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Wall Street started positively this week, with the Dow Jones Industrial Average hitting a six-year high on Tuesday, on the back of energy stocks and strong earnings reports. In Japan stocks also rose sharply, with exporters boosted by a weaker yen and domestically focused stocks rising on economic optimism.
By mid-week, European equity markets moved lower as high crude oil prices weighed on investor sentiment. London equities were also dragged lower thanks to weakness in copper producers and media stocks, as BSkyB reported slower subscriber growth. But Asian stocks were driven higher, continuing the commodity boom that has lifted industrial metals and oil prices back toward fresh highs. Hong Kong’s Hang Seng index rose to more than the 17,000 level for the first time since September 2000, led by financial stocks and oil major CNOOC, China’s largest offshore oil producer and the Hang Seng’s fourth-largest constituent.
In New York, the Dow Jones Industrial Average fell after Proctor & Gamble’s profit forecasts for the fiscal fourth quarter disappointed investors. Energy companies were also weaker as crude prices retreated after an unexpected recovery in gasoline stocks.
On Thursday, the London market recovered its poise after Tuesday’s big sell-off with ICI leading the recovery after first-quarter results impressed, while property stocks were in demand after Hammerson revealed plans to adopt a REIT structure.
US stocks also gained as a drop in crude oil, along with strong earnings from the retail sector offset economic data that had raised fresh interest rate fears. Unit-labour costs – an indicator of inflationary pressure – showed a bigger than forecast increase in the first quarter, adding to speculation that the US Federal Reserve, chaired by Ben Bernanke, would continue to raise interest rates. However, data also showed an increase in productivity.
European equity markets extended their initial gains by mid morning on Friday at the end of a busy week for corporate earnings. Alliance & Leicester jumped 8.9 per cent to £12.22 after a newspaper reports that Banco Santander of Spain is in exclusive talks to buy the UK banking group for £6.5bn.
This article was compiled by Valletta Fund Management Limited, a member of the BOV Group. Valletta Fund Management, The Mall Offices, Level 6, The Mall, Floriana VLT 16. Freephone: 80072344. E-mail: infovfm@vfm.com.mt. Website: www.vfm.com.mt Valletta Fund Management Limited is licensed by the MFSA.
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