A quiet festive day, except for the world’s oldest bank | Calamatta Cuschieri

In Europe, Tuesday was a quiet day except for the fact that bank shares were amongst the worst performers. The Stoxx Europe 600 Banks Index fell 0.2% after the European Central Bank (ECB) expressed fresh concerns on the future of the Italian Bank Monte Dei Paschi Di Siena.

On Wall Street, the U.S. markets traded in the green as investors remained positive ahead of several economic data reports. Market watchers kept their focus on the U.S. consumer confidence report and the U.S. home prices report. Overall market investment incentives were higher in the last few days of the year, continuing the upward trend since President-elect Donald Trump’s victory in November elections. The Dow Jones Industrial Index added 0.16% at the open whilst the S&P 500 opened 0.28% higher.

Oil Market leant slightly on the positive side today, despite the fact that the dollar held near the strongest point in 14 years. Meanwhile, investment incentives were also higher as market watchers continued to await the Organization of the Petroleum Exporting Countries (OPEC) output cut deal implementation. The deal, foreseen to come into force on 1st January 2017, will lower the global output, by as much as 1.8 million barrels per day.

Soaring Costs for Monte Dei Paschi Di Siena

The Italian bank Monte Dei Paschi Di Siena is expecting a bailout offer by the Italian Government of around €6.5bn, after the cost of saving the world’s oldest bank spiked to €8.8bn. The ECB informed the lender that the hole in the balance sheet had grown well out of the estimated €5bn previously estimated. This was a result of a ‘rapid deterioration’ in the bank’s liquidity over the past month.

Meanwhile, the subordinated bonds held by the bank’s institutional investors are expected to be converted to shares in order to raise additional funding around €2bn to €2.3bn. This extra stress comes after the bank failed to raise €5bn through a complex deal with private investors last week.

Dunlop Trademark changing hands

The online sports retailer Sports Direct is selling Dunlop, known for its green flash tennis shoes, to a Japanese buyer in a surprise £112 million deal. Sumitomo Rubber Industries confirmed it would acquire the trademark rights of the Dunlop brand overseas as well as its sporting goods and licensing businesses.

Sports Direct founder Mike Ashley acquired Dunlop Slazenger for an estimated £40 million from Royal bank of Scotland – which had taken control of the struggling business from its private-equity backed owners. The company has had a difficult 2016, with weak trading compounded by criticism of its working practices. In December, the retailer revealed that profits more than halved to £71.6million in the six months to 23 October.

This article was issued by Rodrick Duca, 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.