Markets Summary | Calamatta Cuschieri

Decrease in MSE price index, rise in European Stocks, Bank of England holds interest rates, Jeff Bezos’ climate plan, China Tariffs, S&P nears record territory

MSE Equity Price Index fell by 0.57% as a decrease in one of the major local companies outweighed the gain in four other companies. Malta International Airport plc dropped by 6.5% to reach a €7.20 price level. RS2 Software plc had a minimal increase of 0.5%, €1.91 and International Hotel Investments plc also traded 0.6% higher which led to a €0.81 price level. Bank of Valletta plc and Tigné Mall plc had an increase of 0.9%, €1.16 and 3.9%, €0.935.

Higher European stocks due to Bank rally

Euro stocks went higher as investors snapped up battered shares of Eurozone banks after the U.S. Federal Reserve decrease expectations of further interest rate cuts. The index of Eurozone banks, which year-to-date has underperformed, rose by 2.7% while the Eurozone stocks index increased by 0.6%. Italian and Spanish banks’ shares including Bankia SA, UBI Banca and Banco Sabadell were a couple of the top gainers in the STOXX 600 after the Fed’s meeting. European banks together with sectors such as miners and automakers, had an increase recently as investors rotated into cyclical sectors due to signs of easing U.S.-China trade tensions and assurances of support from major central banks.

The Bank of England kept interest rates steady as Brexit uncertainty continues to hang over one of the world’s largest economies. Having just over a month before the U.K. is set to leave the European Union, the Bank of England’s Monetary Policy Committee, led by Mark Carney, unanimously voted to hold interest rates at 0.75%. This news had a minimal effect on the Sterling which resulted to the currency trading at around $1.2467. Policymakers at the Bank of England commented that leaving the EU without a deal would negatively affect growth and increase prices. Additionally, the central bank warned that another delay to Britain’s deadline could result to further economic weakness.

Steady U.S. market

The Dow Jones Industrial Average fell by 0.919%, while the S&P 500 index was unchanged. On the other hand, the Nasdaq Composite Index rose by 0.07%. Today is quadruple witching day for U.S. markets which means that quarterly expiration of futures and options on indexes and stocks occurs on the same day, sometimes spurring volatility. Microsoft Corp. shares increased by 0.16% after the company announced that its board approved a $40 billion share buyback and increase dividend by 11%. Datadog Inc. rose by 2.37%, the cloud-monitoring company received a buyout bid from Cisco Systems Inc. ahead of its initial public offering.

Jeff Bezos to tackle climate change

Amazon CEO Jeff Bezos announced a new plan on how his company plans to tackle climate change, committing the retail giant to meet the goals of the Paris climate agreement 10 years ahead of schedule. Bezos is calling it the “Climate Pledge”, and he also promised to measure and report the company’s emissions on a regular basis, implement decarbonisation strategies and alter its business strategies to offset remaining emissions. The CEO expects that 80% of Amazon’s energy use comes from renewable sources by 2024, before transiting to zero emissions by 2030. This plan call other companies to join Amazon in pledging to have net zero carbon emissions by 2040, a decade ahead of the Paris accord’s goal.

Trump grants tariff exemptions

Washington is temporarily exempting more than 400 types of Chinese products from traffic that President Trump’s administration has imposed last year. The exclusions include things like Christmas tree lights, plastic straws and doe leashes, for a total of 437 types of products. These form part of the $250 billion worth of Chinese goods that the U.S. hit with tariffs in 2018. These exemptions came as a result of more than 1,100 exclusion requests made by companies in the U.S.

China decrease its new one-year benchmark lending rate for the second consecutive month to 4.20%, as the central bank would like to guide borrowing costs lower for an economy hit by the trade war. The highly expected reduction in the one-year Loan Prime Rate came as a result of the People’s Bank of China lowered banks’ reserve requirements. It was also lead by the Federal Reserve cut U.S. interest rates by 25 basis points.

 

This article was issued by Peter Petrov, Trader at Calamatta Cuschieri. For more information visit, https://cc.com.mt/. The information, view 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.

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