Market commentary: An energetic start for European markets

European markets started the week off confidently, as a positive trend set in Asia and a rally in oil and metal prices calmed investor nerves after the recent commodity rout. Oil was the driver behind the bulk of the gains for stock futures on Monday, helping lift European energy companies and offset concerns about Britain’s potential exit from the European Union.

Mining stocks were among the best performers of the day, with Anglo American enjoying a 9% rise as the price of copper reached a two-week high. Both crude and Brent also posted solid gains, as prices were up 6.68% and 5% respectively.

This was good news for all markets worldwide. Similarly to Europe, it was also a good start to the week in America. Investors continued to load up on some of the year’s worst performers, with banks up for the fifth time in six days as Bank of America and Wells Fargo & Co increasing at least 2.1%. In the UK, the FTSE 100 climbed 1.47% to 6,037.93 regardless of the current political turmoil. Elsewhere, Germany’s DAX 30 rose 1.98% to 9,576.33 and France’s CAC 40 gained 1.79% to 4,298.70.

Despite the positive backdrop, sterling hit a seven-year low on Monday as it slipped to £1.4150 from £1.4405 against the dollar. This marked the biggest decline since March 2009, leaving the global community pondering what a British exit from the EU would mean for a number of markets.

Meanwhile, HSBC faced a rough start to the week, after the bank posted an unexpected loss during the fourth quarter. This loss was the first since 2009, and is said to have been the result of a fall in revenues, and loans to oil and gas companies, causing a jump in impairment charges. This news resulted in HSBC shares skidding 3% but, despite this, the company managed to recover some of its losses to close the day at 445.60.

Carmaker BMW had a good day too. Shares were up 1.8% after the Handelsblatt newspaper reported that the carmaker planned to launch a new 7-Series model, which will compete with the Mercedes S-class.

Elsewhere in the news, Facebook says it has set up a team dedicated solely to researching and developing virtual reality for social networking. The company is of the firm belief that “pretty soon we're going to live in a world where everyone has the power to share and experience whole scenes as if you're just there, right there in person”. This announcement led Facebook shares to trade 2.85% higher at $107.57.

Investors are still keeping a close eye on the U.S Federal Reserve for its next move on interest rates. While Fed Chair Janet Yellen has indicated the central bank would stick to its rate hike programme, policymakers appear at odds, and traders have all but given up on a hike this year.

Still, investors continue to asses economic data to gauge the health of the world’s biggest economy and the possible trajectory of interest rates. Reports on consumer confidence, home sales, durable goods, economic growth and personal spending are due this week.

This article was issued by Rebecca Naudi , 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.