Markets progress by energy and financial sectors

Global stocks marched higher Wednesday, continuing from the previous day, as rising oil prices and the prospect of Greek debt relief helped fuel the rally. Technology and financial stocks led the S&P 500 to its biggest gain in recent months amid strong US housing data and growing confidence that the economy could withstand a possible summer interest rate rise.

Oil prices got a lift from expectations that productions disruptions would help reduce a supply glut. Tracking this, energy company shares were in demand after oil prices pushed closer to $50 per barrel, with U.S. crude hitting its highest in more than seven months. On the other hand Royal Dutch Shell will cut a further 2,200 jobs as it cuts deeper in the face of still weak oil prices. Current oil market conditions in the company remain challenging despite all the company’s improvements.

In Europe, Greek shares rose 1.3% after the Eurozone finance ministers agreed with Greece and the International Monetary Fund on a deal that will address Athens’ request for debt relief. The news led the 10 year Greek Bond yield fall below 7% for the first time since November. Despite this, many Greek investors aren’t convinced they will see great returns this year in a sluggish economy over uncertainty on what will happen on 23rd June, when U.K holds its European Union membership referendum.

Marks and Spencer slumped around 8%, after the company announced a short-term hit to profit as it pushes through a plan to turn around its unsatisfactory performance in homeware and clothing business. In fact the company’s pre-tax profit fell to £488 million in the year ended 2nd April from £600 million in the same period a year before.

In the Banking Sector, HSBC was one of the biggest gainers, rising around 3% after stating it will strengthen its capital structure by $2 billion in contingent convertible bonds. The bonds would convert into shares if the bank’s core equity Tier 1 capital ratio falls below 7%. These securities help the bank’s capital cushion in case there is trouble.  Meanwhile Barclays PLC traded higher brushing aside a ratings downgrade to hold from buy, as the outlook for earnings and returns remain very challenging.

On the Technology side, Microsoft is bowing out of its own phones business after last year’s scaling back of Lumia’s devices. The last nail in the coffin happened today with an additional $950 million write off and 1,850 more job losses. On a positive note, Hewlett Packard was up 9% in post-trading session after announcing that it will spin off its enterprise services and merge it with Computer Sciences, whose shares also spiked around 23% after hours.

Moreover on the innovation side, automaker Toyota, is prepared to invest in UBER, a mobile app which allows consumers with smartphones to submit trip request, as an alternative to the usual taxi services. Toyota will create leasing options to which UBER drivers can lease vehicles from Toyota. This autonomous vehicle technology is believed to power fleets of self-driving cars in future. Meanwhile, Apple is upping its game in the field of intelligent assistants, as it is preparing to let others build applications for Siri. It is also working on developing a rival to Amazons’ wireless speaker Echo.

This article was issued by Rodrick Duca, Trader 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.