Credit Suisse cut its price target for companies in the metals and mining sector and also reduced its 2013 EPS for most by 15% – 40%. Slowdown in demand from China, falling margins and returns and weak cash flows are obstacles which they will need to overcome. Kazakhmys and Antofagasta both shed over 3% during the course of the trading day.

The weekend sees the continuation of the IMF, World Bank meeting in Tokyo. Yesterday the IMF urged Europe to slow the pace of the deep budget cuts, this stance received strong criticism from Germany’s finance minister. However, today both Christine Lagarde and Wolfgang Schauble put on a united front, playing down tensions and calming the markets.

With little domestic economic data captivating investor interest, attention is focused on the US Consumer Sentiment figure, which rose to its highest level in five years. This new buoyancy comes as the US unemployment rate (yesterday) also fell to its lowest level in four years. This improved confidence should in turn filter through to consumer spending and consequently help to support the economic recovery. This is good news for Obama as he enters the final three weeks before the election, but also indicates that risk appetite could be returning for longer term investors.