Market commentary: European stocks decline for second day

Investors were given a reminder that plunging oil prices and concerns about slowing growth in China are still dominating the agenda in the global financial markets this year. For a second consecutive day, European stocks found themselves sliding, as oil prices were once again sliding, and lenders continue being battered.

Miners posted the worst performance on the day, with Glencore plc and BHP Billiton losing at least 8.2%. This drop comes on the news that Iran has dismissed a proposal by Saudi Arabia and Russia to freeze output. It has been said that Saudi Arabia would rather give out the oil for free instead of giving market share to Iran! Naturally, this news is weighing on the price of oil, as well as on the markets. Crude lurched towards $31 a barrel as a result.

It was also a rough day for the financial industry as banks continued taking a beating. The current vibe in the market is dominated by worries over bad loans at Italian banks, the impact of a low interest rate environment on profits as well as the creditworthiness of one of the world’s leading financial service providers, Deutsche Bank.

Nevertheless, it was Greece’s Eurobank Ergasias that led the declines on Wednesday, with a sharp fall of over 9%. Elsewhere, JP Morgan was down 2.3% at €54.81 after the bank forecast a double-digit loss in its investment banking revenue, and, to little surprise, raised provisions for energy loan losses.

Among other movers of the day was clothing brand Hugo Boss. Shares tumbled 10.83%, extending its two-day decline to over 26%. The German company announced that its full-year earnings fell short of expectations, leaving its shares trading at €51.44.

In a day where selling seemed the norm, one company to hold its ground was Chesapeake Energy. This came as a result of a company announcement that the company will pay off the remained of its debt due in three weeks – that’s half a billion dollars’ worth of debt! The company will use proceeds it has received from asset sales that were twice as big as the company expected. Shares in Chesapeake closed the day at $2.69, climbing 22.83%.

In the metals industry, Gold was another winner on the day, as it headed for the biggest gain in almost two weeks. Gold futures were in high demand as fear over declining equities and oil boosted demand for safe haven assets. Futures for April advanced 1.9% to trade at $1, 2450.50 an ounce. Meanwhile, copper led the losses in industrial metals, falling 1.4% to $4,580 per metric ton.

Jitters are evident in the business community. Worldwide stocks are feeling the heat as oil is yet again in the limelight – for the wrong reasons. Fresh earnings are failing to elevate investor sentiment, and the uncertainty over Britain’s future in the E.U. is taking a toll on investor confidence.

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.