Market Commentary | Markets influenced by Fed, BOJ and Brexit

European stock traded lower, hovering around three-week low, with concerned investors on whether the U.K. will remain in the European Union. Banking Shares were among the decliners as investors picked up the pace, investing in more safe securities. In fact, government bonds price were higher, which in turn led to record low yields.

From the currency aspect, the British Pound against the U.S Dollar hit the levels from the middle of April ahead of the United Kingdom’s referendum on the European Union membership scheduled for next week. Sterling was 0.65% down, trading at $1.4161. Pressured by the latest polls, which showed Britons preferring the leave vote, the pound also dropped 1.4% against the yen to a three-year low. The sterling slump is explained by the U.K.’s huge current account deficit, which could keep on widening if Brexit is voted.

Oil prices were below the psychologically important $50 mark. Aside from concerns over the supply, oil markets are keeping an eye over U.S crude inventories and general demand market, especially after Friday’s rise in the oil-rig count. Brent futures for August delivery were below, hitting a session low at $49.80 per barrel earlier on Monday, while West Texas Intermediate for July delivery remained under the $50 mark.

Trading week in Wall Street also started in a grim mood, with a minute of silence for the victims of Orlando. Mixed feelings reigned in the US Stock market as investors are trying to find clues on what will be the moves of the Federal Reserve and Bank of Japan on June 15-16. The Dow Jones Industrial average finished 0.74% lower, the S&P 500 closed 0.81% lower and the Nasdaq 100 finished 0.86% down. The Fed is now widely expected to wait and see the outcome of the United Kingdom's Brexit referendum on June 23.

Corporate News

The world’s leading international security group G4S dropped by 7% after the security firm confirmed, that the suspect in Sundays’ shooting at an Orlando nightclub was their employee. This episode left 50 dead and 53 injured in the deadliest shooting in US history.

On the Tech side, Dutch communications and technology company VimpelCom Ltd. will collaborate with Ericsson after they reached a deal worth over $1 billion, the company announced on Monday. The deal will see VimpelCom improve and digitalize its IT infrastructure on a global level with the help of Ericsson’s software and cloud-based technologies. Some of the innovations will include the introduction of a more user-friendly interface and quicker product and service development.

Meanwhile, Microsoft Corp. and LinkedIn Corporation reached a deal, “under which Microsoft will acquire LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion, inclusive of LinkedIn’s net cash". The transaction would value LinkedIn well over its current market capitalisation of $15.27 billion. According to Standard and Poor, even though the deal will be entirely funded by the issuance of debt, it is not expected to hurt the credit quality of Microsoft. Tracking this news, Microsoft shares fell 2.60% whilst LinkedIn was up 46.64%.

This article was issued by Roderick Duca, 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.