Yellen speaks, the world listens | Calamatta Cuschieri

Stocks across Europe darted between small gains and losses on Thursday, as investors remained on the sidelines and waited to hear from the European Central Bank and US Federal Reserve chief, Janet Yellen, for clues on interest rates. Equities were mostly subdued in Asia, while Wall Street closed slightly higher as an improving economic picture and great clarity of Federal Reserve policy allowed the market’s postelection uptrend to continue.

Janet’s testimony

All eyes, and ears, turned to Federal Reserve chair Janet Yellen on Thursday afternoon, with investors eager to pick up clues about potential interest rate movements as early as next month.

Yellen made her strongest comments to date in favour for a policy tightening in December, signaling that the US central bank is in fact close to lifting interest rates, as the economy continues to create jobs at a healthy pace, as inflation creeps higher. She mentioned how Fed policy makers, at their meeting earlier in November, judged that the case for a rate hike had strengthened.

The Fed chair gave a generally upbeat assessment of an economy that continues to generate jobs at a pace adequate to absorb new employees and keep others engaged in work. Indeed the major question mark for the Fed may now be the actions of the President-elect. His cabinet and policies are still taking shape. But the proposals outlined in his campaign could change the Fed's baseline outlook substantially if he follows through on plans to cut taxes, roll out hundreds of billions of dollars in new infrastructure spending, and rip up free trade agreements.

Banks in the red

Bank stocks, which ran higher after Trump’s victory, were moving lower on Thursday, as investors kept assessing the likelihood of a Trump administration loosening regulatory rules in the financial industry, among other policies. The Stoxx Europe 600 Banks index was lower during the session.

Shares of Deutsche Bank recorded their third consecutive session of declines, as shares fell 0.75% on Thursday. Shares of Credit Suisse also logged their second consecutive day of losses, as shares slumped 0.3%. Elsewhere, shares of Lloyds were 0.7% lower.

But it wasn’t a bad day for all banks. Shares of HSBC were trading in positive territory, picking up 0.77% on Thursday, and Standard Chartered picked up 1.36%.

Oil optimism

Oil prices were on track to record another winning session on Thursday, after Saudi Arabia’s oil minister voiced optimism about the ability of the Organisation of the Petroleum Exporting Countries to reach an output deal to curb output.

Crude oil traded in the green, picking up 0.4% to remain trading above $45 a barrel.

This article was issued by Rebecca Naudi, 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 Investments Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.