Turkeys in focus, trading paused | Calamatta Cuschieri

Thanksgiving calm descended across markets, with investors reconciling themselves to a day of low volumes and quiet trading

US investors were more focused on turkeys than on trading on Thursday
US investors were more focused on turkeys than on trading on Thursday

Global markets were strangely quiet on Thursday as Thanksgiving calm descended across markets, and investors reconciled themselves to a day of low volumes and quiet trading. European stocks were slightly higher, with investors turning their attention to new economic data from Germany, and increased expectations of a US interest rate hike next month. Meanwhile, US investors were more focused on turkeys than on trading on Thursday, as they celebrated Thanksgiving Day.

With market liquidity scarce, the basic materials group were the best performers of the day in Europe. Healthcare and industrial stocks were also in the green, but utility and technology stocks suffered slightly.

Dollar surge continues

The dollar’s gain reverberated across emerging markets as the case for multiple US interest rate increases strengthened.

The greenback traded near the strongest level in a decade after better-than-estimated economic reports fuelled speculation the US is strong enough to withstand higher interest rates. The odds of a December rate hike surged to 100% and the probability of additional moves by June climbed to 6%, according to Fed fund futures data compiled by Bloomberg. Those bets have weighed on emerging markets on the perception that a jump in US yields would curb demand for riskier assets.

The dollar hit an eight-month high against the yen and an almost 14-year high against a basket of currencies that measures its broader strength. It also notched up new record highs overnight against a raft of emerging market currencies, including the rupee.

The dollar’s surge is based on a belief that Donald Trump’s presidency will produce a bump in inflation that will drive US interest rates higher and potentially see substantial dollar capital repatriated by US corporates. That would appear to play into the hands of European, Japanese and Chinese policymakers, who hope weaker currencies will help deal with their respective problems with growth.

Oil prices steady

Oil prices were steady on Thursday, ahead of next week’s meeting of the Organisation of Petroleum Exporting Countries to discuss the implementation of its proposed cap on production. Although trading volumes were low, Brent crude remained above the $48 a barrel mark, and rose 0.3% during Thursday’s session.

Headlines on OPEC have been the dominant factor driving price moves in the oil market for much of this year. Prices rebounded off their lows near $40 a barrel in recent sessions. Anticipation has been building that the cartel will follow through with a production cut at its Vienna meeting set for next Wednesday, though some sticking points remain around the terms of a cut for members such as Iran and Iraq.

BOV downgrade, outlook stable

Fitch Ratings on Thursday downgraded Bank of Valletta’s Long-Term Issuer Default Rating (IDR) and Viability Rating to ‘BBB’ from ‘BBB+’ and to ‘bbb’ from ‘bbb+’, respectively. It also affirmed the bank’s Short-Term IDR at ‘F2’, Support Rating (SR) at ‘5’ and Support Rating Floor (SRF) at ‘No Floor’. The Outlook on the Long-Term IDR is stable.

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.

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