Spreadex Market Update
Commodities stable(ish) but oil and mining stocks still weigh on FTSE
So far Brent Crude and copper are tentatively in the green as they take back some of Monday’s losses; this still leaves the former teetering just above $50 per barrel whilst the latter is only marginally higher than yesterday’s lows. Lagging behind the commodity stocks themselves are the FTSE’s weighty oil and mining firms, with BP and Shell especially looking shaky. The continuation of this commodity drag has meant the UK index underwent another lifeless open, as it continues its struggle to substantially break 6700. An expected improvement in the construction PMI is unlikely to help the FTSE out as investors focus on the commodity issues, but a strong figure could give a boost to the pound.
The biggest, and most controversial, news of the morning was the UK government’s £2.1 billion (i.e. 5.2%) sale of RBS shares. The reason for the controversy comes from the fact that, at a price of £3.30 per share to the £5 they were bought at, this sale leaves the taxpayer around £1 billion out of pocket. Others have argued that the bank is now much smaller than it was at the time of the bailout, meaning matching that initial share price is unrealistic, and that at no point in the last 7 years has the stock even begun to approach its 2007 peak. Either way RBS tumbled to that sale price, with the rest of the banking sector suffering as well.
After posting healthy gains on Monday the DAX and CAC began to give back some of that growth after the bell, with a quiet day on the horizon for the Eurozone. Better than expected Spanish unemployment data effectively sees the region use up all its Tuesday data, meaning there is little to interest investors until tomorrow’ services PMI. Or, of course, any surprises from Greece.
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