Market commentary: Global stocks continue recovery

European stocks opened stronger in a third back to back session, despite some weakness in China, with all European indices north of 1 percent. Investors have seemingly looked past concerns over global growth which dominated the start to the year, igniting a rebound in most asset classes.

Yesterday in the US session, the NASDAQ was the best performer, up 2.27 percent while WTI Crude has remained trading around the USD 29 mark.

The European session was positively impacted by positive earnings announcements from companies including Credit Agricole SA and Schneider Electric SE, which beat analyst expectations.

In credit, European sovereigns are trading marginally tighter along with broader investment grade credit while high yield credit is also trading tighter, with the iTraxx Crossover Spread down 8.38 points to 447.38, extending its recent positive momentum. The communications sector is leading, with increases in the price of bonds of companies such as Portugal Telecom, Oi Brasil and Telemar Norte Leste SA.

Chatter around the market is based upon speculation whether this rebound is set to last or whether it is a momentary relief rally. Central bank continue to attempt to calm global markets this year amid unprecedented volatility.

Looking ahead, minutes of the Federal Reserve’s most recent meeting are due Wednesday. Officials indicated they were monitoring the turmoil in markets, with Chair Janet Yellen, subsequently indicating the global disruptions may delay further tightening of U.S. monetary policy.

In some interesting equity news, Apple Inc. rejected a court order to help the Justice Department unlock an iPhone used by one of the shooters in a terrorist attack in California, accusing the U.S. government of “overreach” that will set a dangerous precedent. The request highlights the mounting tension between the government and technology companies over access to encrypted content. Companies including Apple have resisted pleas from law enforcement for wider access, worried about angering customers by exposing their private data.

In other news, Airbus Group SE plans to offer airlines an update by the Farnborough Air Show in July on its potential plans to come out with a bigger variant of the A350 wide-body jetliner so it can better challenge the order success of Boeing Co.’s enlarged 777X. The Aerospace sector has been positively affected by the upsurge in air travel as well as the sharp drop in oil prices, making the sector an interesting investment prospect.

This article was issued by Simon Psaila, Treasury officer at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.