Market Commentary: US job openings number highest since 2001

Europe

Following their biggest rally since April, the major European indices moved marginally into negative territory in yesterday’s trading. These moves came on the back of a drop in investor confidence in Germany. The EURO Stoxx50 ended its trading session at 3023.77, shedding -0.78% whilst the French CAC40 dropped by 0.85% to end the day at 4162.16. 

The German DAX recorded the highest losses, dropping over 1.20% to end its trading at 9069.47. Contrary to the other indices, the Spanish IBEX 35 managed to add value, increasing by just under half a percent ending at 10241.50

The gauge for German Investor Confidence has fallen for another month. This appears to have been affected by the Ukrainian crisis together with a slow-down in the euro-area recovery. The Investor Confidence gauge as calculated by the ZEW Center is intended to predict economic developments six months in advance. This slid to 8.6 in August from 27.1 in July. This drop was greater than 17, the drop which was expected by analysts.  

News from the Russia-Ukraine conflict may have also affected the markets. Reports have indicated that Russia has deployed trucks with humanitarian aid to pro-Russian rebels in Ukraine. However, there are increasing suspicions that these trucks may also be transporting weapons for these rebels. Ukraine has insisted that the trucks will only be accepted within the country if the trucks are fully examined by humanitarian aid groups; a process that may take a few days. 

US

Despite the positive data figures related to Job Openings in the US, the three major US indices traded marginally lower yesterday evening.  The closely followed S&P 500 ended the trading session at 1933.75 trimming off -0.16%. Similarly the Nasdaq closed 0.27% lower at 4389.25 whilst the Dow Jones Industrial ended the day 0.06% below its opening level, closing its session at 16560.54.

Reports have shown that the job openings number rose in June reaching the highest level since 2001. The number of openings made available rose by 94,000 to 4.67 million. 

An increase in such openings, together with fewer job redundancies and an increase in the number of people exiting their current job positions shows that the economic improvement is broadening. This may prompt the Fed to raise interest rates faster than previously expected.   

UK

UK stocks were unchanged yesterday as the FTSE 100 ending its trading session close to its opening level. The index closed at 6632.42, only -0.01% lower. Royal Dutch Shell PLC dropped 1%, offsetting gains recorded by Prudential PLC. Hargreaves Lansdown plc was also in on the act of offsetting the gains recorded as it dropped 2.9%.

Argentina

It has been reported that a group of international banks are looking to set up a team of investors which will buy disputed Argentine debt from holdout investors in order to resolve a US lawsuit. This will enable currently blocked interest payments to resume allowing the country to continue servicing its foreign debt.

This will be an opportunity to help the Argentinian government resume bond interest payments and regain access to overseas markets, increasing the value of its debt and earning good will which could lead to further underwriting business for the banks helping out.

Company News

Prudential PLC

The UK’s largest insurer by market cap has increased its profits in the first six months on its financial year. This was mainly propelled by business undertaken in the US as sales in individual annuities sold in Britain slumped. The company’s operating profit rose by 7% reaching £1.52 billion equivalent to $2.6 billion. This figure also beat analysts’ expectations of £1.47 billion. 

TATA Motors

India’s largest automaker share value rose the most since September as its financial results beat analysts’ expectations threefold. The shares increased by 6.2% to 474 Rupees. Deutsche Bank and Credit Suisse were among a number of brokerage houses which raised the price targets for the company. 

Peripheral Banks

The National Bank of Greece (NBG) added 4.9% to reach €2.37 whilst Piraeus Bank SA also added value as it increased 4.6% to €1.36.  The Italian bank Banca Popolare di Sondrio also saw significant increases. Its share price rose to €3.26, adding 3.7% whilst Banca Monte dei Paschi di Siena also saw a 3.3% increase in its share price, reaching €1.06.

Germany’s second largest lender Commerzbank AG climbed to €10.69 an increase of 2.4%. The gauge for banking stocks advanced the most amongst the 19 industry groups within the Stoxx 600.

This article was issued by Calamatta Cuschieri, visit www.cc.com.mt for more information.

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 & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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