Relieved investors return to markets | Calamatta Cuschieri

US stocks edged higher on Tuesday, with major indexes heading for a third straight gain, as tensions between the US and North Korea appeared to recede after Kim Jong-un pulled back on his threat to attack Guam. The Dow Jones Industrial Average rose 25 points, or 0.1%, at 22,016, while the S&P 500 index was up 1.4 point at 2,467, less than 0.1%, while the Nasdaq Composite Index was flat at 6,341.

The positive trading mood was also seen around the world, as European stocks continued to rise after the easing geopolitical tensions. The Stoxx Europe 600 index advanced 0.3% to 377.41, Germany’s DAX 30 index rose 0.3% to 12,199.18, while the UK’s FTSE 100 index climbed 0.1% to 7,362.91.

Air Berlin faces insolvency

Air Berlin Plc filed for insolvency after leading shareholder Etihad Airways PJSC withdrew its financial support, marking the second failure of a major European airline in four months. “Etihad has notified Air Berlin of the fact that it will not provide any further financial support,” the German carrier said in its statement, adding that the move has led it to conclude that there is “no longer a positive continuation prognosis.”

Etihad said that it withdrew funding after Air Berlin’s operations deteriorated at an “unprecedented pace” in recent months. Air Berlin has racked more than €2.7 billion of losses in a little over six years, and has net debt of 1.2 billion euros. Etihad bought a 29 percent stake in 2012 as part of a plan to feed more passengers through its Abu Dhabi hub, by building a network of minority investments, a strategy that it’s now unraveling itself after suffering losses of $1.87 billion in 2016.

US Retail

US retail sales recorded their biggest increase in seven months in July, as consumers boosted purchases of motor vehicles and lifted discretionary spending, suggesting the economy continued to gain momentum early in the third quarter. Economists had forecast retail sales increasing 0.4 percent in July. May's retail sales were revised to show no change instead of the previously reported 0.1 percent dip. Retail sales increased 4.2 percent in July on a year-on-year basis.

Consumer spending, which accounts for more than two-thirds of US economic activity, increased at a 2.8 percent annualised rate in the second quarter, that boosted GDP growth to a 2.6 percent rate in the April-June period. Retail sales for June and May were also revised higher, which should help to assuage concerns about consumer spending, but persistently sluggish wage growth has pushed Americans to dip into their savings to fund spending. Economists say wage growth has to pick up to sustain consumer spending.

Disclaimer:

This article was issued by Peter Petrov, Junior Trader 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.