A good start to the week

After last week’s rough patch, investors are being offered some respite this morning as general market prices have returned to positive territory again. European stocks rose from a one-month low as oil rallied above $45 a barrel, buoyed by Canadian wildfires that are curbing production. All but one of 19 industry groups on the Stoxx Europe 600 Index advanced, led by technology shares. Global equities lost ground over the last two weeks as economic data painted a subdued picture of growth in the world economy, coupled with mixed corporate earnings, putting further downward pressure on prices.

Oil prices have risen to $45.44 as of this writing, spurred by the stronger dollar. While U.S. jobs figures on Friday were weaker than economists forecast, several Federal Reserve officials have warned over the past week that U.S. interest rates are headed higher, which subsequently led to a strengthening in the currency. The probability of the U.S. central bank hiking borrowing costs at its meeting next month fell to 8 percent after the jobs data, from 12 percent a week earlier, Fed Funds futures show.

On the data front, Germany reported a bigger increase in March factory orders than economists forecast, while companies including Enel SpA and Tyson Foods Inc. are scheduled to announce earnings. Also this morning, Euro-area finance ministers and International Monetary Fund officials are meeting to decide whether Greece’s government has done enough belt-tightening to gain another aid disbursement.

Earlier this morning, the MSCI Asia Pacific Index was closed at its lowest level in four weeks. The Shanghai Composite Index sank 2.4 percent, capping its biggest two-day slide since February. A measure of Chinese shares listed in Hong Kong dropped for a sixth day, the longest losing streak this year on weaker trade import data.

In the fixed income space, the yield on the 10 year U.S. Treasuries was little changed at 1.78 percent, after climbing three basis points on Friday as a report showed American employers took on fewer workers in April than economists forecast. Bill Gross, the former manager of the biggest bond fund, said policy makers may act at their next meeting in June. Across the pond, European sovereigns are trading mixed, with higher grade German and French debt trading wider while Italian and Spanish yields are lower by 2bps to 1.47% and 1.57% on the 10 year bonds.

In high yield, spreads have tightened across the board with the Energy sector leading. In some single name news, Banco Sabadell has sold a fully-provisioned €1b bad loan portfolio with a 95% haircut. The portfolio consisted of consumer and credit card loans without guarantees. Also, Fitch downgraded AB InBev to BBB+ from A and ratings remain on Watch Negative while Fitch affirmed ArcelorMittal at BB+ with a Negative outlook.

This article was issued by Simon Psaila, Treasury Officer 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.