Market roundup: US dollar down, bonds up with gold | Calamatta Cuschieri

European markets closed Thursday on a flat note, barely influenced by the economic data published in the morning. In the Euro-area factory prices increased by 0.1% year on year in November, whilst the United Kingdom’s service sector reported stronger growth in December. The German DAX and the French CAC 40 finished the day in the green, whilst the Euro Stoxx 50 ended lower with the banking sector as the main culprit.

On Wall Street, US markets fluctuated after the announcement of discouraging US non-farm payrolls figures. US initial jobless claims for the week ending 31 December fell by 28,000 to 235,000 from the previous week’s revised level of 263,000. The Dow Jones Industrial average retreated from the closely watched 20,000 level. This marks 96 straight weeks of initial claims remaining below 300,000, the longest streak since 1970.

In the bonds area, prices were on the upper side, as markets digested the minutes from the US Federal Reserve, December meeting. The yield on the 10-year US Treasury note fell, as higher inflation would lead to less return to bondholders. This has led banks to losses, as lower bond yields would mean lower interest rates and reduced profits from loans.

Gold was in the green area, surpassing the four-week high and reaching its highest value since 28 November. The yellow metal was up tracking a weaker US dollar, in which the commodity is denominated, but also by higher physical demand in China and India, which are the biggest consumers of gold.

Corporates corner

Stanley Black and Decker announced it would buy the retailer Sears Holdings’ Craftsman tool brand for $900 million, strengthening its portfolio of hand and power tools. The acquisition makes Black and Decker much stronger after concluding the purchase of Newell Brands for $1.95 billion in October, adding Irwin and Lenox to its line-up.

Sears struggled to remain with a good business view. The Craftsman sale is part of a larger and broader business strategy, which is essential to boost its liquidity. Other plans include the closure of one hundred and fifty unprofitable Sears and Kmart Stores. Stanley black and Decker will have the right to make and sell Craftsman branded product in non-Sears stores. Sears shares traded in the green today.

The technology information and analysis company Gartner is set to buy advisory company CEB for $2.6 billion in cash and in a new additional debt financing. This will bring the firm under full control of Gartner, with Gartner shareholders owning approx. 91% of the combined company. CEB shares jumped around 21.1%, while Gartner gave up around 8.6 percent.

This article was issued by Rodrick Duca, Investment Manager 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.