Markets decline, oil slips with US dollar | Calamatta Cuschieri

On Wednesday, European shares finished on the lower side as concerns about the refinancing of troubled Italian bank Monte Dei Paschi di Siena continue, with the bank saying it could run out of cash in four months. On the other hand, Italy’s parliament have approved the government proposal to give a rescue loan to troubled banks. Tracking this Monte Dei Paschi shares recovered slightly but remained deep in the red.

In England, UK market also pared down today losing steam after four consecutive sessions of gains. With the FTSE 100 finishing the year above the 7,000 mark will help the markets with a psychological boost required to begin the New Year.

Tracking the others, US markets finished the session in negative territory with the US dollar moving lower from the very high levels seen in the past weeks, while oil fell with an unexpected inventory build-up registered last week. It seems that markets are repositioning themselves towards stronger balance sheet, taking some of the profit from Trump’s rally off the table, in anticipation of the incoming presidential administration policy solutions.

Government bonds

Government bond prices looked for direction on Wednesday but mostly remained on an upward trend as yields, which move inversely to prices, fell across the board last week. However, investors seemed largely undeterred by geopolitical tensions in Europe following recent attacks.

The yield on the 10-year United States sovereign bonds edged slightly up at one point reaching 2.5606% while the yield on two-year Treasuries declined to 1.2125%. The yield on 30-year debt increased to 3.1463%. On the other side of the globe, the yield on 10-year German Bunds, a benchmark for the Eurozone, dropped to 0.26%, whereas the equivalent for British gilts rose to 1.415%.

Oily area

Initially, Oil prices edged up ahead of the release of inventory data by the United States Energy Information Administration. After the date release futures of oil turned to moderate losses after the date reports showed commercial stockpiles in the US jumped 2.3 million barrels, in contrast to private reports on inventories. The strength in the US dollar also helped with the prices of oil.

The Union Bank of Switzerland (UBS) raised the rating of the British Petroleum (BP) with optimism the company will deliver cost improvements and with a plan to bring the capital expenditure meaningfully down, aiming towards a sustainable medium-term financial model in view of the current market oil prices.

Corporate news

The tour operator Carnival was down today at £40.92 as the cruise ship operator stated that higher operational costs and exchange rate would affect its results for 2017, although it did report better than expected fourth quarter figures.

This article was issued by Roderick 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 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.