Market Commentary | What Goes Up…

Must come down, for some time at least. Global markets fell victim to the laws of gravity as most bourses pulled back from recently hit multi-week and multi-month highs. Bond prices also fell, while commodities and precious metals were supported.

In Europe, Swiss elevator firm Schindler fell after it revised revenue growth for the year lower due to increasing uncertainty in the Chinese and Brazil markets. The stock was the biggest faller on the day on the Stoxx 600. Notable risers in Europe include gas-supplier Linde who surged over 11% over confirmed talks with US-based Praxair Inc.

Most mining stocks also out-performed, with Antofagasta taking the crown for the day with an increase of over 9% in its share price. Glencore came in a distant 2nd with a 2.3% rise, and BHP Billiton also managed to end the day higher despite the worst corporate results since its formation in 2001. The Anglo-Australian mining giant – the world’s biggest – reported a loss of €6.4 billion. CEO Andrew Mackenzie said that, while the company is “clearly really disappointed”, another measure of performance – EBITDA – “remained healthy” at $12.3 billion.

US Treasury bulls were not the happiest as data released in the US and prominent Federal Reserve speakers seemed to point an earlier-than-expected interest rate hike in the US. The latest data on housing starts and industrial production showed that momentum has swung back towards growth. New York Fed President William Dudley went as far as saying the Fed could raise rates as early as September, and that the market is not pricing the odds of a rate hike correctly, although he was also quick to add that any tightening would have to be gradual. By the Fed’s own rules, inflation is still somewhat low, and the latest reading was the weakest since February.

Stocks were unsurprisingly lower on the back of these developments, with US indices following their European counterpart’s lower. The notable riser was Chesapeake Energy, up over 15% after news of a debt buy-back.

In the currency space, the yen hit a one-month high against the US dollar. The greenback retreated against almost all of its peers. Closer to home, EUR/GBP hit a 3-year intraday high… time to book that UK holiday perhaps?

Disclaimer:

This article was issued by Andrew Martinelli, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, views and opinions provided in this article are 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.