logo-loader

Growing concerns over health of the banking sector

Published: 09:09 12 Feb 2016 GMT

no_picture_pai

UK Market Snapshot
UK markets closed lower yesterday, with the benchmark FTSE 100 index declining to almost four-year low level, led by losses in financial and mining sector shares. HSBC Holdings, Standard Chartered, Barclays, Aberdeen Asset Management and Prudential plunged 4.8%, 5.1%, 7.0%, 7.4% and 7.5%, respectively, amid growing concerns over health of the banking sector in Europe. Glencore dropped 6.2%, as it reported a decline in production of copper and zinc in the fourth quarter. Rio Tinto fell 3.4%, after it reported a net loss for 2015. Peers, BHP Billiton and Anglo American shed 3.0% and 3.4%, respectively. Thomas Cook Group lost 1.9%, after it reported a drop in its total winter bookings. On the brighter side, precious metals miners, Fresnillo and Randgold Resources climbed 5.4% and 7.5%, respectively, as gold prices rallied. The FTSE 100 declined 2.4%, to close at 5,537.0, while the FTSE 250 fell 2.2%, to settle at 15,178.8.

US Market Snapshot
US markets closed in negative territory yesterday, with the S&P 500 and the Dow Jones indices extending their losses, amid concerns over slowdown in global markets and weakness in crude oil prices. Banks, Citigroup and Bank of America declined 6.5% and 6.8%, respectively. Boeing plunged 6.8%, after news surfaced that the US SEC had initiated an accounting probe with regards to cost and sales of its Dreamliner and 747 aircrafts. Twitter lost 4.5%, after it reported a flat growth in its active users for the fourth quarter. On the other hand, Cisco Systems soared 9.6%, as it posted better than expected second quarter results and projected that sales in the third quarter could beat market expectations. Tesla Motors rose 4.7%, after assuring that the company is on track with development of its long awaited Model 3. The S&P 500 lost 1.2%, to settle at 1,829.1. The DJIA dropped 1.6%, to settle at 15,660.2, while the NASDAQ slid 0.4%, to close at 4,266.8.

Europe Market Snapshot
Other European markets ended sharply lower yesterday, as banking sector stocks experienced a rout amid concerns over global growth. Societe Generale sank 12.6%, after it reported lower than expected earnings for the fourth quarter and indicated that it could miss its profitability target for 2016. Deutsche Bank, UniCredit, Credit Suisse Group and Unione di Banche Italiane tumbled 4.5%, 7.0%, 8.4% and 12.1%, respectively. Zurich Insurance Group slid 2.7%, after it posted worse than expected loss for the fourth quarter. On the contrary, Meda surged 67.2%, after Mylan agreed to buy the company in a cash and stock deal valued at about $7.2 billion. Adidas rose 3.6%, as it upgraded its sales and earnings forecast for 2016. The FTSEurofirst 300 index declined 3.7%, to close at 1,195.8. Among other European markets, the German DAX Xetra 30 fell 2.9%, to close at 8,752.9, while the French CAC-40 lost 4.1%, to settle at 3,896.7.

Asia Market Snapshot
Markets in Asia are trading lower this morning, tracking overnight losses on Wall Street. In Japan, SoftBank Group has tumbled 8.0%, after it reported a significant decline in its third quarter net earnings. Stocks sensitive to currency fluctuations, TDK, Kubota and Fuji Heavy Industries have plummeted 4.6%, 5.7% and 7.8%, respectively. Banks, Mitsubishi UFJ Financial Group and Mizuho Financial Group have shed 0.1% and 1.4%, respectively. In Hong Kong, index heavyweights, Tencent Holdings and HSBC Holdings have lost 1.9% and 3.0%, respectively. On the flipside, CNOOC and PetroChina have added 1.7% and 2.0%, respectively, as crude oil prices recovered from their slump. In South Korea, brokerage firms, Daewoo Securities and Samsung Securities have eased 2.8% and 2.9%, respectively. The Nikkei 225 index is trading 4.1% lower at 15,070.8. The Hang Seng index is trading 0.5% down at 18,447.1, while the Kospi index is trading 1.3% lower at 1,838.0.

 

Commodity, Currency and Fixed Income Snapshots

Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 5.42% or $1.63 higher at $31.69 per barrel, as the UAE energy minister stated that OPEC has expressed its willingness to co-ordinate with other oil exporters about reducing output. Yesterday, the contract declined 2.53% or $0.78, to settle at $30.06 per barrel, as concerns over growing supply glut and weak demand for oil overshadowed a decline in the US crude inventories.
Gold
At 0430GMT today, Gold futures contract is trading 1.09% or $13.60 lower at $1234.30 per ounce, amid profit booking. Yesterday, the contract advanced 4.45% or $53.20, to settle at $1247.90 per ounce, amid increased safe-haven buying due to turmoil in global financial markets.
Currency
At 0430GMT today, the EUR is trading 0.24% lower against the USD at $1.1298, ahead of the German consumer prices data for January, scheduled to release in a few hours. Investors would also closely monitor the Euro-zone and Germany’s economic growth figures for the fourth quarter, slated for release today. Yesterday, the EUR strengthened 0.29% versus the USD, to close at $1.1326, reversing its losses from previous session.
At 0430GMT today, the GBP is trading a tad lower against the USD at $1.4470, ahead of UK’s construction output data for December, due to release today. Market participants would also keep an eye on the US advance retail sales figures due later in the day which is likely to show a rebound in January. Yesterday, the GBP weakened 0.39% versus the USD, to close at $1.4475.
Fixed Income
In the US, long term treasury prices rose and pushed yields sharply lower, as demand for the safe haven US government bonds increased amid rout in global equity markets. Yesterday, yield on 10-year notes plunged 8 basis points to 1.63%, while yield on 2-year notes tumbled 7 basis points to 0.64%. Meanwhile, 30-year bond yield fell 3 basis points to 2.50%.

Key Economic News

Swiss CPI dropped as expected in January
The consumer price index (CPI) eased 1.30% on a YoY basis in January, in Switzerland, meeting market expectations. In the previous month, the CPI had registered a similar fall.

Swiss CPI declined as expected in January
The CPI recorded a drop of 0.40% on a MoM basis in January, in Switzerland, compared to a similar fall in the previous month. Markets were anticipating the CPI to drop 0.40%.

US continuing jobless claims declined in the last week
In the week ended 30 January 2016, the seasonally adjusted continuing jobless claims in the US fell to a level of 2239.00 K, lower than market expectations of a fall to a level of 2250.00 K. Continuing jobless claims had recorded a revised level of 2260.00 K in the prior week.

US initial jobless claims slid in the last week
In the week ended 06 February 2016, the seasonally adjusted initial jobless claims registered a drop to 269.00 K in the US, compared to a level of 285.00 K in the previous week. Markets were expecting initial jobless claims to drop to 280.00 K.

Canadian new housing price index rose less than expected in December
The new housing price index in Canada rose 0.10% in December on a MoM basis, compared to an advance of 0.20% in the prior month. Markets were expecting the new housing price index to rise 0.20%.

Canadian new housing price index advanced in December
In Canada, the new housing price index rose 1.60% on an annual basis, in December. In the prior month, the new housing price index had registered a similar rise.

Japanese investors became net buyers of foreign stocks in the previous week
Japanese investors were net buyers of ¥202.40 billion worth of foreign stocks in the week ended 05 February 2016, from being net buyers of ¥242.10 billion worth of foreign stocks in the prior week.

Foreign investors became net buyers of Japanese bonds in the previous week
Foreign investors were net buyers of ¥19.50 billion worth of Japanese bonds in the week ended 05 February 2016, from being net buyers of a revised ¥449.30 billion worth of Japanese bonds in the previous week.

Japanese investors turned net buyers of foreign bonds in the previous week
Japanese investors turned net buyers of ¥1454.00 billion worth of foreign bonds in the week ended 05 February 2016, as compared to being net sellers of a revised ¥78.80 billion worth of foreign bonds in the previous week.

Foreign investors remained net sellers of Japanese stocks in the previous week
Foreign investors were net sellers of ¥610.40 billion worth of Japanese stocks in the week ended 05 February 2016, from being net sellers of a revised ¥365.00 billion worth of Japanese stocks in the previous week.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

2 hours, 47 minutes ago