Market commentary: Markets trade flat on little activity

Generally the saying goes that “no news is good news”, however in this case it merely translated into very little volatility as yesterday’s session was largely unchanged in most financial markets. The S&P 500 closed up 0.08%, briefly passing its record closing high intra-day before retracing gains into the close.

It seemed that the energy sector was the Achilles heel, as the recent commodity rout continued quietly in the background. WTI was trading 1.45% down, and dipped below $50 at one stage for the first time in over 3 months. Gold fell 3.32%, hitting five-year lows, affecting the likes of Newmont Mining and Anglogold, with Barrick Gold, the world’s largest producer crashing 16% lower to levels not witnessed since the early 90s.

In Europe we saw the Stoxx 600 up 0.28%, the German DAX up 0.53% and the French CAC up 0.35%. Europe credit markets also ended a touch better with Crossover 5bps tighter at the close.

This morning European stocks slid as a decline in health- care shares outweighed gains in auto companies and commodity producers. Novartis AG fell 2.3 percent after reporting lower sales, dragging a measure of health-related companies to the worst performance of the 19 industry groups on the Stoxx Europe 600 Index. Automakers rose the most on the equity gauge, with Faurecia SA adding 2.1 percent after people familiar with the matter said Europe’s biggest maker of car interiors is exploring a sale of its bumpers business.

The Stoxx 600 was trading largely flat and on low volume, with shares changing hands 24 percent lower than the 30-day average. A nine-day winning streak pushed the equity gauge to within 2 percent of its record as Greece and its creditors reached an agreement paving the way for a new bailout and the European Central Bank increased emergency liquidity assistance. The nation reopened its banks yesterday after a three-week shutdown. The Athens Stock Exchange remains closed.

The Euro Stoxx 50 Index rebounded 12 percent through Monday from a five-month low as concern eased that Greece would leave the currency region. That’s led to a record 43 percent slump in a gauge tracking equity-price swings in the past eight days, signaling calmer markets for investors who turn their focus toward earnings.

French distiller Remy Cointreau SA slipped 2.3 percent after posting sales that missed analyst estimates, while Tele2 AB dropped 2.7 percent after profit fell short of projections. Zalando SE retreated 5.4 percent after the German online fashion retailer indicated that second-quarter earnings may have declined because of higher costs. EasyJet slipped 1.3 percent after Commerzbank AG reiterated its sell recommendation on the carrier, while also downgrading shares of some European peers amid increasing capacity and falling demand.

Commodity producers rebounded after two days of declines, led by gains of at least 2.4 percent in Outokumpu OYJ and Fresnillo Plc. Norsk Hydro ASA advanced 1.5 percent after second-quarter underlying net income beat estimates.

It’s set to be another quiet day ahead for data, with corporate earnings likely to retain much of the focus as Apple, Microsoft and Verizon are the prominent names who are left to report.

This article was issued by Simon Psaila, Trader/ Analyst 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 & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.